ICOM 2nd Year students can now download the Key Book to Fundamental Principles of Accounting for I.Com Part II in PDF format. Published by Kitab Markaz Faisalabad and authored by Ch. Muhammad Hanif and Ch. Ijaz Ahmed, this key book provides fully solved exercises and problems for all 9 chapters of the Principles of Accounting course.
This key book is specifically designed as a companion to the Principles of Accounting textbook for I.Com Part II. Students can use it to check their solutions, understand accounting methods, and prepare thoroughly for Punjab Board annual exams.
Book Overview
| Class | 12th Class (2nd Year / I.Com Part II) |
| Subject | Principles of Accounting (Key Book) |
| Category | ICOM |
| Board | Punjab Board |
| Authors | Ch. Muhammad Hanif, Ch. Ijaz Ahmed |
| Publisher | Kitab Markaz, Faisalabad |
| Type | Solved Key Book |
| Total Chapters | 9 |
| Format | PDF (Free Download) |
Chapter List
Chapter 1: Single Entry System
Solved problems on preparing the Statement of Affairs to find opening and closing capital, calculating net profit or loss from incomplete records using the net worth (capital comparison) method, and converting single entry records into a full Trading, Profit and Loss Account and Balance Sheet. Several problems also include cash account reconstruction.
Important Questions:
- What is the Single Entry System? Answer: An incomplete accounting method that does not record both debit and credit aspects of every transaction, commonly used by small businesses.
- How is the Statement of Affairs used in this system? Answer: It lists all assets and liabilities on a given date to calculate the capital of the business.
- How is net profit calculated without complete records? Answer: By comparing capital at the end of the year with capital at the start, after adding drawings and subtracting any fresh capital introduced.
- What is the net worth (capital comparison) method? Answer: A technique that determines profit or loss by comparing the owner’s capital at two different dates using statements of affairs.
Chapter 2: Accounts of Non-Trading Concerns
Solved exercises on preparing Income and Expenditure Accounts and Balance Sheets for clubs, societies, and hospitals from receipts and payments data. Covers subscriptions outstanding and received in advance, entrance fees, donations, life membership fees, and calculating the opening capital fund.
Important Questions:
- What is an Income and Expenditure Account? Answer: An account similar to a Profit and Loss Account, prepared by non-trading organizations like clubs and societies to find surplus or deficit.
- How are outstanding subscriptions treated? Answer: They are added to the subscription income received during the year to find the actual amount due.
- What is a capital fund? Answer: The accumulated excess of assets over liabilities of a non-trading concern, similar to capital in a trading business.
- How is subscription received in advance treated? Answer: It is deducted from the total subscription received, since it belongs to the next accounting period.
Chapter 3: Consignment Accounts
Fully solved consignment problems covering consignor and consignee journal entries, preparation of the Consignment Account and the consignee’s personal account, valuation of closing stock and abnormal loss, and treatment of commission and account sales.
Important Questions:
- What is a consignment? Answer: The sending of goods by a consignor to a consignee for sale on the consignor’s behalf, without any transfer of ownership.
- How is unsold stock on consignment valued? Answer: At original cost plus a proportionate share of direct expenses like freight and insurance incurred by the consignor.
- What is del credere commission? Answer: An extra commission paid to the consignee for taking the risk of bad debts on credit sales made on the consignor’s behalf.
- What is an abnormal loss in consignment? Answer: A loss caused by unforeseen events like fire or theft, valued and transferred separately instead of being included in normal trading loss.
Chapter 4: Partnership Accounts (I) – Division of Profit or Loss
Solved exercises on preparing the Profit and Loss Appropriation Account, calculating interest on capital, partners’ salary and commission, and dividing profit among partners under both fixed and fluctuating capital methods.
Important Questions:
- What is a Profit and Loss Appropriation Account? Answer: An account prepared to distribute the net profit of a partnership among partners after adjusting salary, interest and commission.
- How is interest on capital treated? Answer: It is allowed to partners as an appropriation of profit before dividing the remaining balance among them.
- What is the difference between fixed and fluctuating capital methods? Answer: Under the fixed method capital stays constant and adjustments go to a separate current account, while under the fluctuating method all adjustments are made directly in the capital account.
- How is a partner’s salary recorded? Answer: It is debited to the Profit and Loss Appropriation Account and credited to the partner’s capital or current account.
Chapter 5: Partnership Accounts (II) – Admission of a New Partner
Solved problems on calculating and adjusting goodwill using multiple methods including cash, raised, written-off, and hidden goodwill, revaluation of assets and liabilities on admission, and preparing capital accounts and the balance sheet of the reconstituted firm.
Important Questions:
- Why is goodwill adjusted when a new partner is admitted? Answer: Because the new partner gains a share in future profits built on the efforts of the old partners, so goodwill compensates them.
- What is hidden goodwill? Answer: Goodwill that is not given directly but is calculated by comparing the new partner’s capital for their share with the total capital of the reconstituted firm.
- Why are assets and liabilities revalued on admission? Answer: To record their current fair value so gains or losses belong only to the old partners before the new partner joins.
- How is goodwill treated when the new partner brings it in cash? Answer: It is credited to the old partners’ capital accounts in their sacrificing ratio.
Chapter 6: Partnership Accounts (III) – Retirement and Death of a Partner
Solved exercises on adjusting goodwill and reserves when a partner retires or dies, revaluing assets and liabilities, settling the outgoing partner’s dues through cash, loan account or bills payable, and preparing the revised balance sheet.
Important Questions:
- How is the retiring partner’s share of goodwill treated? Answer: It is credited to the retiring partner’s capital account and debited to the remaining partners in their gaining ratio.
- How is the amount due to a retiring partner settled? Answer: Either paid in cash, transferred to a loan account, or settled through bills payable.
- How is a deceased partner’s share of profit calculated? Answer: On the basis of the previous year’s profit or an average of past years’ profits, up to the date of death.
- What happens to reserves on retirement or death of a partner? Answer: They are distributed among all partners, including the retiring or deceased partner, in the old profit-sharing ratio.
Chapter 7: Partnership Accounts (IV) – Dissolution of the Partnership
Fully solved problems on preparing the Realisation Account on dissolution, settling creditors and realisation expenses, distributing profit or loss on realisation among partners, and closing partners’ capital and cash accounts, including insolvency cases under the Garner vs Murray rule.
Important Questions:
- What is a Realisation Account? Answer: An account prepared on dissolution to record the sale of assets and payment of liabilities, and to find the profit or loss on realisation.
- How is profit or loss on realisation distributed? Answer: Among all partners in their old profit-sharing ratio.
- What is the Garner vs Murray rule? Answer: A rule applied when a partner becomes insolvent, stating that the loss due to their insolvency is shared by the remaining solvent partners in their capital ratio.
- How are realisation expenses treated? Answer: They are debited to the Realisation Account as an expense of closing the business.
Chapter 8: Joint Stock Company Accounts
Solved exercises on journal entries for share application and allotment, issue of shares at par, premium and discount, issue of shares against assets purchased through a business purchase, and issue of debentures at par, premium and discount, with balance sheet preparation.
Important Questions:
- What is share application money? Answer: The amount received from applicants when they apply for shares, before allotment is made.
- How is a share premium recorded? Answer: It is credited to a separate Share Premium Account when shares are issued at more than their face value.
- What is a business purchase account used for? Answer: To record the purchase consideration when a company takes over the assets and liabilities of an existing business.
- How are debentures issued at a discount treated? Answer: The discount is debited to a Discount on Issue of Debentures Account and written off over time.
Chapter 9: Depreciation Accounts
Solved problems on calculating and recording depreciation under the straight line and diminishing balance methods, treatment of asset purchases and sales during the year, profit or loss on disposal, and the depreciation fund (sinking fund) method with the investment account.
Important Questions:
- What is the straight line method of depreciation? Answer: A method that charges an equal amount of depreciation every year based on the original cost of the asset.
- What is the diminishing balance method? Answer: A method that charges depreciation as a fixed percentage of the asset’s reducing book value each year.
- How is profit or loss on sale of an asset calculated? Answer: By comparing the sale proceeds with the book value of the asset on the date of sale.
- What is the depreciation fund (sinking fund) method? Answer: A method where funds equal to depreciation are invested outside the business each year to accumulate money for replacing the asset.
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⬇ Download PDFWho Should Read This
This key book is for ICOM 2nd Year students studying Principles of Accounting for I.Com Part II under Punjab Board. It is especially useful for students who want to verify their exercise solutions, understand accounting problem-solving approaches, and prepare thoroughly for annual board exams. Students who find Partnership Accounts, Company Accounts, or Consignment Accounts challenging will find this key book very helpful.
Applicable Boards
This key book follows the Punjab Board Principles of Accounting syllabus for I.Com Part II. Students from Federal Board and other provincial boards with a similar Accounting curriculum may also find it useful.
FAQs
What is this Principles of Accounting Key Book for?
This is the solved key book for Principles of Accounting I.Com Part II (ICOM 2nd Year). It provides complete solutions for all 9 chapters including Single Entry System, Non-Trading Concerns, Consignment, Partnership, Company Accounts, and Depreciation.
Which chapters are covered in this key book?
The key book covers all 9 chapters: Single Entry System, Accounts of Non-Trading Concerns, Consignment Accounts, Partnership Accounts I to IV, Joint Stock Company Accounts, and Depreciation Accounts.
Can I use this key book without the main textbook?
This key book is best used alongside the main Principles of Accounting textbook for I.Com Part II to check and understand exercise solutions.
Is Partnership Accounts covered in detail?
Yes, Partnership Accounts is covered across 4 chapters (Chapters 4 to 7) covering formation, admission, retirement, death, and dissolution of partnership with fully solved problems.
Is this key book useful for board exam preparation?
Yes, working through the solved exercises helps students understand accounting methods and prepare for Punjab Board annual exams for I.Com Part II.
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Study Resources for Accounting 2nd Year
Free exam-preparation resources for Accounting 2nd Year from the Freebooks.pk Editorial Team — the latest paper pairing scheme. Study online or download.