Category: Maharashtra State Board Notes

By going through these Maharashtra State Board Book Keeping & Accountancy Notes 12th Chapter 7 Bills of Exchange students can recall all the concepts quickly.

Maharashtra State Board 12th Accounts Notes Chapter 7 Bills of Exchange

Introduction-

When goods are sold on credit, there is an implied promise by the buyer to pay money to the seller on a future date. Similarly, in the case of borrowing or lending of money, borrower/debtor borrows money on oral or implied promise. Such credit sales or lending of money involves risk of recovery of debts in time. In spite of repeated reminders, some borrowers/debtors do not fulfil their promises. So in the interest of seller or creditor, the party to the credit transaction prepares a written document or undertaking giving the details of debts such as person liable to pay debts, person entitled to receive the payment, amount of debts, date of payments, signatures of the parties to the transaction, etc.

This written document or undertaking is called Credit Document or Negotiable Instrument. Bill of Exchange is one of the important credit instruments used to support credit transactions. In India, in ancient days, instrument of credit popularly known as Hundies were used on large extent. Bills of exchange if drafted in any one of the Indian languages such as Marathi, Gujarati, Urdu, Hindi, etc., is called Hundi. Hundies are classified into different types like Shahjog Hundi, Darshani Hundi, Muddati or Miadi Hundi, Namjog Hundi, Dhani-Jog Hundi, Jawabee Hundi, Hukhami Hundi, Firman-Jog Hundi, etc.

Necessity : The necessity of Bills of Exchange is summarised as follows :

• In the Bills of Exchange the debtor gives acknowledgement of the debts which automatically
  creates evidence of debts. ,
• The seller or creditor is relieved from the tension or risk of recovery of the amount or debts.
• The seller or creditor comes to know the exact date of receiving the payment of the bill.
• It is a valuable document which can be discounted with the bank to raise needed finance.
• It can be used or endorsed by its owner in settlement of the debts owed by him / her.

Meaning and definition : Bill of Exchange is a written acknowledgement of debt given by the debtor to the creditor along with a written promise to pay that debt on demand or after a specified period to the creditor or any other person as per his order. Usually bill of exchange is drawn by the creditor on his debtor. It is accepted by debtor.

According to the Negotiable Instruments Act, 1881, Bill of Exchange is defined as, “ an instrument in writing containing an unconditional order signed by the maker, directing a certain person to pay on demand, or on a certain future date, or after a certain period of time, a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument. ”

Salient features of a Bill of Exchange :

• A bill of exchange must be in writing.
• A stamp of proper value must be affixed on it as per the provisions of Stamp Duty Act, 1889.
• It must be dated.
• It should contain an unconditional order to pay certain sum of money only.
• Such order is given to make payment of certain or definite sum of money only.
• The order is to make payment to a certain person whose name is specified in it or to his order or the bearer.
• The maker of the bill signs the bill of exchange.
• It must be accepted by the drawee i.e. the person on whom it is drawn.
• It must clearly specify when payment is to be made.

Draft, Format of Bills of Exchange-

There are three parties to a bill of exchange viz., the drawer, the drawee and the payee.

(1) Drawer : The person who draws or prepares the bill, gives the order to pay money and signs on it is called Drawer. He is a creditor. He has to receive the amount specified on the bill. Accordingly drawer records all transactions relating to bills under the title or name called “Bill Receivable”.

(2) Drawee : The person on whom the bill is drawn is called Drawee. Every bill drawn by the drawer Is required to be accepted by the drawee. When drawee accepts the bill or agrees to make the payment, he becomes the Acceptor. Since, the amount of bill is payable on due date by drawee and hence for him it is “Bill Payable”.

(3) Payee : The person named in the instrument, to whom the amount of the bill is to be paid is called the Payee. Generally, drawer is the payee, but payee could also be a third person like a creditor to whom the amount is made payable by drawer.

Contents of format of B of Exchange :

•  Date : At the top righ and corner below the address of the drawer, date on which bill is drawn is to be written, which is required to calculate maturity date.
• Term : Term of bill must be mentioned in months or in days.
• Amount: Below the stamp, amount of bill in figure should be mentioned and amount of bill in words are written in the body of bill.
• Stamp : Appropriate value of stamp should be affixed as per Indian Stamp Act 1889.
• Parties : in the bill of exchange names of drawer, drawee and payee and their address must be mentioned.
• For value received : The bill of exchange should be issued in exchange of some benefit received which is legally necessary.
• Acceptance : At per mutual understanding, drawer makes a draft for bills of exchange and sent it to drawee for acceptance. Drawee then signs that draft with his name along with date across the face of the bill with the words ‘Accepted’. On acceptance by drawee, that ‘draft’ becomes bill of exchange.

Pro Forma of a Bill of Exchange :

Acceptance of Bill of Exchange : Acceptance of a bill of exchange means signing the bill of exchange by drawee to give his assent to pay the amount of the bill. Unless the bill is accepted by drawee, he is not liable to pay an amount of the bill. A bill of exchange before its acceptance is called a Draft.

Types of Acceptance : Acceptance of bill of exchange can be of two types viz., (1) Unconditional or General Acceptance and (2) Conditional or Qualified Acceptance.

(1) General Acceptance :if the drawee accepts the bill without putting any condition or making any change in the original terms of the bill, such an acceptance is known as Unconditional or General Acceptance.

(2) Qualified Acceptance : If the drawee accepts the bill by making certain changes in the original terms regarding the time, amount of payment or place of payment, the acceptance is said to be Conditional or Qualified Acceptance.

A qualified or conditional acceptance may be of five types. They are explained below :

• Qualified as to Time : When drawee accepts the bill by making changes in the period of the bill, it is called Qualified as to Time.
• Qualified as to Place : When drawee is not ready to make payment at the place mentioned in the bill and suggests a different place where he is willing to pay the amount of the bill, it is called Qualified acceptance as to Place.
• Qualified as to Amount : When drawee accepts the bill not for entire amount specified on the bill but for part of the amount of the bill, it is called Qualified acceptance as to Amount.
• Qualified as to Parties : When drawee is not ready to pay the amount of bill to the payee as mentioned in the bill, it is called Qualified acceptance as to Parties.
• Qualified as to Condition : When drawee accepts the bill by putting his own conditions, it is called Qualified as to Condition.

Promisory Note: Promisory note is one of the negotiable instrument payable either to order to bearer.

Parties to a Promisory Note :

• Drawer: A person who draws a promisory note, promises to pay a certain amount as specified
  in the promisory note is known as Drawer or Maker of the promisory note. Drawer is also known as the Promiser.
• Drawee : A person in whose favour the promisory note is drawn is known as Drawee or Payee of the promisory note. Drawee is aLIso known as Promisee.

Specimen of Promisory Note:

Terms of Bills of Exchange:

Tenor or Term : Tenor or Term of the bill of exchange refers to a period or duration for which bill of exchange is drawn. It is the period of the bill after which it becomes payable. It may be in number of months or in number of days. If the bill of exchange is drawn for 90 days, the term of the bill of exchange in that case is 90 days.
Draft: A bill which is prepared by drawer and not yet accepted by drawee, then it is called Draft.

Days of Grace : Days of grace refer to three extra days allowed by law to the drawee over and above the period of the bill to enable him to make payment. Legal due date is calculated by adding days of grace to the period of the bill. However, grace days are not allowed for the bill payable on ‘Demand’ or ‘At sight’.

Date of Maturity/Due Date of a Bill: The date of maturity or the due date of a bill is the date on which the amount of the bill is to be paid. In the case of a bills made payable, a specified period after date or after sight, the law allows three days of grace in addition to the period specified in the bill. Formulae to calculate the due dates are given below :

(i) If the bill is payable ‘on Demand’ or ‘At sight’, its due date is that date on which it is presented to the drawee for payment. It does not have definite period of time and grace days are not allowed for this type of bill.

(ii) If the bill is drawn ‘After date’
Due Date = Date of bill drawn + Period of the bill + 3 days of grace.
Period of the bill may be in number of months or in number of days.

(iii) If the bill is drawn ‘After sight’
Due Date = Date of bill accepted or date of bill presented for acceptance + Period of the bill + 3 days of grace.

Types of Due Date :

(a) Nominal Due Date : The date on which the term i.e. the period of a bill of exchange gets expired is called Nominal due date. It is calculated without adding days of grace to the period of the bill. .•. Nominal due date = Date of bill drawn / accepted + Period of the bill.

(b) Legal Due Date : Legal due date is that date which is arrived at after adding 3 days of grace in nominal due date.
∴ Legal due date = Nominal due date + 3 days of grace.

If the due date falls on public holiday or Sunday, the payment of the bill is required to be made on immediate preceding working day, e.g. if the due date falls on 15th August, payment must be made on 14th August. Similarly if the due date falls on 26th January, payment must be made on 25th January. According to the provisions made in the Negotiable Instruments Act, 1881, if in emergency, the Government of India declares a particular date as holiday, then all bills fall due for payment on that date will be paid on very next working date.

However, if due date of a bill falls due on 7th July, 2020 and this day, the Government of India declared emergency public holiday due to heavy rain and flood, then that bill would be paid on 8th July, 2020 provided it is not Sunday.

Holder : Any person who is entitled in his own name to the possession of the bill and to receive or recover the amount due thereon from the concerned parties thereon is called “holder of the bill”. He may be drawer himself or his creditor in favour of whom drawer has endorsed the bill. Somebody in possession of a stolen or a lost instrument i.e., bills of exchange cannot be a holder. The payee of the bill can be a holder. Any person who has received the instrument from the payee or any previous holder can be a holder.

Holder in due course : A person is said to be “holder in due course” if he satisfies the following conditions :

• He is a holder if it is payable to bearer or he is the payee or endorsee, if it is payble to or to the order of the payee.
• He became the holder before the amount mentioned in the instrument became payable i.e. before maturity.
• He became the holder for valid consideration.
• He became the holder without having sufficient cause to believe that any defect existed in the title of the person from whom he received it, though not of any prior party.

Types of Bills of Exchange : The bills of exchange may be classified as :

(1) Trade bill : A bill of exchange which is drawn by a creditor on his debtor for certain valuable consideration is called Trade bill. Only in case of credit and lending and borrowing, transactions Trade bills are used. The different types of trade bills are explained below :

• Inland bill of exchange : A bill of exchange drawn and accepted between the two parties from the same country is called Inland bill of exchange, e.g. a bill of exchange drawn and accepted at Mumbai and made payable at Kolkata, is known as Inland bill of exchange.
• Foreign bill of exchange : A bill of exchange drawn and accepted in one country and made payable in some other country is called a Foreign bill of exchange, e.g. a bill of exchange drawn in India and made payable in Japan is called a Foreign bill of exchange.
• Bills Payable on Demand or at Sight: A bill of exchange which does not have definite period of time and made payable whenever its payment is demanded, is called bill payable on Demand or at Sight. Grace period of 3 days is not allowed on these bills.
• Bills Payable After Date : A bill of exchange in which period of bill is counted from the date of bill drawn, is called Bills Payable after Date. Grace period of 3 days is allowed on these bills.
• Bills Payable After Sight: A bill of exchange in which period of a bill is counted from the date of presentation or date of acceptance whichever is earlier is called Bill Payable after Sight. Grace period of 3 days is allowed on these bills.

(2) Accommodation bill : A bill drawn not against value received, but to raise money on credit and thus meet the temporary financial needs of the parties thereto, is called Accommodation bill. In order to help a friend and for mutual benefits of the parties thereto, this type of bill is drafted and accepted without any consideration.

Classification of bills for Accounting : The two fundamental accounting rules for recording bill transactions are : first, to remember that for the acceptor or drawee, a bill is always a Bills payable as he is required to make payment, while for all other parties, it is a Bill receivable; and secondly, to treat both the Bills Receivable A/c and the Bills Payable A/c as Real accounts, debiting what comes in and crediting what goes out.
Thus, on accepting a bill of exchange, the acceptor will debit the Drawer’s A/c and credit the Bills Payable A/c, and on receipt of this acceptance, the drawer will debit the Bills Receivable A/c and credit the Acceptor’s or Drawee’s A/c.

How using of Bill :

If on the due date of a bill, its drawee or acceptor makes a full payment on it to its holder, the bill is said to be duly met or honoured.

Meeting or honouring a bill, thus, means making a full payemnt on it to the holder on the due date by its drawee. For honouring the bill, the drawer or holder of the bill must present the bill to the drawee on or before due date for payment.
Dishonour of a Bill : If the drawee or acceptor of a bill fails to make payment on it on the due date, the bill is said to be dishonoured. The bill may be dishonoured in two ways :

• When drawee does not accept bill, the bill is said to be dishonoured for non-acceptance.
• When drawee refuses or does not make payment on the due date of the bill, the bill is said to be dishonoured for non-payment.

Legal protection afforded by Bills of Exchange :

(i) Noting of Dishonour : On dishonour of a bill, the holder has to create official proof of dishonour by getting the bill noted. For this he has to approach a Notary Public. Noting of a bill of exchange means recording the facts of dishonour of bill of exchange, date of dishonour, reasons of dishonour, parties to bill, etc. by a Notary Public. The Notary Public also records the facts of dishonour in his official register. Thereafter, the holder generally gives a notice of dishonour to all parties to the bill and seeks to recover from any or all of them the value of the bill plus the noting charges.

(ii) Protesting : Protesting refers to issue of formal certificate bearing a Notary’s seal by notary public, certifying the facts of dishonour of bill of exchange based on noting. Protesting is absolutely necessary in respect of dishonour of foreign bill of exchange. The protest is accepted by the court as evidence of dishonour of a bill of exchange.

Notary Public : An officer appointed by the Government to certify dishonour of bills of exchange is called Notary Public. According to provisions made in the Notaries Act, 1952, he is a public officer whose function is to administer oaths, to attest and certify, by his hand and official seal, certain classes of documents, in order to give them credit and authenticity, to take acknowledgments of deeds and other to conveyances, and certify the same, and to perform certain official acts, chiefly in commercial matters such as the protesting of notes and bills, the noting of foreign drafts, and marine protests in cases of loss or damage. The Notaries Act is administered by the Central as well as State Governments.

Noting Charges : Noting charges refer to fees charged by Notary Public for establishing facts and causes of dishonour of the bill. Drawee or acceptor who is ultimately responsible for dishonour of the bill, has to bear noting charges.

Accounting treatment of Bills of Exchange-

(a) Retaining the bill till due date : Retaining the bill till due date means act of drawer or holder to keep the bill with himself till its due date. On the due date, the drawer or holder of it has to present the bill to the drawee for payment which may be honoured or dishonoured by drawee.

(b) Endorsement of a bill of exchange : When the holder or owner of a bill of exchange signs on its back with the object of transferring its title to somebody else, the signature or the act of signing is called an Endorsement and the bill is said to be Endorsed. The person so signing a note or bill is called the Endorser, while the person to whom it is endorsed is called the Endorsee. The act of endorsement of bill of exchange may continue till its due date.

(c) Discounting of a bill of exchange : A bill is said to be discounted, if before its due date, the holder of the bill, exchanges it for cash, giving away a small part of its face value by way of interest for the unexpired period. Bill is usually discounted with the bank.

While computing the amount of such discount, the students should remember that unless followed biy the words ‘per annum’, the given rate of discount is to be treated as straight or flat, irrespective of the period. Thus, if a three-month bill for ₹ 10,000 is discounted at 5%, the discount will be ₹ 500, but if it is discounted at 5% per annum, the discount will be ₹ 125.

On the due date of the discounted bill, the bank presents the bill before the drawee and recover the entire amount of the bill. In case the bill is dishonoured by the drawee, the bank returns the bill to the drawer and recovers the entire amount from drawer.

Formulae for calculation of discount :

(i) If flat rate of discount is given (i.e. when per annum rate is not given) :

(ii) If discount rate per annum and period in months are given :

(iii) If discount rate per annum and period in number of days are given :

in case of leap year number days will be 366 instead of 365.

(d) Sending the Bills of Exchange to the bank for collection : The drawer of a bill of exchange may deposit the bill with the bank with the instruction that the bill be kept till its maturity and present the same before the drawee on its due date to collect its amount. Accordingly on the due date the bank present the bill before the drawee and collects the amount of the bill. Then the bank credits the proceeds of the bill to the bank account of the depositor (drawer or holder). If bill is dishonoured, the bank will return bill to the depositor. For this service the bank debits the account of the depositor with certain amount of charges.

On depositing the bill with the bank for collection purpose, the drawer opens a separate Account called “Bill sent to Bank for collection Account,” in his books of accounts.

(e) Renewal of a bill of exchange : If the drawee or acceptor of a bill is not in a position to make full payment on it on its due date, he can approach the drawer on or before the due date and request him for an extension of time for payment.

Thus, renewal of a bill of exchange refers to drafting a new bill of exchange in cancellation of earlier bill of exchange by drawer at the request of drawee.

Note that in most cases, the drawer will not agree to a renewal unless a part payment of the amount due is made in cash and the interest on the unpaid balance for extension of time is also taken into consideration. (Such interest is either paid in cash immediately or is included in the amount of the new bill.)

(f) Ways to renew a bill of exchange :

(1) New bill is drawn without interest for extended credit period :

• A new bill is drafted and accepted equal to the amount of old bill for the extended period of credit.
• The drawer or holder of bill accepts the part payment and drafts a new bill for the balance amount for the extended credit period.

(2) New bill is drawn with interest for extended credit period :

• The drawer or holder receives the interest in cash and drafts a new bill for the amount equal to the amount of that old bill for the extended credit period.
• The drawer or holder receives the part payment along with interest on the balance amount in cash and drafts a new bill for the balance amount for the extended credit period.
• The drawer or holder receives only part of the bill amount of bill and drafts a new bill for the balance amount plus interest due thereon for the extended credit period.

The drawer may renew the bill even after its dishonour on maturity. In such a case, noting
charges may be recovered immediately or added to the amount of new bill.

(g) Insolvency of Acceptor / Drawee on or before due date of a bill :A person whose liabilities are greater than his assets and such liabilities he cannot pay in full, is called insolvent or bankrupt person. If the drawee or acceptor of a bill is declared insolvent, his acceptance is deemed to be dishonoured. Thus, as soon as the drawee or acceptor is declared insolvent, all parties to the bill will treat the bill as dishonoured and pass appropriate entries. If insolvent person owns and possesses any property, it is sold by a liquidator appointed by the court and proceeds so obtained is distributed among the creditors as per the ratio of their dues. Thus, drawer or holder recovers part of the amount due from insolvent drawee’s property. The unsatisfied balance which is not recovered is treated as Bad debts and debited to ‘Bad debts Account’ in the books of drawer and credited to ‘Deficiency Account’ in the books of drawee or acceptor.

(h) Retirement of a bill of exchange : If the drawee or acceptor desires to pay the amount of the bill before its due date, he may approach its holder and offer to make an early payment, generally in reborn for a discount or rebate. If the holder of the bill agrees to the proposal, and accordingly drawee makes payment before maturity, the bill is said to be retired.

Retirement of a bill, thus, means its payment by the drawee or acceptor before its due date, generally at a discount or rebate. Such rebate or discount is an expense to the party (i.e. drawer) receiving the payment and gain to the party (i.e. drawee) making the payment.

Pro Forma journal entries with respect to bills transactions in the books of Drawer and Drawee :

Pro Forma ledger accounts :

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By going through these Maharashtra State Board 12th Science Biology Notes Chapter 13 Organisms and Populations students can recall all the concepts quickly.

Maharashtra State Board 12th Biology Notes Chapter 13 Organisms and Populations

Introduction-

• Ecology : Ecology is a study of the interactions : among organisms and between the organisms and their physical (abiotic) environment.
• E. Haeckel introduced this term. Reiter used the term ecology for the first time.
• Four sequential levels with increasing complexity of ecological (biological) organizations are organism, Populations, Communities and Biomes.
• Organism : Individual which is the basic unit of ecological hierarchy is called organism.
• Population : Organisms of same kind inhabiting a geographical area is called population.
• Community : Several populations of different species in a particular area makes a community.
• Land biome : A large regional terrestrial unit : delimited by a specific climatic zone with typical major vegetation and associated fauna.

Organisms and the environment-

1. In ecology organismic level consists of its physiology, ways of adaptation to the surrounding environment, survival techniques and propagation, etc.

The rotation of earth along with its tilted axis, cause seasons. Due to seasons there are rain and snow which demarcate the major biomes of the earth. E.g. desert, tropical rain forest, temperate forest, coniferous forest, grassland, tundra, etc. are six major terrestrial biomes.

Biomes → Habitats → Biotic components. E.g. plants, pathogens, parasites and predators.

3. Ethology : Study of behaviour of animals in relation to their environment is ethology. The term was coined by Hilaire. Term popularised by W. M. Wheeler.

4. Bionomics : The study of relation between. organisms to their environment is called bionomics. Lankester (1890) coined this term.

5. Environmental biology (Modern ecology) : Study of functional or physiological interrelationships between the organism and their surroundings. G. L. Clarke (1964) and Odum (1969) introduced this term.

6. Biosphere : All the ecosystems on earth constitute biosphere.

7. Habitat and Niche :

• Habitat : Place or area where a particular  species lives is called habitat.
• Factors deciding presence of organisms in a particular habitat : Sunlight, average : rainfall, annual temperatures, type of soil, topographic factors, etc.
• Types of habitats : Arboreal, terrestrial, aerial, aquatic, etc.
• Microhabitat : Small part of the habitat which forms immediate surrounding of an organism.
• Niche : The functional role played by an organism in its environment is called niche. Term given by J. Grinnell. Niche includes various aspects of the life of an organism like diet, shelter, and its link with physical and biological environment.
• Habitat is a postal address while niche is the profession of organism.

(7) Types of niche :

Major Abiotic Factors –

1. Key abiotic factors : Ambient temperature, availability of water, light and type of soil.

(1) Temperature :

(i) Ecologically relevant environmental factors showing seasonal variations.

• Progressive decrease of the temperature from the equator towards the poles and from plains to the mountain tops.
• In polar areas and at high altitude : below zero °C.
• Tropical deserts : more than 50 °C in summer.
• In thermal springs : 80 to 100 °C.
• In deep sea hydrothermal vents : about 400 °C.

(ii) Distribution of animals and plant species is mainly dependent on the ambient temperature. Animals are geographically distributed according to their levels of thermal tolerance.

(iii) Temperature can affect the kinetics of enzymes in the body and thus alter the basal metabolism, organism’s activity and other physiological functions.

(iv) Eurythermal : Organisms that can tolerate and thrive in a wide range of temperature fluctuations are called eurythermal.

(v) Stenothermal : Organisms restricted to a narrow range of temperatures are called stenothermal.

(2) Water :

• Water is the second most important factor influencing the life of organisms.
• Life on earth originated in water and can sustain only due to water.
• Availability of water changes according to geographical regions. It also decides the productivity and distribution of plants.
• Even for aquatic organisms the chemical composition and pH of water are important qualities.

Salinity or the Salt concentration : Unit of salinity is parts per thousand. (%o)

• Inland waters : Salinity is less than 5%o.
• Sea : 30 – 35 %o
• Hypersaline lagoons : 100%o
• Euryhaline : Organisms that can tolerate wide range of salinities.
• Stenohaline : Organisms that Eire restricted to a narrow range of salinity.
• Many freshwater animals cannot live for long in sea water and vice versa because of the osmotic problems they would face.

(3) Light :

• Sunlight is the ultimate source of energy. Photosynthesis depends upon the availability of sunlight. Hence for autotrophs it is a very essential abiotic factor.
• Species of herbs and shrubs growing in forests are adapted to photosynthesis even under very low light conditions because they are constantly under a canopy of tall trees.
• Flowering of plants is dependent on sunlight to meet their photoperiodic requirement of the plants.
• In animals the diurnal and seasonal rhythms are dependent on the sunlight. Foraging, reproductive and migratory activities of animals depend upon photoperiod.
• The availability of light on land is closely linked with that of temperature since the sun is the source for both.
• In oceanic depths (> 500m) the environment is perpetually dark and its inhabitants are well adapted to this dark life. They are carnivorous.

(4) Soil :

• Climate of a place determines the nature and properties of the soil.
• The weathering process, type of soil (sedimentary or transported), pattern of soil development, soil composition, grain size differs from place to place. Therefore, the soil characteristics are also varied.
• The percolation and water holding capacity of the soils depend upon the soil composition, aggregation of particles and grain size.
• The vegetation in many areas is dependent upon soil parameters such as pH, mineral composition and topography. Based on these characteristics the vegetation and the faunal pattern is seen.
• The sediment-characteristics in the aquatic environment, determine the type of resident benthic animals.

2. Types of organisms according to abiotic factors : The abiotic factors change due to diurnal and seasonal variations. For survival, organisms adapt to these variations in the following four ways. By these mechanisms they maintain homeostasis or steady internal state.

Adaptation-

1. Adaptations enable the organism to survive and reproduce in its habitat.
2. Adaptations are of following types :

(1) Physiological adaptations : Thermoregulation and Osmoregulation.
(2) Behavioural adaptations :

• Migration
• Hibernation and aestivation
• Behavioural responses to cope with variations in their environment.
• Desert lizards → bask in the sun and absorb heat when temperature is cold. → move into shade → when the ambient temperature is more.
• Burrowing into the sand for escaping heat.

(3) Morphological adaptations :

• Desert plants : Thick cuticle on leaf surfaces, sunken stomata → minimizing loss of water through transpiration. CAM → Crassulacean acid metabolism pathway of photosynthesis. Modified leaves to spines, flattened green stems performing photosynthesis.
• Mammals from cold climate region : Shorter snout, ears, tail and limbs to minimize the loss of body heat (Allen’s Rule).
• Aquatic polar mammals → thick layer of blubber below their skin → insulator → minimize loss of body heat.

Population-

1. Population : Group of organisms in a well- defined geographical area which shares or competes for similar resources and which potentially interbreed with each other is called population. At the population level natural selection operates and desired traits are evolved.

2. Population ecology : An important area of ecology that links ecology to population dynamics, genetics and evolution.

3. Population attributes : Basic physical characteristics of population are called population attributes.

(1) Natality : Birth rate of a population.

• Crude birth rate : Used for calculating population size (number of births per 1000 population/year).
• Specific birth rate : Used when a specific criterion such as age has to be considered.
• Absolute Natality : The number of births under ideal conditions when there is no competition and resources such as food and water, etc. are abundant.
• Realized Natality: The number of births when environmental pressures are operating on the population.

(2) Mortality : Death rate of a population.

• Absolute Mortality : Number of deaths under ideal conditions when there is no competition and resources, like food and water are abundant.
• Realized Mortality : Number of deaths when environmental pressures are operating on the population.
  Absolute mortality will always be less than realized mortality.

(3) Sex ratio : The ratio of the number of individuals of one sex to that of the other sex is sex ratio. Birth, death, immigration and emigration, etc. affect sex ratio.

Evolutionary stable strategy (ESS) : The males and females of a population should be in a ratio of 1 : 1.

(4) Age distribution and Age pyramid : Age pyramid is the figure plotted for a population to show age distribution. Age distribution is done in following way : Pre-reproductive (0-14 years), Reproductive (15-44 years) and Post-reproductive (45-85+ years).

(5) Population size or population density (N) : Population density is the number of individuals present per unit space in given time. Population’s status in the habitat indicate population size. The biomass is also more meaningful measure of the population size.

(6) Population Growth : The size of a population keeps changing with time, depending on various factors including food, predation pressure and adverse weather.

Density of population in a habitat during a given period, fluctuates due to changes in four basic processes : (i) New births (ii) Immigration (iii) Deaths (iv) Emigration.
Of these new births and immigration increase the population growth while deaths and emigration decrease population growth.

(7) Immigration (I) : Number of individuals of the same species that enter the habitat from elsewhere during specific time period under consideration.

(8) Emigration (E) : It is the number of individuals of the population who leave the habitat during specific time period.

So, if N is the population density at time ‘t’, then its density at time ‘t + 1′ can be calculated
as, Nt + 1 = Nt + [(B + I) – (D + E)]

4. Growth Models :

• Exponential growth.
• Logistic growth
• Verhulst-Pearl Logistic Growth : A plot of N in relation to time (t) results in a sigmoid curve. This type of population growth is called Verhulst-Pearl Logistic Growth.
• Since resources for growth of most animal populations are finite and become limiting sooner or later, the logistic growth model is considered as a more realistic one.

Population Interactions-

1. Interactions are of two types in the living species :

• Intraspecific : Interaction existing between organisms of same species’ population.
• Interspecific : Interaction between members of different species.

2. Classification of population interactions :

(3) Gause’s ‘Competitive Exclusion Principle’ :

• This principle states that two closely related species competing for the same resources cannot co-exist indefinitely and the competitively inferior one will be eliminated eventually.
• The Gause’s principle may be true if resources are limiting, but not otherwise. More recent studies do not support such gross generalisations about competition.

Important information :

• Instrument used to measure the height of forest trees is called hypsometer.
• World Environment day : 5th June
• World Population day : 11th July
• World Earth day : 22nd April
• World Ozone day : 16th September

వందే శివం శంకరమ్

By going through these Maharashtra State Board Bookkeeping and Accountancy 11th Notes Chapter 6 Bank Reconciliation Statement students can recall all the concepts quickly.

Maharashtra State Board 11th Accounts Notes Chapter 6 Bank Reconciliation Statement

Meaning, Importance, And Utilities of Accounting Documents-
The documents which explain all the basic facts (information) of cash and banking transactions such as the date, amount, parties, and purposes of transactions are called Accounting documents. Accounting documents also provide evidence of financial transactions on account of the introduction and increasing use of the Internet and mobile banking, the functioning of the modern bank has undergone a drastic change. Payments and receipts of cash through the internet and mobiles generate instant and automatic evidence useful for concerned parties. Even today payments and receipts are made through cheques and drafts. Similarly a large number of banking transactions are completed by the account holders through visiting the banks.

Types of Bank Documents-
1. PAY-IN-SLIP: Pay-in-slip is an important source document used by the account holder for depositing cash as well as cheques into the bank account. A pay-in-slip book consists of 10 slips or 100 slips. Each slip is divided into two parts, each of which can be separated easily from the other. The longer part of the slip is called foil and the smaller part is called counterfoil.

Before depositing cash or cheque into the bank, account holder is required to fill up both the parts of pay-in-slip. Information regarding name of the account holder, his account number, amount in figures and words, signature, etc is required to be filled up on both the parts of the pay-in-slip. The cashier of the bank accepts cash or cheque along with the duly filled up pay-in-slip. The foil of pay-in-slip remains with the bank for making records in the books of the bank and the counter foil after stamping and signature of the cashier is given back to the account holder for his own reference. Separate pay-in-slips are used for depositing cash and cheque.

The pay-in-slip is a bank printed form provided by the bank free of charge to the account holders to facilitate them to deposit cash or cheque into the bank. On the basis of slip entries are made in the cash book as well as in the bank passbook.

Contents: The pay-in-slip contains the following details:

• Name of the bank and its branch. Usually, they are printed.
• Date of banking transaction.
• Name of the account holder.
• Account No.
• Types of Account.
• Amount deposited in words as well as in figures.
• Form of amount deposited i.e. cheque/cash.
• Signature of the depositor.
• Signature of officer in charge and stamp of bank.
• On the backside of the pay-in-slip, the details of cash or cheque deposited are given.

(a) Specimen form of pay-in-slip is given below: From side.

(b) Reverse (Back-side) of Pay-in-Jip :

Withdrawal Slip:
A source document which is used by the account holder for withdrawing cash from the bank is called withdrawal slip. It is used to withdraw the amount from Savings Account. Before withdrawing cash from the bank, an account holder is required to fill up a withdrawal slip. Information regarding the name of the account holder, his account number, amount in figures and in words, date, signature, etc. are required to be filled up. The account holder is also required to sign on the back of the withdrawal slip. Both the signatures made on withdrawal slip must be matched with the specimen signature recorded in the computer. This is to avoid malpractices.

A person other than an account holder can also withdraw money with the help of a withdrawal slip. In such case, a person appointed to withdraw the money is required to sign on the reverse of the withdrawal slip below the signature of the account holder. While withdrawing the money from the bank, the withdrawal slip must be accompanied by the bank passbook. An account holder is not allowed to carry withdrawal slips outside the bank premises. It is a bearer document. This is because the person holding duly filled in and signed by the account holder can easily withdraw the amount from the bank by signing on the backside. In the case of use of withdrawal slip, account holder gets no document from the bank on such withdrawal.

Contents: Withdrawal slip contains the following details:

• Name of the Bank and its branch. They are generally printed.
• Date of withdrawal of cash.
• Name of the account holder.
• Account Number.
• Amount in words as well as in figures.
• Signature of account holder.

Specimen form of a withdrawal slip is given below.

Bank Pass Book:
A bank passbook is a small booklet given by the bank to the account holder free of charge. In the passbook, an account holder’s transactions with the bank are recorded by the banker chronologically. A passbook is a copy of ledger account appearing in the books of bank. The entries in the passbook are made by the banker.

Nowadays printed entries in the passbook are made through computer. This book has a number of pages and on each page, there are several columns like Sr. No., date, particulars, cheque or withdrawal slip nos., amount deposited, amount withdrawn, balance amount and initials of bank clerk, etc. An account holder is required to carry a bank pass book whenever he goes to bank for a transaction. The bank passbook serves as an identity of the account holder. Account holder cannot pass any entry or make any changes on the Bank passbook.

Importance:

• Bank passbook shows the balance of amount i.e. standing position of account holder with the bank on a particular date.
• It is a documentary proof accepted as an evidence of banking transactions in the court of law.
• It gives confirmation by the bank that all the transactions are made through the bank.

Contents:

• Date of transaction.
• Particulars regarding banking transactions.
• Cheque No.
• Amount withdrawn from the bank.
• Amount deposited into the bank.
• Balance amount.
• Signature of Bank clerk or officer.

Specimen form of the Bank Pass Book is given below:

Bank Statement:
A statement which shows the details of the banking transactions of the account holder during a specific period of time is called a bank statement. It is issued by the banker to its current account holders every month or after a fixed interval of time. It is usually issued by the bank at the end of every month. It may be issued by the bank whenever demanded by the current account holders. It substitutes to the bank passbook.

The current account holder gets a bank statement in place of the bank passbook. Nowadays, many schedule bank instead of issuing the bank passbook, issues a bank statement to its current account holders as well as savings account holders. Periodical information about the deposits of money and cheques in the bank account, withdrawals, issue of cheques opening balance and closing balance, etc., are recorded in the bank statement. Information provided in the bank statement is useful to the account holder to prepare his business plans.

Under computerised accounting system, the printouts of the bank statement are issued to Current Account holders.

Importance:

• The Bank statement provides the information to current account holder about his banking transactions and balance position with the bank.
• By referring bank statement businessman makes arrangement for payments.
• By referring bank statement, the businessmen can try to arrange for overdraft facility from the bank.
• Businessman knows about the clearing of the cheque deposited and issued.

Contents:

• Date of banking transactions.
• Particulars of banking transactions entered.
• Cheque numbers.
• Withdrawal slip nos.
• Amount deposited into the bank.
• Amount withdrawn from the bank.
• Balance amount.

Specimen of Bank Statement is given below:

Bank Advice: Bank advice is a statement or source document prepared and issued by the bank to inform the account holder that his account has been debited or credited for the amount specified therein. If an account holder gives instructions in writing to the bank to pay certain business expenses like insurance premium, share call money, electricity bill, telephone charges, etc., the bank accordingly makes payments and debits the account of the account holder. Similarly, the bank also collects the earnings as well as incomes like salaries, rent, commission, dividend, discount, etc., of the account holders as per their instructions on their behalf and credit their accounts for the amount so collected.

When a bank makes payments to account holders, it issues debit advice to the concerned account holder to inform that his account has been debited for the payments so made by the bank. A Debit advice is also issued by the bank whenever the bank deducts certain charges or commission from the balance amount of the account holder with the bank for the services rendered. Similarly, when a bank collects the fund as per instructions of the account holder from various parties, it issues a credit advice to the concerned account holder to inform that his account has been credited for the account so collected.

Importance:

1. After receiving debit advice and credit advice, the businessman can update his records from time to time.
2. Bank advice serves as an evidence of the transaction made through bank.

Specimen of a bank advice is given below:

Bank Reconciliation Statement-
1. Introduction: When a businessman opens and operates a current account in a bank, he gets a bank passbook, cheque book and a pay-in-slip book free of charge from the bank to operate his bank account. The bank opens the account holder’s account in its ledger and enters therein all the banking transactions carried on with the account holder. The bank passbook is a small booklet in which banking transactions of account holder are recorded by the bank in chronological order.

Thus, the account holder’s banking transactions are recorded in two different books viz. first they are recorded by businessman (i.e. by account holder) in his three column cash book under bank column and secondly they are recorded in the bank passbook by the bank from the bank ledger. For instance, if an account holder has issued a cheque of ₹ 500 in favour of Mr. Sachin S. Shetty, it is first recorded in the three column cash book on credit side under bank column by account holder and then it is recorded on the debit side of bank passbook by the bank soon after it is paid by the bank. When all the banking transactions of account holder are systematically recorded in the cash book and in the passbook, then balance shown by cash book and balance shown by bank passbook as on particular date must agree with each other.

Many a times bank balance shown by passbook and bank balance shown by cash book do not tally with each other. The account holder prepares a statement showing causes of disagreement between two balances usually at the end of every month.

2. Meaning: Bank Reconciliation Statement is a statement which attempts to explain causes of disagreement of balance shown in cash book and balance shown in Bank passbook. In short a Bank Reconciliation Statement is a statement prepared to disclose causes of difference between the balances shown by cash book and passbook. Importance of Bank Reconciliation Statement lies in the fact that it ensures that the bank balance shown. by cash book is reconciled with that of the bank passbook.

Definition: “A statement which is prepared to reconcile the difference between the balance shown by bank column of cash book and balance shown by bank passbook and also showing causes of disagreement of these two balances is called Bank Reconciliation Statement.”

3. Need And Importance of Bank Reconciliation Statement-

• Proper Records: Bank Reconciliation Statement serves a check or follow up on the banker whether the bank is making proper entries in the passbook for cheque or money deposited into the bank and amount withdrawn or cheques issued from the bank.
• Explanation of Causes of Disagreement: Bank Reconciliation Statement, explains and clarifies the causes of disagreement between the balance shown in the cash book under bank column and the balance shown in the passbook.
• Rectification of Errors or Omissions: Bank Reconciliation Statement helps to rectify the mistakes or omissions that take place in the books maintained by the banker as well as the customer.
• Confidence in Bank: In the absence of a Bank Reconciliation Statement, a customer will lose confidence in the bank, because the customer cannot be sure of the correctness of the bank balance depicted in the bank passbook.
• Reduction in the chances of frauds: The Bank Reconciliation Statement helps to reduce the chances of frauds committed by the staff handling the cash.
• Delay in collection of cheques: The Bank Reconciliation Statement explains any delay in the collection of cheques.

Reasons For Differences in Balances-

Reasons or causes responsible for difference in balance shown by passbook and balance shown by cash book are explained below:
1. Some of the banking transactions are entered in the cash book and pass book on different dates, e.g. as soon as cheques are sent to the bank, entries are made in the cash book. But the bank records the same in the passbook only when the cheques are realised, (cheques are deposited but not cleared), then on the date of deposit of the cheques, bank balance in cash book will go up. But passbook balance will not go up, and balance in passbook appears as it is.

2. If some mistakes or omissions are committed by the bank clerk in the pass book or if mistakes or omissions are committed by the businessman in recording business transactions in the three column cash book, then there will be a difference in the balance shown by the passbook and the balance shown by cash book.

3. If banking transactions are entered twice by the bank clerk in the passbook or if they are entered twice by businessman in his cash book, then difference in bank balance in cash book and balance in bank passbook are bound to occur.

4. If banking transactions are recorded by a businessman on the wrong side or in the wrong column of the three-column cash book, difference between balance shown by pass book and cash book are bound to occur.

5. The difference between the balance shown by the Cashbook under Bank column and the balance shown by the passbook also occurs on account of the following reasons:

• When cheques are issued but not presented for payment.
• When direct deposit is made into the bank by the client. .
• Dividend/Interest/Commission collected by the bank but not shown in the cash book.
• Bank charges/direct payment to clients made by the Bank, but not shown in the cash book.
• Dishonour of cheque intimation not received from the bank to record in the cash book.

Specimen Form of Bank Reconciliation Statement-

Bank Reconciliation Statement as on 31st March, 2004-

Formulae of Bank Reconciliation Statement:

(A) When bank balance as per Cash Book is given:

• Cheque issued but not presented for payment.
• Interest and dividend collected by the bank and credited in the passbook, but are not recorded in the cash book
• Direct deposit made by the customer into the bank and credited in the passbook.
• Interest on deposit allowed by the bank and credited in the passbook, but not recorded in the cash book.

Less:

• Cheque deposited into the bank but not realised.
• Commission and bank charges debited by the bank in the passbook but same are not recorded in the cash book.
• Insurance premium or any other expenses paid by the bank recorded in the passbook but is not recorded in the cash book.
• Dishonour of a bill or cheque, recorded in the bank passbook, but not entered in the cash book.

(B) When Overdraft as per Cash Book is given :

Add:

• Cheque deposited into the bank but not realised.
• Commission and bank charges debited by the bank in the passbook but same are not recorded in the cash book.
• Insurance premium or any other expenses paid by the bank and debited in the passbook but is not recorded in the cash book.
• Dishonour of a bill or cheque, recorded in the bank passbook, but not entered in the cash book.
• Interest on Bank overdraft debited in passbook only.

Less:

• Cheque issued but not presented for payment.
• Interest and dividend collected by the bank and credited in the passbook but not recorded in the cash book.
• Direct deposit made by the customer into the bank and credited in the passbook but not entered in the cash book.
• Interest on deposit allowed by the bank and credited in the passbook, but not recorded in the cash book.

(C) When Bank balance as per pass book is given:

Add:

• Cheque deposited into the bank but not realised.
• Commission and bank charges debited in the passbook by the bank, but same are not recorded in the cash book.
• Insurance premium or any other expenses paid by the bank and debited in the passbook but same is not recorded in the cash book.
• Dishonour of cheque or bill of exchange recorded by the bank in passbook but not entered in the cash book.

Less:

• Cheque issued but not presented for payment.
• Interest and dividend collected by the bank and credited in the passbook but not recorded in the cash book.
• Direct deposit made by customer into the bank and credited in the passbook but not entered in the cash book.
• Interest on deposit allowed by the bank and credited in the passbook, but not recorded in the cash book.

(D) When Overdraft as per pass book is given:

Add:

• Cheque issued but not presented for payment.
• Interest and dividend collected by the bank and credited in the passbook but not recorded in the cash book.
• Direct deposit made by customer into the bank and credited in passbook but not entered in the cash  book.
• Interest on deposit allowed by the bank and credited in the passbook but not recorded in the cash book.

Less:

• Cheque deposited into the bank but not realised.
• Commission and bank charges debited in the passbook by the bank but same are not recorded in the cash book.
• Insurance premium or any other expenses paid by the bank and debited only in the passbook.
• Dishonour of cheque or bill of exchange recorded by the bank in the passbook but not entered in the cash book.
• Interest on Bank overdraft debited in passbook only.

Position in Cash Book

• Bank balance as per cash book means debit balance as per cash book.
• Overdraft as per cash book means credit balance as per the cash book.

Position in Pass Book

• Bank balance as per pass book means credit balance as per passbook
• Overdraft, as per pass book means debit balance as per pass book,

(B) Method to ascertain items to be added to and deducted from balance.

By going through these Maharashtra State Board Bookkeeping and Accountancy 11th Notes Chapter 4 Ledger students can recall all the concepts quickly.

Maharashtra State Board 11th Accounts Notes Chapter 4 Ledger

Meaning And Definition of Ledger-

(i) Meaning : Ledger is another important and principal book of accounts in which a businessman keeps individual records of persons, properties, expenses, incomes, gains and losses. It is the end point of entries made in the journal, or subsidiary books. Ledger may be in the form of a bound register or cards or separate sheets may be attached and maintained in a loose leaf binder. For every person with whom the business keep dealings, a separate account is prepared in the ledger. Similarly, a separate account is maintained in the ledger for each kind of assets, expenses, losses and gains.

As and when business transactions occur, they are first recorded in the journal and subsequently those recorded entries from journal are transferred and posted to the respective account in the ledger. Each ledger account is totalled at the end of the accounting period. This book contains many pages and each page is called ledger folio. The relationship between the business and a particular account on given date can be ascertained only from the ledger. For example, if a businessman wants to know on a particular date the amount due from a certain customer or debtor, it can be known easily only from the ledger. Various transactions pertaining to different dates of a particular account may be spreaded over in the journal on various pages but in the ledger they are found on one page.

Ledger is also called as book of final entry. The word ‘Ledger’ is originated from the Latin word ‘Ledger’ which means ‘to contain.’ Ledger is the collection of all the account. Ledger contains all the account opened and operated.

(ii) Definition: According to S.P. Jain’s and K.L. Narang’s Advanced Accountancy,
“A Ledger Account may be defined as a summary statement of all the transactions relating to persons, assets, expenses and revenues, which have to be taken place during a given period of time and show their net effect.” According to the Oxford Dictionary, ledger is the main record of the accounts of a business, traditionally, a ledger was a large book with separate pages for each account. In modern systems ledger may consist of separate cards or computer records.

Importance of Ledger-

Importance of Ledger is explained as follows :

• Ledger is useful for maintaining individual records of person with whom the business keep dealings.
• It keeps records of every item of properties, expenses, incomes, gains and losses.
• Amount due from various debtors can be known easily and quickly from the ledger. This will help the businessman to send reminders to recover the outstanding amount due from the debtors.
• Amount due to suppliers or creditors can be known easily and quickly to make timely payments to gain their confidence.
• Trial balance can be prepared easily on the basis of balances ascertained from the ledger accounts. Therefore ledger is necessary for preparation of trial balance.
• It is easier to prepare business planning and strategies on the basis of balances shown by the ledger accounts.
• The financial position of the business can be easily known by referring to balances of various assets and liabilities.
• Various income statements can be prepared on the basis of the balances shown by the ledger accounts.
• Ledger is useful tool to control various expenses because ledger shows accounts of various expenses with total amount spent on them.
• Ledger facilitates the management to get classified information of various accounts such assets, liabilities, capital etc. They can easily prepare plans for various business activities.
  Ledger also facilitates decision making process.

Contents of A Ledger-

The contents of a ledger are explained as below:
A ledger contains many pages and each page is called ledger folio. Each page of a ledger is serially numbered. Each ledger account has two main sides viz. left hand side which is called the debit side and right hand side which is called the credit side. A list of ledger account in alphabetically order is given on the first page of a ledger which is called as an ‘Index’. Each side has four sub-columns. These sub-columns are:

• Date Column: In this column, the date of transaction is written. Date of transaction is written in order of year, month and date. In the beginning of each page the year, month and date are written. For subsequent transactions on the same page only dates are written for the same month and year.
• Particulars Column: In the particulars column the name of the account is written. In the particulars column on the debit side of the account, the name of the account to be credited is written and on the credit side in the particulars column, the name of the account to be debited is written.
• Journal Folio No. Column: In Journal Folio No. (J.F. No.) column of the ledger, the page number of the journal from which the entry is posted is recorded in red ink for cross reference. By referring to the journal page as shown in the ledger, a businessman can understand the nature of transaction by
• reading the journal entry and narration.
• Amount Column: In this column the amount of the transaction is entered in figures.

Specimen of The Ledger :

Steps to be Taken For Preparation of Ledger Account:
(1) At the top of ledger, in the middle, the name of the account should be written.

(2) The date of transaction should be written in date column in the same order as we record in the journal.

(3) In the particulars column on the debit side of the ledger account the name of account credited is written and in the particulars column on the credit side of ledger account, the name of account debited is written. For example the following journal entries are posted in the cash account as follows:

(4) Opening balance of ledger account should be shown as Balance (b/d). Real account like Cash A/c, Furniture A/c, Goods A/c, Machinery A/c. etc. always show debit balances, and liabilities like Capital A/c, Sundry Creditor’s A/c. Bank Loan A/c, etc. always show credit balances.

Posting of Entries From Journal And Subsidiary Books to Ledger-

(i) Posting of entries from journal to ledger :
Transferring or recording journal entries from journal to the respective ledger account is called ledger posting. Ledger posting implies entering the information in the ledger from journal for individual records. Ledger posting is done from time to time by the accountant. The account credited is posted on the credit side of that account and account debited is posted on the debit side of the same account. Process of ledger posting is continued throughout the year. At the end of the financial year all ledger accounts are closed and thereafter they are totalled and balanced.

(ii) Posting” of entries from subsidiary books to ledger:

(1) Single column and double column cash book: While posting the entries from single column and double columns Cash book, Cash Account and Bank Account are not opened. Cash column and Bank column are served as Journal as well as Ledger. Each Person’s Asset’s Account is opened and entries passed on the debit side of cash book are posted to credit side of Person’s A/c or Asset’s A/c. Similarly entries appeared on the credit side of cash book are posted to debit side of related Person’s A/c or Asset’s Account.

(2) Purchase Book: The total of posted to Purchases at the end of the month or year is posted to Purchases Account on the debit side as ‘To Sundries as per Purchases book”. Each Supplier’s Account is opened and related entries are recorded on the credit side as “By Purchases A/c.”

(3) Purchase Return Book / Return Outward Book: The total of Purchase Return Book is posted to Purchase Return A/c as “Sundries as per Purchase Return Book”. Each Supplier’s account is debited with the account of goods returned as ‘To Purchase Return A/c.”

(4) Sales Book: The total of Sales book at the end of month or year is posted to Sales A/c on the credit side as “By Sundries as per Sales Book”. Each Customer’s Account is opened and related entries are recorded on the debit side as ‘To Sales A/c”.

(5) Sales Return Book: The total of Sales Return Book is posted, to debit side of Sales Return Account as ‘To Sundries as per Sales Return Book”. Each Customer’s A/c is credited with the amount of goods returned as “By Sales Return A/c”.

(6) Journal Proper: Each entry from journal is posted to respective Account in the ledger.

Balancing of Ledger account-
Balancing of ledger account means finding the difference between the heavier total, and lighter total of ledger account and recording that difference on lighter total side.
At the end of the accounting year all accounts operated in the ledger are totalled and balanced.
Steps required for balancing of ledger account are given below:

• First do totalling of debit side and credit side of ledger account separately on rough sheet.
• Find out difference by subtracting lighter total from heavier total. Such difference is called balance.
• Draw a single line before making the totals.
• Draw double lines across the amount column after the totals are made.
• If total of debit side of ledger account is heavier than total of credit side of that account, the balance is called debit balance and is written on credit side (i.e. on the side where total is lighter) as “By Balance (c/fd.) or (c/d)”.
• If total of credit side of ledger account is heavier than total of debit side of that account, the balance is called credit balance, and is written on debit side (i.e. on the side where total is lighter) as “To Balance (c/fd) or (c/d),”
• Last year’s closing balance, becomes opening balance of current year. If there is debit balance it should be shown on debit side of concerned account as “To Balance (b/d) or (b/fd)” and vice versa.

Preparation of Trial Balance-
(i) Introduction: As and when business transactions take place, the same are first recorded in the journal in the summarised form and subsequently they are posted to respective ledger accounts. This in short is known as journalisation and ledger posting respectively. This process of normalisation and ledger posting are continuously done throughout the accounting year and then at the end of the accounting year all ledger accounts are closed, totalled and balanced.

On totalling and balancing, some ledger accounts show debit balances and some ledger accounts show credit balances. In rare cases some ledger account do not show any balance. After this process, a statement is prepared by businessman or accountant wherein total of debit side and credit side of every ledger account or net balance shown by every ledger account is systematically recorded to ascertain arithmetical accuracy and to detect errors or frauds committed in the business. This statement is called the trial balance.

(ii) Meaning: Trial balance is an abstract or list of all the ledger accounts as on a specified date showing debit total and credit total of all the accounts or their balances. A trial balance may be prepared on any date, but it must be prepared by a businessman at the close of the accounting year.

(iii) Definitions: (1) “It is the final list of balances, totalled and combined.” – Rolland
(2) “It is a list of abstract of the balances or of total debits and total credits of accounts in a ledger, with the purpose being to determine the equality of posted debits and credits and to establish a basic summary for financial statements.” – Eric Kohler.

(iv) Types of Trial Balance: A trial balance can be prepared in one of the following two forms, viz.
(i) Gross trial balance, and
(ii) Net trial balance. Each of them is discussed below:

(i) Gross Trial Balance: Gross Trial Balance is a type of trial balance in which total of debit column and total of credit column of all ledgers are recorded and posted in respective columns of trial balance. Gross trial balance is prepared by transferring the total of debit column and total of credit column from each ledger account and posted and entered in the respective columns of the trial balance. Gross Trial Balance is not so popular or common in the business world.

(ii) Net Trial Balance: Net trial balance is a type of trial balance in which net balance shown by each ledger account is systematically transferred and recorded. Net trial balance is prepared by transferring net balance shown by ledger accounts in respective columns, i.e. debit balance in debit column and credit balance in credit column of the trial balance. Ledger account which does not show balance is not transferred to trial balance. Net trial balance is more common and popular in the business world. It is extensively used by the business people.

The following illustration will explain the difference between Gross trial balance and Net trial balance.

(v) Methods of preparing trial balance :
Trial balance can be prepared in any one of the following 2 forms : (i) Vertical or Journal form of Trial Balance and (2) Horizontal or Ledger form of Trial Balance.

(1) Vertical or Journal Form of Trial Balance

Explanation of columns:

• Particulars Column: In this column name of account is written.
• Ledger Folio (L.F.): In this column page number of ledger from where balance is extracted and transferred to trial balance is written.
• Debit balance: In this column accounts having debit balances are written in figures.
• Credit balance: In this column accounts having credit balances are written in figures.
• After writing all the balances in debit column and credit column, amounts written in debit column and amounts written in credit column are totalled separately. If the total of debit column agrees with the total of credit column, it is said that trial balance is tallied.

(2) Horizontal or Ledger Form of Trial Balance:

This trial balance has two main sides viz left-hand side and right-hand side. On the left-hand side debit balances are written down and on the right-hand side, credit balances are noted down.
Each side has three columns viz. name of the accounts, L.F. No. and Amount.

Explanation of columns:
(1) Left-hand side: In the first column names of the accounts having debit balances are written.
In the second column i.e. L.F. column Page No. of Ledger from where balance is extracted and transferred to Trial balance is written. In the third column balance amount of the account is written in figures.

(2) Right-hand side: In the first column names of the accounts having credit balances are written.
In the second column i.e. L.F. column Page No. of Ledger from where balance is transferred is written.
In the third column balance amount of Account is written in figures.

(vi) Utility of Trial Balance :
(1) Trial balance is prepared to know the final balance of every account.

(2) Trial balance is prepared to ascertain arithmetical accuracy of ledger accounts. If total of debit column and total of credit column of the trial balance tallies with each other, then it is proved that, no mistakes of whatsoever nature, has been committed in writing accounts. It is also confirmed that the posting to ledger account in terms of debit and credit amount, carry forward, etc. are accurate.

(3) Trial balance is also useful for preparation of final accounts like Trading Account, Profit and Loss Account and Balance Sheet. It is also useful to prepare other important financial statements.

(4) To locate accounting errors committed in writing accounts, a trial balance is used. Trial balance will not tally if mistakes or omissions in writing accounts carry forward, etc. are committed.

(5) Trial balance provides a condensed picture of each account opened and operated in the ledger. With the help of trial balance, the position of any account prepared in the ledger can be easily known or found without referring to the ledger.

By going through these Maharashtra State Board Organisation of Commerce and Management 11th Notes Chapter 8 Introduction to Management students can recall all the concepts quickly.

Maharashtra State Board Organisation of Commerce and Management 11th Notes Chapter 8 Introduction to Management

Management-
Managerial → Derived from Italian words

• Manus – hand
• agere – to act

Meaning and Definition:

• Mary Parker Follet: “ Management is an art of getting things done through others”.
• Henry Fayol : “ To manage is to forecast and plan, to organize, to command, to co-ordinate and to control”.
• Fedrick Winslow Taylor : “ Management is knowing exactly what is to be done and seeing that it is done in the best possible manner*’.
• George Terry : “Management is the process consisting of planning, organizing, actuating and controlling, performed to determine and accomplish the objectives by the use of people and resources. ”

Characteristics of Management-

1. Management is Dynamic
2. Management is Inborn Quality
3. Management is a Social Process
4. Management is a Continuous Process
5. Management is Different from Ownership
6. Management is Intangible
7. Management is Situational
8. Management is Goal Oriented
9. Management is Universal
10. Management is a Group Activity

Level of Management-

• Top – Board of Directors, President, Chief Executive Officer, Managing Directors, etc.
• Middle – Functional Managers i.e. Finance Manage, Production Manager, Sales Manager, etc.
• Lower – Superintendents, Supervisors, Foremen, etc

Functions of Top Level Management-

1. Long term objectives
2. Frame the plans and policies
3. Implementation of policies
4. Create various epartments and positions
5. Appoint head, or Incharge, managers to carry out activities
6. Evaluate the performance of various departments.
7. Implementation of policies Functions of Middle Level Management

Functions of Middle Level Management-

1. link between top and lower level management
2. understand plans and policies framed by top management
3. prepare action plan according to the goals to achieve
4. assign duties and responsibilities to the staff
5. to train the staff for carrying out activities
6. appoint lower level staff
7. give timely report to top level management and co-ordinate departmental activities

Functions of Lower Level Management-

1. work as per instructions from middle level management /In charge
2. assign work to the subordinates
3. give instructions to subordinates
4. direct the subordinate (if necessary)
5. solve the Problems and disputes of subordinates.
6. look after repairs and maintenance of machinery, tools and equipments, etc.
7. conduct quality check of the product or service from time to time.

Management as an Art

• “Art is the bringing about a desired result through the application of skills”

Relation Between Art And Management

1. Personal Skills: Solve the resource problems by individual way
2. Creativity: Ability to find new ideas, according to changes in business situation.
3. Regular Practice: Use of different techniques and skills to deal with different people, different situations, different organizations.
4. Personal Abilities: Ability to co-ordinates the activities and guide people.

Management as a Science-

• Science refers to a systematically organized body of knowledge based on proper findings and
  exact principles and is capable of verification.

Relation Between Science And Management

1. Systematic body of Knowledge: Management Principles are based on experiments conducted through management theories and approaches
2. Use of Scientific Method of Observation: Management uses systematic methods of data collections, verification, analysis, interpretation and on this basis taking decisions.
3. Cause and Effect relationship: Management theories are also based on Cause and Effect relationship
4. Universal Applicability of Principles: Principles of Management are universal applied in any condition and situation

Management as a Profession-
A profession may be defined as an occupation backed by specialised knowledge and training and to which entry is regulated by a representative body and duly recognized by the society.

Relation between profession and Management

1. Formal Education: Formal management diploma or degree with training from management from school to work professionally
2. Code of Conduct: Managers have to follow code of conduct based on customs and traditions
3. Expertise: Manager is an expert in practicing his or her knowledge and skill
4. Registration: Managers can take the membership of Chambers of Commerce
5. Restricted Entry: No such compulsion for a manager

Word Meaning:

ancient – in early time; essential – necessary; indispensable – necessary; never ending – endless; creative
– having good imagination; optimum – maximise; techniques – method; exhaustive – complete; character – nature / personality; universal – in general; adaptation – accept tq change; procurement – to obtain; dynamic
– constant change; evaluation – to assess / to judge; static – fixed; forecast – to predict; systematic – in order / well arranged; vision – planning about future goals; utilization – effective use of something; mission – assignment; synchronization – activity of two or more things at same time; evaluate – to assess; purposeful – determined; implementation – to execute; guidance – to instruct / to direct; supervisory – to direct someone; intangible – not physically seen or touched; inherent – built in; continuity – in progression / without a break; context – with reference to topic; innovativeness – new ideas; qualitative – relating with quality; inborn – from birth; backed by – supported; skill – capability; regulated – to control; consistent – stable; practice – to use; organized – arranged in proper way; irrespective – no matter what; findings – to discover; formal education – process of education completed in school and colleges; verification – to find validity of something; stimulate – to encourage; principles – essential; functions – results; theories – judgement / beliefs; approaches – method; conclusions – opinion / judgement; analysis – to investigate / to inspect; interpretation – to review; motivate – to inspire; quantitative – related with numbers.

By going through these Maharashtra State Board 12th Science Biology Notes Chapter 12 Biotechnology students can recall all the concepts quickly.

Maharashtra State Board 12th Biology Notes Chapter 12 Biotechnology

Biotechnology-

1. Biotechnology is defined as ‘the development and utilization of biological forms, products or processes for obtaining maximum benefits to man and other forms of life.
2. The term biotechnology was first used by Karl Ereky in 1919 to describe a process for the large-scale production of pigs.
3. According to OECD (Organization for Economic Cooperation and Development, 1981) -‘Biotechnology is the application of scientific and engineering principles to the processing of materials by biological agents to provide goods and service to the human welfare’.
4. Two phases of the development of biotechnology in terms of its growth :

• Traditional or old biotechnology: Based on fermentation technology using microorganisms as in the preparation of curd, ghee, soma, vinegar, yogurt, cheese making, winemaking, etc.
• Modern or new biotechnology: Based on –
  • The use of rDNA technology, polymerase chain reaction (PCR), microarrays, cell culture, cell fusion, and bioprocessing to develop specific products.
  • Ownership of technology and its socio-political impact.

Principles and Processes of Biotechnology-

1. Two core techniques of modem biotechnology :

(1) Genetic engineering :

(a) Manipulation of genetic material towards the desired end and in a directed and predetermined way, using in vitro process.

(b) Definition of genetic engineering (By Smith): ‘The formation of a new combination of heritable material by the insertion of nucleic acid molecule produced by whatever means outside the cells, into any virus, bacterial plasmid or another vector system so as to allow their incorporation into a host organism in which they do not occur naturally but in which they are capable of continued propagation.

(c) Genetic engineering is also called recombinant DNA technology or gene cloning, as it involves alterations in DNA.

(2) Chemical engineering: Maintaining a sterile environment for manufacturing of useful products like vaccines, antibodies, enzymes, organic acids, vitamins, therapeutics, etc.

2. Different techniques and instruments (devices) for gene cloning/r-DNA technology :

(1) The techniques used in rDNA technology, on the basis of molecular weight: Gel
permeation, osmotic pressure, ion-exchange chromatography, spectroscopy, mass spectrometry, electrophoresis, etc.

(2) Electrophoresis :

• It is used for the separation of charged molecules like DNA, RNA, and proteins, by application of an electric field.
• Different types of electrophoresis: Agarose gel electrophoresis, PAGE, SDA PAGE.

(3) Polymerase chain reaction (PCR) :

• It was discovered by Kary Mullis in 1985.
• Uses of PCR : In vitro gene cloning or gene multiplication to produce a billion copies of the desired segment of DNA or RNA, with high accuracy and specificity, in few hours.
• Requirements of PCR : Thermal cycler, DNA containing the desired segment to be amplified, deoxyribonuclueoside triphosphates (dNTPs), excess of two primer molecules, heat stable DNA polymerase and appropriate quantities of Mg⁺⁺ ions.
• Three essential steps : Denaturation, annealing of primer and extension of primer.

3. Biological tools for gene cloning/r-DNA technology :
(1) Enzymes :

• Lysozymes, Nucleases (exonucleases, endonucleases, restriction endonucleases), DNA ligases, DNA polymerases, alkaline phosphatases, reverse transcriptases, etc.
• Nucleases : They cut the phosphodiester bonds of polynucleotide chains.
• Types of nucleases :
  • Exonucleases : They cut nucleotides from the ends of DNA strands.
  • Endonucleases : They cut DNA from within.

Restriction endonucleases or restriction enzymes :

• They are the molecular scissors which recognize and cut the phosphodiester back bone of DNA on both strands, at highly specific sequences.
• The 4 to 8 nucleotide long sites recognized by them are called recognition sequences or recognition sites.
• Types of restriction enzyme :
  • Type I : They fuction simultaneously as endonuclease and methylase e.g. EcoKI.
  • Type II : They have separate cleaving and methylation activities e.g. EcoRI, Bgll. They cut DNA at specific sites within the palindrome.
  • Type III : They cut DNA at specific non-palindromic sequences e.g. Hpal, MboII.
• Restriction cutting may result in DNA fragments with blunt ends or cohesive or sticky ends or staggered ends (having short, single stranded projections).

Table : Source and recognition sequences of various restriction enzymes :

(2) Cloning vectors (vehicle DNA) :

• Vectors are DNA molecules that carry a foreign DNA segment and replicate inside the host cell.
• Examples of vectors : Plasmids (e.g. Ti plasmid of Agrobacterium tumejaciens, pBR 322, pUC), bacteriophages (e.g. M13, lambda virus), cosmid, phagemids, BAC (bacterial artificial chromosome), YAC (yeast artificial chromosome), transposons, baculoviruses and MACs (mammalian artificial chromosomes).

(3) Competent host: e.g. bacteria like Bacillus Haemophilus, Helicobacter pyroli and E. coli.

Methodology for r-DNA technology-

1. The steps involved in gene cloning :

• Isolation of DNA (gene) from the donor organism.
• Insertion of desired foreign gene into a cloning vector (vehicle DNA).
• Transfer of r-DNA into suitable competent host or cloning organism.
• Selection of the transformed host cell.
• Multiplication of transformed host cell.
• Expression of the gene to obtain desired product.

2. Gene library :

(1) Gene library is a collection of different DNA sequences from an organism where each sequence has been cloned into a vector for ease of purification, storage and analysis.

(2) Types of gene library :

• Genomic library : It is a collection Of clones that represent the complete genome of an organism.
• c-DNA library : It is a collection of clones containing cDNAs inserted into suitable vectors like phages or

Applications of Biotechnology-

1. Healthcare Biotechnology :

(1) It involves unique, targeted and personalized therapeutic and diagnostic solutions for organ transplant, stem cell technology, genetic counselling, forensic medicine, gene probes, genetic fingerprinting and karyotyping.
(2) Human insulin production using r-DNA technology.
(3) Vaccine production :

• Recombinant vaccines, naked DNA vaccines, viral vector vaccines and plant- derived vaccines are found to be most effective against various diseases.
• Modern diagnostic test kits include rickettsial, bacterial and viral vaccines along with radio-labelled biological therapeutics for imaging and analysis.
• Oral Vaccines.

Proteins produced by r-DNA technology	Disorders
Factor VIII	Haemophilia A
Factor IX	Haemophilia B
Erythropoeitin	Anaemia
Tissue plasminogen activator (TPA), Urokinase	Blood clots
Platelet derived growth factor	Atherosclerosis
Hepatitis B vaccine	Hepatitis B
Interleukin-1 -receptor	Asthma
a Antitrypsin	Emphysema
Interferons, Tumour necrosis factor, interleukins, macrophage activating factor	Cancer
Insulin	Diabetes
Relaxin	Parturition

2. Agriculture :

(1) Application of biotechnology in agriculture : Genetically modified organisms, Bt Cotton, pest resistant plants, improvement in the agricultural productivity.
(2) Applications of tissue culture :

• Micropropagation i.e. large-scale propagation of plants in very short durations.
• Storage of germplasm and maintaining clone of plants which produce recalcitrant seeds or highly variable seeds. Recalcitrant seeds are those whose survival and viability gets affected because of dehydration and freezing.

3. Gene therapy :

(1) Gene therapy is the treatment of genetic disorders by replacing, Elitering , or supplementing a gene that is absent or abnormal Eind whose absence or abnormality is responsible for the disease.

(2) Genes can be delivered by three ways, viz. Ex vivo delivery, in vivo delivery and use of virosomes (Liposome + inactivated HIV) and bionic chips.

(3) Forms of gene therapy :

• Germ line gene therapy and
• Somatic cell gene therapy.

4. Genetically Modified Organisms (GMOs) :

(1) Genetically modified orgEinisms are those whose genetic material has been artificially manipulated in a laboratory through genetic engineering to create combinations of plant, animal, baetericil and virals genes that do not occur in nature or through traditional crossbreeding methods.

(2) Transgenic Plants : Transgenic plants have been developed for :

• Insect pest resistance : e.g. Bt cotton and Transgenic tobacco.
• Biofortification : Improvement in quantity and quality of vitamin, proteins, oil and iron.

• Tolerance to abiotic stresse and herbicides.
• Resistance to various diseases.
• Improvement in post-harvest characteristics : e.g. Flavr savr tomatoes.

(3) Plants are potential factories or bioreactors for :

• Biochemicals (starch, sugar, lipids and proteins) and biopharmaceuticals (hormones, antibodies, vaccines, drugs or enzymes) isolated from transgenic plants.
• Fine chemicals, perfumes and adhesive compounds.
• Industrial lubricants.
• Biodegradable plastic.
• ‘Renewable’ energy crops to replace fossil fuels.
• ‘Superglue’
• Edible vaccines

(4) Transgenic animals : Transgenic animals are the animals in which there has been a deliberate modification of the genome and such animlas are used in various fields such as medical research, toxicology, molecular biology and in pharmaceutical industry.

• Transgenic mice : Used in cancer research.
• Transgenic fish : Developed for increased cold tolerance and improved growth.

Transgenic farm animals :

(i) The main objectives for developing transgenic animals are to improve quality and quantity of milk, meat and wool, to increase egg production, to develop disease resistant animals, production of low-cost pharmaceuticals and biologicals.

(ii) Transgenic farm animals include transgenic cattle (developed for food production and human therapeutic production), transgenic sheep (developed for production of better quality and quantity of wool and meat. They are also used as bioreactors), transgenic pigs (developed for improved meat production, as bioreactors and they are useful in human transplants – xenotransplantation) and transgenic chicken (developed for having traits like lower levels of fat and cholesterol, high protein containing eggs, in vivo resistance to viral and coccidial diseases, better feed efficiency and better meat quality).

Bioethics-

Ethics deals with the matters related to socially acceptable moral duty, conduct and judgement. It helps to regulate the behaviour of community by certain set of standards.

1. Bioethics helps to study moral vision, decision and policies of human behaviour in relation to biological phenomena or events.
2. It deals with wide range of reactions on new developments like :

• r-DNA technology, cloning, transgenics and gene therapy.
• In vitro fertilization, sperm bank, prenatal genetic selection and eugenics.
• Euthanasia, death, maintaining those who are in comatose state.
• Use of animals causes great sufferings to them.
• Violation of integration of species caused due to transgenosis.
• Transfer of human genes into animals and vice versa.
• Indiscriminate use of biotechnology poses risk to the environment, health and biodiversity.

3. Bioethical concerns related to GMO :

• The effects on non-target organisms,
• Insect resistance crops,
• Gene flow
• The loss of diversity as well as the issue on
• Modification process disrupting the natural process of biological entities.

4. Ethics in biotechnology also includes the general subject of what should and should not be done in using recombinant DNA techniques.

Effects of Biotechnology on the Environment-

1. Herbicide Use and Resistance :

• Unintended hybrid strains of weeds and other plants can develop resistance to these herbicides through cross-pollination, thus negating the potential benefit of the herbicide.
• E.g. Crops of Round Up-ready soybeans have already been implemented into agricultural practices, possibly conferring Round Up resistance to neighbouring plants.

2. Effects on Untargeted Species :

• Bt corn has adverse effects on untargeted species like Monarch butterfly.
• GM plants can also have unintentional effects on neutral or even beneficial species.

Effects of Biotechnology on Human Health-

• Allergies : e.g. Transgenic soyBean containing a gene from the Brazil nut to increase the production of methionine, has caused allergic reactions in those with known nut allergies (Biotech SoyBeans).
• Long-Term Effects : GMO technology is a recent development and its long-term effects on health cannot be anticipated now.
• New Proteins : Proteins which were never ingested before, can have potential effects which are not yet known.
• Food Additives : The use of GMOs may create antibiotic and vaccine-resistant strains of diseases.
• The Indian Government has set up the Genetic Engineering Approval Committee (GEAC) to make decisions regarding the validity of research involving GMOs and addresses the safety of GMOs introduced for public use.

Biopatent and Biopiracy-

Patent is a special right granted to the inventor by the government.
A patent consists of three parts – grant (agreement with the inventor), specification (subject matter of invention) and claims (scope of invention to be protected).

1. Biopatent :

• Biopatent is a biological patent awarded for strains of microorganisms, cell lines, genetically modified strains, DNA sequences, biotechnological processes, product processes, product and product applications.
• Biopatent allows the patent holder to exclude others from making, using, selling or importing protected invention for a limited period of time.
• First biopatent : Genetically engineered bacterium ‘Pseudomonas’ used for clearing oils spills.

2. Biopiracy:

(1) Biopiracy is defined as ‘theft of various natural products and then selling them by getting patent without giving any benefits or compensation back to the host country’.
(2) It is unauthorized misappropriation of any biological resource and indigenous knowledge.
(3) Examples of Biopiracy :

• Patenting of Neem (Azadirachta indica)
• Patenting of Basmati
• Patenting of Haldi (Turmeric)

By going through these Maharashtra State Board Book Keeping & Accountancy Notes 12th Chapter 3 Reconstitution of Partnership (Admission of Partner) students can recall all the concepts quickly.

Maharashtra State Board 12th Accounts Notes Chapter 3 Reconstitution of Partnership (Admission of Partner)

Meaning of Reconstitution of Partnership-

To reconstitute means to form or create it again. Accordingly reconstitution of partnership means to change the earlier relationship and form a new relationship between or among the partners. It refers to the change in the form of partnership due to making of new agreement by the partners. Such reconstitution of partnership takes place on account of admission of a new partner or retirement or death of existing partner.

Different forms of reconstitution : The different forms of reconstitution of partnership are stated
below :

(1) Change in profit-sharing of existing partner : Sometimes due to certain circumstances, existing partners may decide to change their profit and loss ratio. If one of the partners purchases certain profit sharing ratio from another partner, the old partnership deed may get terminated and new agreement comes into force stating the new profit sharing ratio.

(2) Admission of a new partner : If need arises a new person may be admitted into the partnership firm with the consent of all the existing partners. On admission, new partner becomes a new owner of the firm. He is required to bring in his share of capital and goodwill and is entitled to share in future profit. Hence, partnership agreement changes.

(3) Retirement of existing partner : On account of old age, continuing ill health or by sweet will an existing partner may retire from the partnership firm. He is called outgoing partner. Partnership firm is required to pay all his dues on retirement. The profit sharing ratio of continuing partners increases due to reduction in the number of partners.

(4) Death of partner : When a partner dies, he no more remains as partner of a firm. On natural ground he ceases to be partner of a firm. On death of a partner, the profit sharing ratio of continuing partners get changed and old partnership agreement gets terminated.

Admission of a Partner-

As per the Section 31(1) of the Partnership Act, 1932, if need arises, with the consent of all the i
existing partners a new person can be admitted in the partnership firm. Such a partner is called incoming
partner. :

Meaning and Need of admission of a partner:

Meaning : Admission of a partner refers to a process in which a new person is taken into the existing partnership firm as a partner as per certain terms and conditions of partnership deed.
On admission, a new partner brings in cash for his share of capital and goodwill, skill, services, experience, etc. into the existing partnership business and in exchange he gets certain share in future profit of the firm and right in the assets of the firm.

Need : The need of admission of a partner is stated as follows :

• To increase the capital resources of the firm and :
• To secure the advantages of the new person’s skill, experience and business connections to develop efficiency of the business.

Capital brought in by new partner : At the time of admission, new partner is required to bring .
in cash or/and other assets, if any, as his capital, to get rights in the assets and definite share in the future profit of the firm.

When a new partner brings in cash towards his share of capital, the following journal entry is passed :

In case a new partner brings in other assets towards his capital the following journal entry is ;
passed :

New profit sharing ratio : In all cases of admission of a partner, the new partner gets the agreed share in the future of profit whereas all the old partners together get the remaining share. As a result profit sharing ratio of existing (old) partners changes and newly constituted firm is required to calculate new profit sharing ratio for all the partners including new partner. Such new ratio is used by the firm to write off goodwill and to make adjustments in Capital Accounts of the Partners.

New Ratio is calculated by using following formula :
Assume that total profit be 1, The Balance of 1 = (1 – share given to new partner).
New Ratio = (Balance of 1) x Old Ratio.
If sacrifice ratio of old partners is given along with old ratio, the new ratio can be calculated as
→ New Ratio = Old Ratio – Sacrifice Ratio.

Sacrifice ratio : Sacrifice ratio is the ratio in which two or more old partners surrender or give up their shares in the future profit in favour of a new partner of the firm. Sacrifice ratio is calculated by using the following formula :
Sacrifice Ratio = Old Ratio-New Ratio

Meaning of Goodwill-

It is often observed that some business firms are in a position to earn higher profit in comparison to other firms dealing in the similar line of products. This extra earning capacity of a business firm is called goodwill. In other words, Goodwill is the monetary value of the reputation of a firm as measured in terms of its expected future profits. In the words of Lord Macnaghten, Goodwill is “the benefits and advantages of the good name, reputation and connections of the business.

According to Institute of Chartered Accountants of India, Goodwill is “an intangible asset
arising from business connection or reputation or trade name of an enterprise. ” Goodwill is built up slowly and gradually by a business concern through great efforts over a long period of time.
The factors on which the value of goodwill depends are : (1) monopoly enjoyed by the business (2) its continued prosperity (3) its reputation, location and connections with leading parties (4) its trade mark, brand name and patents (5) its high profit earning capacity and (6) good and cordial relations with all including customers, employees etc.

Goodwill is an intangible asset because its existence cannot be verified by our senses. It is an asset that cannot be expected to realise or converted into cash unless it is sold along with the business. Goodwill is valued and recorded in the books of accounts by the partnership firm on the following occasions : (1) Sale or purchase of a firm as a going concern (2) Admission of a partner (3) Retirement or death of a partner (4) Change in the profit and loss ratio of the partners.

Methods of Valuation of Goodwill : As prescribed in the syllabus, the value of goodwill as on a ,
particular date is ascertained by using any one of the following methods : ‘
(A) Average Profit Method and (B) Super Profit Method.

(A) Average Profit Method : Under this method, goodwill is valued at certain number of years’ .
purchases of the average profit of the firm. To compute the value of Goodwill as per this ,
method the following formulae are used :

1. Total Profits = Profits of the given number of years-losses, if any.
2. Average Profit = \(\frac{Total Profits of given no. of years}{No. of years given}\)
3. Goodwill = Averge Profit x No. of years’ purchases

Steps to calculate goodwill : Following steps are required to be taken for calculating goodwill :

1. Calculate total profit by giving plus sign to profits and minus sign to losses.
2. Calculate average profit by dividing total profit by given number of years.
3. Calculate the value of goodwill by multiplying average profit by given number of years’ purchases.

(B) Super Profit Method : Under this method, goodwill is valued at certain number of years’ •; purchases of the super profit of the partnership firm. In order to understand the formulae used for computing the value of goodwill under super profit method, the following concepts need to be understood :

(1) Super Profit : Super profit is the profit earned by the business concern over and above the normal profit or return earned on capital exmployed. Super profit is calculated by using the following formula :
Super Profit = Average Profit – Normal Profit.

(Normal Profit or Normal Return on Capital Employed : Normal profit or normal return on capital employed refers to a reasonable profit earned by a business concern to survive in the industry after meeting all its business expenses.
It is ascertained by using the following formula :
Normal Profit or Normal Return on Capital Employed = Capital Employed x Normal Rate of Return.)

(2) Capital Employed : Capital employed is the total amount of capital used by the business concern to run and maintain its business activities. Capital employed is made of fixed assets other than goodwill plus current assets minus current liabilities.

(3) Normal Rate of Return : Normal rate of return is the return or profit normally expected on the capital employed by considering the returns or profit actually earned by other firms in the same industry. This is the average rate of return or profit earned in the industry. Normal rate of return depends on the nature of business and element of risk involved therein.

(4) Goodwill: Super Profit x Number of years’ purchases.

Accounting Treatment of Goodwill: As new partner gets certain share in future profit of the firm from old partners who sacrifice their profit sharing ratio in favour of him, for which they (old partners) must be compensated for such a loss. Therefore, new partner is required to bring in certain amount for goodwill in addition to the amount to be brought in by him towards his share of capital. At the time of admission, goodwill may be given treatment in one of the following two methods, viz.
(A) Premium Method and (B) Valuation Method.

(A) Premium Method : Under premium method following possible cases are considered : Journal entries are shown as follows :

(i) When a new partner brings his share of goodwill in cash which is retained in the business :

(ii) When a new partner brings Goodwill In cash but it is withdrawn by the old partners:

(iii) When a new partner pays amount of Goodwill to old partners privately :
No accounting entry is to be passed in the books of the partnership firm as amount of goodwill is paid privately by a new partner to old partners, business firm as such is not at all benefited and therefore, there is no necessity of recording any entry for goodwill in the books of a partnership firm.

(B) Valuation Method : if the new partner does not bring in his share of goodwill in cash, a new Goodwill A/c may be opened and it may be treated in the following manner :

(i) If goodwill does not appear in the books of accounts :

(ii) If goodwill already appears In the books of accounts:

(a) If on revaluation, the revised value of goodwill Is found to be lower than Its existing value which already appears In the books : (Entry is to be passcd only for difference in the value of goodwill)

(b) If on revaluation, the revised value of goodwill is found to be greater than Its existing value which already appears in the books : (Entry is to be passed only for difference In the value of goodwill)

Revaluation of Assets and Liabilities : Just before the admission of a new partner, it is usual practice to revalue the assets and liabilities of the existing firm. The profit or loss which arises due to changes in their values is shared by the old partners alone. To record such changes in the values of assets and liabilities, a separate account is opened and operated. Such an account is called “Profit and Loss Adjustment A/c” or “Revaluation A/c”. It is a nominal account showing the expenses or losses on the debit side and incomes or gains on the credit side.

A decrease in the value of the assets and an increase in the amount of the liabilities are shown on the debit side of this account, while an increase in the assets or a decrease in the liabilities are shown on the credit side of this account. So also this account is debited for recording an outstanding expense and creating a provision for bad and doubtful debts and credited for recording incomes receivables, prepaid expenses and creating a provision for discount on creditors. Any balance of this account is then transferred to old partners’ capital/current accounts in their old profit sharing ratio.

Debit balance of Profit and Loss Adjustment A/c or Revaluation A/c indicates loss incurred on revaluation of assets and liabilities, while credit balance of this account shows profit earned on revaluation of assets and liabilities.

(a) Pro Forma journal entries on revaluation of assets and liabilities are given below :

(b) Pro Forma Profit and Loss Adjustment Account/Revaluation Account :

Adjustment of Accumulated Profits and Losses:
(1) Different type of Reserve Funds : Every year part of the profit, kept aside in a separate account by the partners to meet the loss, if any that may arise due to unforeseen contingencies like flood, fire, theft, sudden fall in prices of firm’s products, etc. is called as General Reserve. The credit balance in General Reserve, Reserve Fund, Workmen’s Compensation Fund, Investment Fluctuation Fund, Joint Policy Reserve, etc., are created out of past profit, the balance of the those reserves entirely belong to old partners and therefore new partner has no right to get any share in those reserves. Hence on admission of a new partner, entire balance in the above mentioned reserves is required to be transferred to old partners’ capital accounts or current accounts in their old profit sharing ratio. The following journal entry is required to be passed for transfer of balance in various reserves :

(2) Accumulated Profit/Loss : Every year part of the profit, which remains undistributed among the old partners, is carried forward to next year. Such undistributed profit accumulated over many years is shown in the Balance Sheet on liabilities side under the heading “Profit and Loss A/c”. Similarly, part of the losses unadjusted among the partners is carried forward to next year. Such unadjusted losses if any, accumulated over many years are shown on the Assets side of the Balance Sheet under the heading “Profit and Loss A/c”. At the time of admission of a new partner, entire balance of such accumulated profits or losses is transferred to old partners’ capital/current accounts in their old profit sharing ratio. The following entries are required to be passed for transfer of accumulated profit/losses :
(a) Transfer of accumulated profit:

(b) Transfer of accumulated loss :

Adjustment of Capitals: At any time when the partners so desire (and especially after admission of a new partner), they may make their capitals proportionate to their new profit ratio either through their Current or Loan A/cs or by actually bringing in or withdrawing cash.

The capital accounts of all the partners are usually adjusted by taking new partner’s capital as the base and then adjust the capital of other partners. Adjusted new capital balance of each old partner is then compared with his actual capital balance to find out deficit or surplus of capital. Ultimately, the deficit or surplus of capital of partners is adjusted either through partners’ current account or his loan account or through cash.
The following journal entries are passed for adjustment of partners’ capitals as mentioned above :

By going through these Maharashtra State Board 12th Science Biology Notes Chapter 2 Reproduction in Lower and Higher Animals students can recall all the concepts quickly.

Maharashtra State Board 12th Biology Notes Chapter 2 Reproduction in Lower and Higher Animals

Reproduction-

1. Reproduction is defined as the biological process of formation of new life forms from pre-existing similar life.
2. Through reproduction, species can survive over a long period.
3. Reproduction in animals occur mainly by two methods, i.e. asexual and sexual.

Asexual Reproduction in animals-

1. Common and primitive method among animals.
2. Meiosis or the gamete formation and fertilization process does not take place in asexual reproduction.
3. Single parent is involved and offspring identical to parent. Also called clone.
4. E.g. Gemmule formation and budding.

5. Gemmule formation :

• Gemmule is an internal bud. In sponges, during unfavourable conditions this method of asexual reproduction is adopted.
• Gemmule is thus an asexually produced mass or aggregation of dormant archcocytes cells. They develop into a new organism.
• Around archaeocytes, amoebocytes secrete a layer of thick resistant membrane.
• Gemmules hatch and develop into new individual when favourable conditions return.
• Seen in Spongilla.

6. Budding :

• Ii is a simple method of asexual reproduction seen in coelenterates (Hydra and corals) and in some colonial ascidians.
• A bud, i.e. small outgrowth is produced towards the basal end of the body, in Hydra.
• Bud grows and forms tentacles and develops into a new individual.
• This newly formed Hydra later detaches from parent and becomes a separate organism.

Sexual Reproduction in animals-

1. Offspring is produced by fusion of gametes or amphimixes in sexual reproduction. For the formation of gametes, both male and female parent undergo meiosis in their gonads.
2. Two main phases in the life of sexually reproducing animals : Juvenile phase/pre- reproductive phase which involves growth and reproductive/maturity phase in which sex organs undergo maturation.
3. Animals are either seasonal breeders like goat, sheep and donkey which breed only in particular season or continuous breeders like human and apes who can breed throughout the year.

4. Human reproduction :

• Sequential steps in the process of human reproduction : gametogenesis, insemination, internal fertilization, zygote formation and embryogenesis, gestation and parturition followed by lactation.
• Primary Sex organs – testes (testis : singular) in male and ovaries (ovary : singular) in female.
• Secondary or accessory Sex organs – Organs other than testis in male and organs other i than ovaries in female.
• Secondary sexual characters in males – Presence of beard, moustache, hair on the chest, muscular body, enlarged larynx (Adam’s apple), etc.
• Secondary sexual characters in females – Developed breast, broader pelvis, high pitched voice, etc.
• Sexual dimorphism : The phenomena by which sexes can be identified externally.

5. Male Reproduction System : Parts of male reproductive system – Testes, accessory ducts, glands
and external genitalia.
(1) Testes

(2) Accessory ducts:

(3) Glands :

(4) External Ganitalia:

Terms associated with external genitalia of male:

• Inguinal canal : The passage through which testes descend into scrotum.
• Gubernaculum : Fibro-muscular band present in the scrotum.
• Cryptorchidism : Failure of testis to descend into scrotum which may cause sterility.
• Three bundles of erectile tissues in penis :
  •  Paired Corpora cavernosa
  • Median corpus spongiosum.

6. Semen : Single ejaculate of semen is 2.5 to 4.00 ml of viscous, alkaline and milky fluid (pH 7.2 to 7.7) containing 400 million sperms and secretions of epididymis, prostate gland, and Cowper’s glands. It is rich in fructose, Ca⁺⁺ , bicarbonates and prostaglandins.

7. Histology of testis :

• External coverings of testis seen in L.S. from outer to inner side tunica vaginalis, tunica albuginea and tunica vasculosa.
• Testicular mass divided into 200-300 testicular lobules by tunica albuginea.
• Each lobule has 1-4 seminiferous tubules.
• In between the seminiferous tubules there are interstitial cells of Leydig or Leydig’s cells. They secrete the male hormone androgen or i testosterone.
• Internal lining of cuboidal germinal epithelial cells or spermatogonia inside the seminiferous l tubules.
• Few large pyramidal cells called Sertoli or sub-tentacular cells (nurse cells) Sertoli cells provide nutrition to the developing sperms,
• Various stages of developing sperms such as spermatogonia, primary spermatocyte, secondary spermatocyte, spermatids and sperms are seen in the seminiferous tubules.

8. Female Reproductive System : The female reproductive system consists of the following parts :

• A pair of ovaries
• A pair of fallopian tubes. (Also called oviducts, but usually this term is used for lower animals)
• Uterus
• Vagina
• External genitalia (vulva)
• A pair of vestibular glands
• A pair of mammary glands

9. Puberty / Sexual maturity in Females :

• Menarche : Onset of menstrual cycle, usually occurs at the age 10-14 years.
• The reproductive system then becomes functional.
• Menopause : End of menstrual cycles in females, usually occurs at the age of 45-50 years.
• Reproductive age of female : The period from menarche to menopause.

10. Structure and development of the ovary : The process of oogenesis starts in ovary much before the birth of the female baby. The various developing follicles and their fate is shown in the following flow chart :

11. Histology of ovary :

• TWo parts in ovary : Central part is medulla while the peripheral part is called cortex.
• Layer of germinal epithelium covers the cortex.
• Germinal epithelial cells form groups of oogonia in the form of cords called egg tubes of Pfluger which project into the cortex. Each cord ends in egg nest, which is group of oogonial cells. The primordial ovarian follicles develop from these cells.
• Different stages of development of oocyte viz. primordial follicle, primary follicle, secondary follicle, Graafian follicle, rupturing Graafian follicle, corpus luteum, corpus albicans are seen in a cortex of mature ovary.
• Medulla has blood vessels, lymph vessels and theca externa.
• Graafian follicle is a mature ovarian follicle with eccentric secondary oocyte in a fluid filled cavity called antrum surrounded by membrane granulosa, theca interna and theca externa.
• The ovum is surrounded by vitelline membrane, zona pellucida and membrana * granulosa.
• In the antrum, ovum is situated on discus proligerus. Ovum along with discus proligerus ; is called cumulus oophorus. Antrum is filled : with liquor folliculi.

Menstrual cycle (Ovarian cycle)-

1. Primates show menstrual cycle. Human female shows cycle with 28 days periodicity.
2. It involves a series of cyclic changes in the ovary and uterus.

3. Menstual cycle:

4. If the ovum is fertilized corpus luteum is retained.
5. A once embryo gets implanted in the endometrium, it starts secretion of human chorionic gonadotropin (hCG) which extends the life of corpus luteum.
6. Presence of hCG in maternal blood and urine is an indicator of pregnancy.
7. If ovum is not fertilized, corpus luteum regresses and forms corpus albicans. Then the next menstrual cycle begins.

Gametogenesis-

1. The process of formation of gametes in sexually reproducing animals is called gametogenesis.
2. Sperm is the male gamete and ovum/egg is the female gamete.
3. The gametes are formed from primordial germ cells of gonads.
4. Spermatogenesis : The process by which sperms are formed is called spermatogenesis.

• In the testis, i.e. male gonads there are seminiferous tubules which are lined by germinal epithelium.
• Cells of germinal epithelium undergo spermatogenesis and form sperms.
• In between the germinal cells there are nurse cells or cells of Sertoli which provide nourishment to the developing sperms.

(1) Phases of spermatogenesis : There are three phases of spermatogenesis, viz. multiplication phase, growth phase and maturation phase. Germinal cells are called primordial germ cells.

• Multiplication phase : Repeated mitotic divisions produce large number of spermatogonia which are diploid (2n).
• Growth phase : The spermatogonium accumulates food and grows in size. This is now called primary spermatocyte.
• Maturation phase : The primary spermatocyte undergoes first meiotic division. At the end of this division two haploid secondary spermatocytes are formed. Secondary spermatocyte
  undergoes second meiotic division and produce spermatid.

Spermatids are non-motile and non-functional. They undergo metamorphosis in the process of spermiogenesis and mature into motile sperms. Each haploid spermatogonium thus forms four haploid spermatids which later transform into the sperms.

(2) Changes occurring during spermiogenesis :

• Increase in sperm length
• Distinction of centrioles into proximal and distal one.
• Formation of axial filament from distal centriole
• Formation of spirally coiled mitochondria.
• Formation of acrosome from Golgi complex.

(3) Structure of the sperm (spermatozoa) :

• Microscopic, elongated haploid motile male gamete measuring about 0.055 mm (60 /;) in length.
• Produced by the process of spermatogenesis.
• Their viability remains viable for seventy- two hours, but can fertilize the ovum in first 12 to 14 hours only.

(4) Parts of sperm:

5. Oogenesis : Oogenesis takes place in ovary by which the secondary oocyte is formed.
(1) Phases of oogenesis :

• Phase of multiplication : In the phase of multiplication, large number of oogonia are formed.
• Phase of growth : In the phase of growth, one of the oogonia becomes large. It is now called primary oocyte.
• Phase of maturation : In this phase the rimary oocyte undergoes meiosis-I and forms large haploid secondary oocyte. There is equal nuclear division but unequal cytoplasmic division during the phase of maturation. Secondary oocyte and polar bodies undergo arrested meiotic-I division. Secondary oocyte completes the meiosis-II if and only if it undergoes fertilization.

(2) Structure of ovum, i.e. secondary oocyte : j

• The ovum discharged by the ovary during ovulation is actually a secondary oocyte.
• Rounded, haploid, non-mo tile. Female gamete is largest cell of the body.
• Measures about 0.1 mm or 100 in diameter.
• It is microlecithal, i.e. almost free of yolk.
• It has abundant cytoplasm or ooplasm having a large eccentric nucleus surrounded by vitelline membrane.
• Centriole is absent in the ovum.
• Ovum shows polarity having two poles.
• Animal pole is the side which shows the presence of polar body and nucleus while the opposite side is termed as vegetal pole.
• The ovum is enclosed by two additional coats inner, thin, transparent and noncellular zona pellucida and outer, thick cellular corona radiata.
• Between the vitelline membrane and zona pellucida there is a narrow perivitelline space.
• The zona pellucida is secreted by ovum j itself while corona radiata is formed of radially elongated follicular cells which are glued together by hyaluronic acid.

Fertilization/Syngamy-

1. Fertilization : Process of fusion of the haploid male and female gametes into diploid zygote is called fertilization.
2. Fertilization is internal and in the ampulla of the fallopian tube the gametes meet.
3. The sequence of events of fertilization :

• Capacitation of sperms : Movement of sperms towards the secondary oocyte.
• Release of acrosomal enzymes: Enzymes are secreted by sperm head when it touches secondary oocyte.
• Separation of cells of corona radiata : This happens due to acrosomal enzymes like hyaluronidase and corona penetrating enzymes.
• Compatibility reaction/ Fertilizin-anti fertilizin interaction : Fertilizin of egg binds with anti fertilizin of sperm. The zona pellucida of egg has fertilizin receptor proteins (ZP3, ZP2). Also acrosome ruptures releasing enzyme acrosin / zona lysin.
• Acrosome reaction : Acrosin dissolves zona pellucida and vitelline membrane at the point of contact of sperm head.
• Entry of sperm nucleus in ovum : Nucleus and centriole enter the ovum.
• Formation of fertilization membrane/ Cortical reaction : Vitelline membrane of ovum is converted into a fertilization membrane. This prevents polyspermy.
• Activation of ovum : Completion of meiosis- II of secondary oocyte takes place. When ovum receives centriole from sperm, it completes meiosis-II. This releases second polar body.
• Syngamy/Karyogamy : Fusion of male pronucleus and female pronucleus. Synkaryon is formed after fusion of male and female nucleus.
  Formation of diploid zygote conclude the process of fertilization

4. Significance of fertilization :

• Secondary oocyte can complete meiosis only after fertilization.
• Diploid number of chromosomes is restored in the zygote.
• Genetic characters of two parents can be mixed leading to variation and evolution.
• It determines the sex of young one.
• Only through fertilization centrioles are introduced into the ovum which are otherwise absent in ovum.

Embryonic development-

1. After syngamy the zygote that is formed undergoes divisions to form embryo. These mitotic divisions are called cleavages.
2. When the zygote passes through the fallopian tube, the cleavages start.
3. Till morula stage, zona pellucida layer is retained as it prevents the implantation of the blastocyst at an abnormal site.

4. Cleavage :

• Cleavages are rapid mitotic divisions of zygote to form a hollow spherical multicellular blastula. Cleavage converts the zygote first into a mass of cells called morula.
• Cleavage occurs during its passage through the fallopian tube to the uterus.
• In human beings, cleavage is holoblastic, equal and indeterminate.
• Cleavage divisions are rapid with short interphase.
• There is no time for cells to grow in size.
  Thus, cells become progressively smaller. The resulting daughter cells are called blastomeres.
• Cleavage shows faster synthesis of DNA.

5. Blastulation :

• During blastulation hollow and multicellular blastocyst is formed from 16-32 celled stage of morula.
• Blastocyst now reaches uterus and starts absorbing glycogen rich uterine milk.
• The outer layer of cells forms trophoblast layer whereas inner large cells form inner cell mass or embryoblast.
• Size of blastocyst doubles from 0.15 mm to 0. 30 mm.
• Due to the absorption of glycogen rich uterine milk, the trophoblast cells become flat and a cavity called blastocyst cavity is formed.
• Cells of rauber : These are the cells of trophoblast which are in contact with the embryonal knob.
• Blastocyst becomes fully developed by the end of the 7th day.

6. Implantation :

• Implantation is the process of embedding the blastocyst in the uterine endometrium for further gestation.
• On 7th to 10th day after fertilization, implantation takes place. Embryo is completely buried inside the endometrium.
• Trophoblast divides into two layers, viz. cytotrophoblast and syncytiotrophoblast. With processes of synctiotrophoblast the blastocyst is buried in the endometrium layer of uterus.

7. Gastrulation :

(1) Formation of gastrula from the blastocyst is called gastrulation. It starts at about 8 days after fertilization.
(2) Two important events during gastrulation are :

• Differentiation of blastomeres : Three germinal layers are formed by rearrangement of blastomeres.
• Morphogenetic movements : Movements of cells to reach their destined area of differentiation is called morphogenetic movements.

(3) Gastrulation and implantation of blastocyst takes place simultaneously.
(4) Gastrulation involves the following sequential changes :

• Formation of endoderm
• Formation of embryonic disc
• Formation of amniotic cavity
• Formation of ectoderm
• Formation of mesoderm
• Formation of extra-embryonic coelom
• Formation of chorion and amnion

8. Organogenesis : Process of forming organs after the process of gastrulation is called organogenesis.
9. Fate of germinal layers : At the end of gastrulation, embryo develops into three germinal layers.
Different tissues and organs are formed from germinal layers. This process is called histogenensis.

Pregnancy / Gestation-

1. Gestation or pregnancy is the condition of developing foetus in the uterus. It may be one or two as in twins.
2. In human beings, gestation period is about 280 days.

Placenta-

1. Placenta is a flattened, discoidal organ attached to the wall of the uterus and to the baby’s umbilical cord.
2. It facilitates the supply of oxygen and nutrients and also for removal of carbon dioxide and excretory products produced by the foetus.
3. Placenta is the only organ, which is formed of tissues from two different individuals the mother and the foetus.
4. Foetal placenta is the choronic villi while maternal placenta is the highly vascularized uterine wall. So human placenta is called haemochorial.
5. The placenta also acts as an endocrine tissue and produces hormones like hCG, progesterone, estrogen and relaxin.

Parturition-

• Parturition is the birth process which is accompanied with labour pains.
• It is a neuro-endocrine mechanism which involves rise in estrogen : progesterone ratio and increase in oxytocin receptors in myometrium of uterine wall.
• The fully developed foetus gives signals for the uterine contractions by secreting Adrenocorticotropic hormone (ACTH) from pituitary and corticosteroids from adrenal gland.
• This triggers release of oxytocin from mother’s pituitary gland, which acts on uterine muscles of mother and causes vigorous uterine contractions.
• This leads to expulsion of the baby from the uterus.
• Parturition involves three stages, viz. dilation stage, expulsion stage and after birth or placental stage.

Lactation-

• After parturition the new born is given nourishment through milk. The process of secretion of milk is called lactation in which mammary glands of mother become functional.
• The first milk is called colostrum which is rich in proteins, lactose and mother’s antibodies e.g. IgA.
• Lactation is also neuroendocrine process, in which almost all endocrine glands of mother are involved.

Reproductive Health-

• Total wellbeing of a person’s emotional, behavioural, physical and social aspects involving reproduction is called reproductive health.
• In India, Reproductive and Child Health Care (RCH) programmes are undertaken to improve reproductive health.
• One of the objectives of this programme is to control the population growth of India.

Birth Control-

1. For controlling the family size, birth control measures are taken which me called contraceptive measures.
2. Contraceptive methods are of two main types, i.e. temporary and permanent.

Birth control measures:

3. Medical termination of pregnancy (MTP) :

• MTP is induced abortion. This can indirectly control population. MTP is legalized in India since 1971.
• MTP is performed if unwanted pregnancy has to be discontinued or if there are defects in the growing foetus. MTP to abort healthy female embryo is illegal.
• MTP can be safely done only during the first trimester of pregnancy.

4. Amniocentesis :

• Process in which amniotic fluid containing foetal cells is collected using a hollow needle inserted into the uterus under ultrasound guidance.
• This is done for studying the chromosomes to check any possible abnormality in the developing foetus.
• Sex determination by amniocentesis is legally banned in India.

Sexually Transmitted Diseases (STDs)-

1. 1. Disease or infections which are transmitted through sexual intercourse are collectively called Sexually Transmited Diseases (STDs) or Venereal Diseases (VDs) or Reproductive Tract Infections (RTI).
2. The major venereal diseases are syphilis and gonorrhoea.

Infertility-

1. Infertility is defined as the inability to conceive naturally after (one year of) regular unprotected intercourse.
2. Today infertile couples have many options to have a child such as fertility drugs, test tube babies, artificial insemination, IUI, surrogate motherhood, etc.

• In Vitro Fertilization (IVF) : When fertilization process is carried out of the body and the embryo is transferred back into the mother’s body, then it is called IVF technique. (Commonly known as test-tube baby.)
• Zygote Intra Fallopian Transfer (ZIFT) : The embryo is transferred in the fallopian tubes by ZIFT (Zygote Intra Fallopian Transfer) technique.
• Gamete Intra Fallopian Transfer (GIFT) : Transferring the ovum collected from the donor into the fallopian tube of another female who can act as a surrogate mother (a female with suitable environment for fertilization and development) is called GIFT.
• ICSI (Intra Cytoplasmic Sperm Injection) : Single sperm cell is injected directly into cytoplasm of an ovum in the laboratory in this technique.
• Artificial insemination (AI) : The collected sperms are artificially introduced into the
  cervix of female, for the purpose of achieving a pregnancy through in vivo fertilization.
• IUI (Intra Uterine Insemination) : Similar to artificial insemination, but in this technique the sperms are introduced into the uterine cavity instead of cervix.
• Sperm bank / Semen bank : Sperms are collected from donors and stored in a sperm bank or semen bank. These are stored by cryopreservation method and given to needy couples.
• Adoption : A couple or a single parent can legally adopt a child. They also get legal rights, privileges and responsibilities for raising up adopted child.

Know the Institute :

Cord blood bank, Kolkata

• First Government-run cord blood bank at Kolkata, established in 2001.
• Accredited by AABB (American Association of Blood Bank).
• Work carried out Collection of the cord blood, extracting and cryogenically preserving for its stem cells and other cells of the immune system for future potential medical use
• Stem cells are used to treat diseases, e.g. leukaemia, certain cancers, sickle-cell anaemia and some metabolic disorders.

By going through these Maharashtra State Board 12th Science Biology Notes Chapter 1 Reproduction in Lower and Higher Plants students can recall all the concepts quickly.

Maharashtra State Board 12th Biology Notes Chapter 1 Reproduction in Lower and Higher Plants

Introduction – Reproduction

1. Reproduction is production of young ones like parents.
2. Essential Process related to continuity of species.
3. To maintain continuity of life, organisms produce offspring showing similar characters.
4. TWo types – Asexual reproduction and Sexual reproduction.

Asexual reproduction

1. Fusion of two compatible gametes or sex cell is not involved.
2. Production of genetically identical progeny, i. e. Clones.
3. Progeny from single organism.
4. Inheritance of genes of parent by progeny.
5. Modes of Asexual Reproduction

(1) Fragmentation

• Multicellular organism
• Small piece
• Accidental breaking E.g. Algae Spirogyra.

(2) Budding

• Unicellular organism
• One or more outgrowths, i.e. buds
• E.g. Yeast

(3) Spore formation

• Different types
• Flagellated motile zoospores
• Zoosporangia
• Biftagellate zoospores. E.g. Chlamydomonas

(4) Fission
Binary Fission E.g. Amoeba, Paramoecium

(5) Conidia formation
E.g. Fungus Penicillium

(6) Gemmule formation
E.g. Sponges

6. Vegetative reproduction :

• Asexual method
• Reproduction with vegetative plant parts.
• Artificial methods useful in agriculture and horticulture.
• New plants are identical to parent plant

7. Artificial methods-

(1) Cutting
Small piece of plant part selected.
Must possess one or more bud.

• Stem cutting
  e.g. Rose, Bougainvillea
• Leaf cutting
  e.g. Sansev feria
• Root cutting
  e.g. Blackberry

(2) Grafting

• Joining of two plant parts stock and scion
• Rooted plant — Stock
• Joined plant – Scion
• Grow together as one plant
  • Stem grafting e.g. Apple
  • Bud grafting, budding e.g. Rose

(3) Tissue Culture

• A small amount of plant tissue is carefully and aseptically grown to get plantlets.
• Micropropagation — Modern method to get plants from tissue culture. e.g. Orchids

Sexual Reproduction-

1. Involves fusion of two compatible gametes (male and female).
2. Takes place after certain maturity.
3. In higher plants, flowering indicates beginning of reproductive phase.
4. Production of genetically different offspring.
5. Variations are useful for survival and evolution of species.
6. Flowers, specialized reproductive structure producing haploid gametes-

7. Sexual reproduction – Two major events –

Meiosis-
Production of gametes (n):

• Male gametes in anther
• Female gametes in ovule

Fusion of gametes (Fertilization):

• Diploid zygote
• Embryo
• New plant-(2n) sporophyte

8. Diploid sporophyte is dominant plant body → Meiosis → Haploid spores →
gametes ← within flower ← Reduced structure ← gametophyte

9. Structure of anther – Mature anther :

• Usually dithecous (Having two lobes) → tetrasporangiate (Having four pollen sacs)
• Monothecous (Having single lobe) → Bisporangiate (Having two pollen sacs)
• When young it is homogeneous.
• Parenchymatous with epidermis.
• Heterogeneity appears with formation of archesporial cell.

10. T. S. of anther :

• Mature anther has anther wall and microsporangium.
• Anther wall is outer layer and microsporangium has sporogenous tissue.
• Anther wall has four layers, viz. Outer epidermis (Protective) followed by fibrous endothecium, thin walled middle layers and tapetum innermost nutritive layer.
• Microsporangium contains microspore mother cells (2n) which undergo meiosis to form microspore tetrad.
• Haploid (n) microspores separate from tetrad.
• When microspores develop wall around it then it is known as pollen grain.
• From archesporial cell primary parietal cell forms anther wall and sporogenous cell forms sporogenous tissue.

Microsporogenesis-

1. Process of formation of Microspores by meiosis from MMC — Microspore Mother Cell
2. Pollen grain – Non-motile with single nucleus.
Haploid
3. Pollen wall, double layered — Sporoderm

4. Pollen wall-

• Exine (outer wall)
• Intine (inner wall)

Exine (outer wall)

• Thick
• Composed of non- biodegradable sporopollenin
• Protective layer
• Smooth or variously sculptured, spiny
• Presence of thin areas germ pores for emergence of pollen tube

Intine (inner wall)

• Thin
• Cellulose and pectin
• Forms pollen tube
• Smooth

5. Pollen Viability : It is the ability of pollen grain to germinate and develop male gametophyte.

• Depends on environment factors – Temperature and humidity.
• It lasts for few minutes (Grasses, Wheat, Rice) to months (Members of Rosaceae, Solanaceae, Fabaceae, Leguminosae)

6. Development of male gametophyte :

• It is considerably reduced.
• Develops in flower.
• Pollen grain (n) is first cell of gametophyte.

7. Pollen grain-

1. First mitotic division → 2 unequal cells →

1. Vegetative cell
2. Generative cell

Vegetative cell

• Larger, Naked
• Rich in food
• Irregular nucleus

Generative cell

• Smaller, thin walled
• Dense cytoplasm
• Floats in cytoplasm of Vegetative cell

2. Second mitotic division → In generative cell → equal cells

• Two non-motile male gametes produced
• Either occur in pollen grain or in pollen tube.

3. Pollen grains are shed in either two celled stage or three celled stage.

• Pollen grains are lodged on stigma of pistil.

Structure of Anatropous ovule (Most common type)

1. Anatropous Ovule:

Ovule are preset in ovary.
Uniovulate – Mango, Wheat, Rice.
Multiovulate – Tomato, Lady’s finger

3. Parts of ovule :

• Funiculus : Stalk by which ovule is attached to placenta.
• Hilum : Point of attachment.
• Anatropous ovule : Curved ovule, where micropyle is near stalk.
• Nucellus : Parenchymatous tissue that forms body of ovule.
• Integuments : Outer and inner two protective coverings.
• Micropyle : Narrow opening at apex.
• Chalaza : Base of ovule.
• Female gametophyte or embryo sac remains embedded in nucellus.
  Oval, elongated, multicellular 7 celled structure.

Megasporogenesis-

1. Process of formation of haploid megaspores from Megaspore Mother Cell (MMC) which is diploid (2n).
2. Megaspore mother cell is situated in nucellus towards micropylar end.
3. By meiosis → Linear tetrad of 4 megaspores (n).
4. Upper 3 degenerate but lower one is functional,

• Functional megaspore – First cell of female gametophyte
• 1st mitosis -2 nuclei which migrate to opposite poles
• 2nd mitosis-2 nuclei formed at each pole
• 3rd mitosis-4 nuclei formed at each pole
• One from each pole moves towards centre – polar nuclei

5. Egg apparatus : 3 nuclei at micropylar end.
6. Central egg cell with 2 synergids.
7. Synergids with filiform apparatus – guides pollen tube towards egg.
8. Antipodal cells : 3 cells at chalazal end.
9. Definitive or secondary nucleus : 2 Polar nuclei fuse in central cell – form diploid nucleus.
10. This 7 celled 8 nucleate mature embryo sac is monosporic and endosporic, enclosed in ovule.

Pollination-

1. Pollination : Transfer of pollen grains from anther to stigma of flower.

• Pollen grains are non-motile and female gametes are produced at different site. To bring both gametes together, this is a necessary act.
• Agents of pollination also act as agent for seed dispersal.

2. Types of Pollination :
(1) Self pollination – Inbreeding

• Occurs in single flower or two flowers in same plant.
• Autogamy : Bisexual flower pollinated by its own pollen shows autogamy.
• Offspring produced by self-pollination is genetically identical to parents, e.g. Pea.

(2) Cross Pollination – Outbreeding

• Xenogamy : Two different plants are involved.
• Need pollinating agent.
• Genetically varied offspring e.g. food and fibre crops

(3) Types of cross pollination :

• Chasmogamy : When flowers open and expose their sex organs.
• Homogamy : Condition when anther and stigma mature at same time.
• Cleistogamy : Condition when flowers remain closed, e.g. Viola, Commelina.
• Geitonogamy : Conditon where transfer of pollen grains to stigma of other flower produced on same plant, e.g. Unisexual flowers of Cucurbita.

3. Agents of Pollination:

4. Comparison of different mechanisms of pollination:

Outbreeding devices – Contrivances-

1. Mechanism to prevent self-pollination and promote cross pollination.
2. Self-pollination results inbreeding depression, hence cross pollination needed.

3. Devices observed in plants.

(1) Unisexuality:

• Unisexuality flowers
• Dioecism e.g. Maize or Monoecism e.g. Papaya, Mulberry

(2) Dichogamy:

• Maturity at different times for anthers and stigma
• Protandry earlier maturity of androecium e.g. sunflower
• Ptotogyny earlier maturity of gynoecium e.g. Gloriosa

(3) Prepotency:
Rapid pollen germination on other stigma of same type e.g. Apple.

(4) Heteromorphy:

• Different forms of flowers
• Stigmas and anthers placed at different levels.
• Divided into two types
  1. Heterostyly
  2. Hcteroanthy e.g. Prtmula

(5) Herkogamy :

• Natural physical barrier between sex organs.
• Contact of pollen with stigma is avoided. eg. Calot ropis

(6) Self – sterility:

• Genetic mechanism
• Inhibits pollen germination on stigma of same flower e.g. Tobacco, Thea

Pollen-Pistil Interaction-

1. Pistil has ability to recognise right type of pollen.
2. Special proteins help in determining compatibility.
3. Physiological mechanism operates on stigmatic surface.
4. Compatible pollen absorbs water and nutrients.
5. Pollen tube emerges from germ pore and passes through style to ovule.
6. Tip of pollen tube enters synergid.
7. Growth of pollen tube is determined by specific chemicals.
8. Pollen grains can be induced to grow on artificial medium having sucrose and boric acid – in vitro tube growth.
9. Artificial hybridization :

• Crop improvement and plant breeding programmes
• Selected desired pollens are handpicked and pollinated.
• Emasculation (Removal of anthers before opening of flowers) and bagging are important steps.

Double fertilization-

1. Complex fertilization mechanism where both male gametes participate.
2. Characteristic feature of angiosperms

• Porogamy : Pollen tube entering the ovule through micropyle.
  (Most common type – enters synergid and releases its content – 2 non-motile male gametes)
• Chalazogamy : Entry of pollen tube through chalaza.
• Mesogamy : Entry of pollen tube through integuments.
• Siphonogamy : Non-motile gametes present in pollen tube.

Process of double fertilization :

Process of double fertilization in embryo sac

(1) Syngamy (Generative fertilization)

• 1 male gamete unites with egg cell, (n) + (n) =2n
• Zygote (2n)
• Embryo (Generative fertilization)

(2) Triple fusion (Vegetative fertilization)

• 1 male gamete unites with Secondary nucleus, n+(2n)=3n
• PEN – Primary Endosperm Nucleus (3n)
• Endosperm — Nutritive tissue (Vegetative fertilization)

Both male gametes are utilized in the fertilization process hence it is described as a double fertilization.

4. Significance of double fertilization :

• Unique feature of angiosperms.
• Concerned with production of seed.
• Zygote develops into embryo which in turn forms new plant.
• Triploid PEN forms endosperm – nutritive tissue for developing embryo.
• Restoration of diploid chromosome number.
• Avoids polyembryony.

Development of Endosperm-

1. Post fertilization event.
2. Developed from triploid PEN.
3. Development of embryo and endosperm is simultaneous.
4. Endosperm also regulates growth of embryo.

5. Types of endosperm:

(a) Nuclear

• Free nuclear divisions
• No wall formation
• Large central vacuole
• Wall formation at later stage
• e.g. Coconut, Wheat, Sunflower

(b) Cellular

• Divisions of PEN followed by wall formation
• e.g. Petunia
  Adoxa
  Balsam

(c) Helobial:

• First division of PEN followed by wall formation
• 2 celled unequal
• Smaller chalazal cell and larger micropylar cell
• Further free nuclear divisions

6. Mosaic Endosperm : It is variation in the endosperm having tissue of two different types, e.g. Corn – Patches of different colours giving mosaic pattern.

Development of Embryo-

1. Embryogenesis : The process of development of zygote into embryo is called Embryogenesis.
2. Zygotic embryo is situated towards micropylar end in embryo sac.
3. When some amount of endosperm is formed then only growth of embryo starts.
4. Zygote develops wall around it and becomes
oospore.
5. Oospore divided into 2 celled pro-embryo.
6. 2 celled proembryo

1. Larger Cell
2. Smaller Cell

Larger Cell

1. Towards micropyle
2. Called basal cell.
3. Suspensor initial
4. Transverse divisions to form filamentous suspensor
5. Suspensor pushes embryo
6. First swollen cell – Haustorium
7. Lowermost cell is hypophysis
8. Hypophysis forms radicle, root cap.

2. Smaller Cell:

• Towards Chalaza
• Called terminal or apical cell
• Embryonal initial
• 3 mitotic divisions
• 8 cells – octant
• Lower tier forms hypocotyl and part of radicle
• Upper tier forms plumule and Cotyledon
• Divisions to form heart shaped
• TWo lateral cotyledons
• Curvature – Horse shoe shaped

7. Embryogenesis is similar till octant stage in dicot and monocot embryo development.
8. In Monocot embryo – Single cotyledon

• Scutellum – shield shaped cotyledon
• Coleorhiza – Protective covering of radicle
• Coleoptile – Protective covering of plumule Unit

Seed and Fruit development-

1. Formation of seeds inside fruit for creating offspring for next generation.
2. Fertilization initiates seed formation.
3. Integuments form seed coat – Testa : Outer integument.
Tegmen : Inner integument.
4. Perisperm : Remnants of nucellus in seed e.g. black pepper, beet
5. Pericarp : Ovary wall becomes fruit wall
6. Seed

• Endospermic or albuminous- e.g. Castor, Maize
• Non-Endospermic or exalbuminous e.g. Bean. Pea

7. Cotyledons : Store food materials.
8. Micropyle in seed coat: For emergence of radicle.

9. Significance of Seed and Fruit Formation

• Nourishment to seed that is present inside fruit.
• Protection of seed.
• Propagating unit.
• Dispersal, spread of species.

10. Seed dormancy – Structural and physiological adaptive mechanism for survival.
11. Helpful during adverse environmental conditions.

Apomixis –

1. Phenomenon of formation of embryo through asexual methods.
2. Apogamy : Gametophytic cell produces embryo without fertilization.
3. Apospory : Sporophytic cell produces embryo without fertilization.
4. Agamospermy : Seed is produced but embryo inside is formed without meiosis and syngamy.

5. Apomixis

(A) Recurrent

• Diplospory – unreduced.
• Diploid embryo sac from megaspore mother cell.
• e.g. Taraxacum
• Apospory – apomictic embryo sac.

(B) Non-recurrent

• Parthenogenesis, Embryo formed from egg cell (n)
• Apogamy – embryo from haploid cell.
• Sterile plants.
• e.g. Nicotiana

(C) Adventive Embryony

• Addition to zygotic embryo, embryo formed from nucellus or integuments.
• e.g. Mango, Lemon, Orange.

Parthenocarpy-

1. Parthenocarpy: Fruit formation without fertilization.
2. Stimulus provided by placental tissue.
3. Chemical stimulus of auxins (IAA) responsible for enlargement of ovary.
4. No seed formation (seedless).
5. E.g. Banana, Pineapple, Papaya
6. Can be induced artificially by spraying hormones gibberellins or other physical methods.
E.g. Grapes.

Polyembryony-

1. Development of more than one embryo in the seed
2. Adventive Polyembryony : Embryo
development from nucellus or integuments.
3. Cleavage Polyembryony : Cleavage of zygote pre-embryo and the units develop into embryos.

4. Advantages :

• Genetically uniform seedlings.
• Emergence of multiple seedlings.
• Beneficial in horticulture – Growing fruits.

Learn this as well :

• Fibrous endothecium of anther wall helps in the dehiscence of anther when pollen grains are mature.
• Pollination by animals is known as zoophily. Animals like snakes, rodents, squirrel, monkeys, lemurs and elephant act as pollinating agents.
• Pollination by snails and slugs is known as malacophily.
• Pollenkitt substance in insect pollinated pollen grains is contributed by tapetum.
• In ovule, the part of the funiculus united with body of ovule, ovule wall is known as raphe. It is seen as a line or a Ridge.
• In maize grain, aleurone layer is the outer part of starchy endosperm which stores proteins.

Know your Scientist/Conservationist :

• Nawaschin : Discovery of phenomenon of double fertilization in Liliaceae family plants : Lilium and Fritillaria.
• Noll : Coined term parthenocarpy.
• Leeuwenhoek : Noticed polyembryony in Citrus seeds for first time.
• Rahibai Popare : Conservationist of Maharashtra, seed mother, created seed bank for varieties of native seed.

By going through these Maharashtra State Board Bookkeeping and Accountancy 11th Notes Chapter 9 Final Accounts of a Proprietary Concern students can recall all the concepts quickly.

Maharashtra State Board 11th Accounts Notes Chapter 9 Final Accounts of a Proprietary Concern

Meaning of Final Accounts-

Every business organisation prepares two important financial statements viz. income statements and statement of financial position to find out the result of business done in the accounting year and to find out financial position in the form of assets owned and liabilities payable to outsiders. In income statements Trading Account and Profit and Loss Accounts are prepared and in the statement of financial position Balance Sheet is prepared.

Thus, final account refers to the group of Trading Account, Profit and Loss Account and Balance Sheet. Final Accounts are prepared on the basis of trial balance and additional information called adjustments at the end of every accounting year.

Final Accounts may be defined as “the statements prepared at the end of an accounting year to disclose the financial position and performance of a business concern”.
Final Accounts include Trading Account, Profit and Loss Account and Balance Sheet.

Objectives of Final Accounts-

• To know the amount of Profit earned or loss if any suffered during the accounting period.
• To know the amount of assets and liabilities in the business on a particular date.
• To know the amount of capital in the business. ,
• To know the amount receivable from various debtors and the amount payable to various creditors.
• To know the Trading (Gross) profit, Operating (Net) profit and abnormal gains and losses.
• To enable the trader to compare the result and financial position of the business with other similar business.
• To find out or ascertain the amount of taxes, i.e. Income tax, Sales tax, Wealth tax, etc. payable to the government.
• To calculate the various ratios for the purpose of financial analysis.
• To enable the trader to take necessary policy decisions regarding future business activities.

Importance of Final Accounts-

• With the help of final accounts businessman can find out gross result, i.e. gross profit earned or gross loss suffered during the accounting period.
• Final Accounts helps to find out cost of goods sold.
• Current year’s stock can be compared with the previous year’s stock.
• Net Profit or Net Loss can be easily ascertain.
• Ratio of Net Profit to Net Sales can be easily calculated.
• Ratio of expenses to Net Sales can be ascertained.
• Comparison of actual performance with desired performance can be easily done.
• Financial position of the business can be ascertained.
• Proprietor’s equity can be ascertained.
• Facilitates the accountant to check arithmetical accuracy of the accounting records.

Trading Account-

Trading Account is a part of final accounts which is prepared on the basis of direct expenses and direct incomes of business to ascertain the gross result of the business, done in the accounting year. Preparation of Trading Account is the first step in preparation of final accounts. Trading Account is prepared by considering only direct expenses and direct incomes of the business. Expenses and incomes which have a direct connection with production are called direct expenses and direct incomes, e.g. power and fuel, cost of raw materials, wages etc. are called direct expenses, and sales proceeds are called direct incomes.

Thus, the Trading Account shows gross result of trading or business activities carried out in the particular accounting year. It is prepared with the basic objective of ascertaining how much gross profit is earned or loss suffered as a result of manufacturing goods or services or buying and selling of goods. Service industries like banks, insurance companies, medical and education institutions never prepare Trading Account. They prepare revenue account, instead of trading account. On the debit side of Trading Account, direct expenses, opening stock and purchases are recorded and on the credit side of account direct income, closing stock and sales are recorded. This account is also credited if goods are lost on account of fire or theft and goods distributed as free samples.

Debit balance of this account indicates gross loss and credit balance of this account indicates gross profit. Results shown by this account i.e. either gross profit or gross loss is carried forward to the Profit and Loss Account.

Specimen Form of Trading Account –

Equation of Gross Profit And Gross Loss –

1. Gross Profit = Net Sales – Cost of goods sold
2. Gross Loss = Cost of goods sold – Net Sales
3. Net Sales = Total Sales – Sales Returns (Return Inwards)
4. Total Sales = Cash Sales + Credit Sales
5. Cost of Goods Sold = Opening Stock + Net Purchases + Direct expenses – Unsold goods
6. Net Purchases = Total Purchases – Purchase Returns (Return Outward)
7. Total Purchases = Cash Purchases + Credit Purchases
   Unsold goods at the end of the accounting year refers to Closing Stock.

Journal Entries For Preparation of Trading A/C –

Profit And Loss Account-

Profit and Loss Account is a part of final accounts which is prepared on the basis of indirect expenses and indirect incomes of the business to ascertain the net result of the business, done in the accounting year. On completion of Trading Account, Profit and Loss Account are prepared by considering only indirect expenses and indirect incomes of the business. Expenses and incomes which have no direct relation with production and whose absence do not affect production, are called indirect expenses and indirect incomes, e.g. salaries, interest, rent, cost of stationery etc. Indirect expenses are recorded on the debit side of the Profit and Loss Account and indirect incomes are shown on the credit side of the Profit and Loss Account. Indirect expenses of business are classified as:

(i) Office expenses (they are also called administrative expenses.) (ii) Selling expenses and (iii) Distribution expenses.

Indirect incomes and gains include discount received, commission earned, interest received, rent received etc.

Debit balance of Profit and Loss Account indicates net loss incurred in the business and credit balance of Profit and Loss Account shows net profit earned in the business in the accounting year.
Net profit is then carried forward and added to the capital where net loss is adjusted in the capital account of the proprietor.

Specimen Form Of Profit And Loss Account-

Note : R.B.D.D. A/c. stands for Reserve for Bad and Doubtful Debts Account.
N/R stands for New Reserve O/R stands for Old Reserve
F/B/D stands for Further Bad Debts.

Journal Entries Relating to Profit And Loss Account-

Balance Sheet: –

An accounting statement which shows the financial position of all assets and liabilities of the business as on particular date is called the Balance Sheet. Balance Sheet is not an account but a positional statement showing financial position of a business concern as on a particular date. On the left hand side of this statement liabilities of various types are systematically recorded and on the right hand of this statement all types of business assets are shown systematically. Business liabilities include short term liabilities like sundry creditors, bank overdraft, bills payable, outstanding expenses etc. and long term liabilities like bank loan, capital, loan etc. Business assets are classified as fixed assets, tangible assets, intangible assets, current or circulating assets and fictitious assets.

According to Palmer, “The Balance Sheet is a statement at a given date showing on one side the trader’s property and possession and on the other side his liabilities.”

Features of Balance Sheet-

1. Balance Sheet is not an account but it is a statement.
2. It depicts financial position of the business as on a particular date.
3. It is prepared usually at the end of every accounting period, i.e. on 31st March every year.
4. The balances of ledger accounts which are not transferred to Trading A/c and Profit and Loss A/c are ultimately transferred to Balance Sheet.
5. Balance of Real A/cs and Personal A/cs are transferred to Balance Sheet.

Specimen Form of Balance Sheet-

Adjustments-

Additional business information provided after completion of trial balance for preparation of final accounts are known as adjustments. To get a clear view and real results of business done in the trading year, some other business information, which do not find place in the trial balance, are required to be considered, while preparing final accounts. These adjustment items are required to be given proper effects in the final accounts. For every adjustment item, double effects (i.e. debit and credit) are given in the final accounts, e.g. outstanding wages are first added to wages on the debit side of the trading account and Secondly outstanding wages are shown separately on the liability side of the balance sheet.

Some Important Adjustments And Their Double Effects Are Discussed And Shown Below-

(i) Closing Stock : Value of stock in hand at the end of the accounting period is called closing stock. If closing stock is given in the list of adjustments, the same is to be recorded twice as – 1st effect: It is to be recorded separately on the credit side of the Trading Account.
2nd effect: Same is to be shown separately on the asset side of the Balance Sheet as it is shown below.
[Note: Closing Stock is always valued at cost price or market price whichever is less.]

(ii) Outstanding Expenses : Expenses which are not paid or remains unpaid at the end of year, are called outstanding expenses, e.g. outstanding wages, outstanding rent, outstanding salaries etc. If outstanding expense is included in the trial balance, it is to be recorded only on the liability side of the Balance Sheet. If outstanding expense is given in the list of adjustments, the same is to be treated as: E.g. Outstanding Salaries.

1st effect: Add to Salary on the debit side of the Profit and Loss A/e.
2nd effect: Show separately on liability side of the Balance Sheet.

(iii) Income Receivable OR (Income earned but not received) : Income which is not received when it is due, is called as income receivable e.g. outstanding interest (receivable). If income receivable is included in trial balance, than it is to be shown only on the assets side of the Balance Sheet separately. If it is given in the adjustment list, same is to be shown as below : E.g. Interest Receivable.
1st effect: Add to interest received on the credit side of the Profit and Loss Account.
2nd effect: Show separately on the asset side of the Balance Sheet.

(iv) Expenses Paid in Advance (Prepaid Expenses) : When any expense is paid before it is due, the same is called as prepaid expense, e.g. prepaid insurance, prepaid rent etc. If it is given in the trial balance, the same is to be shown on the the assets side of the Balance Sheet. If prepaid expenses are given in the list of adjustments same is to be shown as below. E.g. Prepaid Insurance.

1st effect: Deduct prepaid insurance from the insurance premium paid in the Profit & Loss A/c on debit side.
2nd effect: Show prepaid insurance on the asset side of the Balance Sheet.

(v) Income Received in Advance : Income which is received before it is due, is called as income received in advance e.g. rent received in advance. If it is given in the trial balance, it is to be recorded on the liability side of the Balance Sheet only. If an item of income received in advance is given in the list of adjustments, the same is to be shown as below : E.g. Rent received in advance.

1st effect: Deduct rent received in advance from rent received in Profit & Loss account on credit side.
2nd effect : Show rent received in advance separately on the liability side of the Balance Sheet.

(vi) Depreciation : Depreciation means reduction in the value of fixed asset due to its continuous use, wear and tear or any other similar cause. Depreciation is charged on fixed assets like land & buildings, plant & machinery, furniture and fixtures etc. If depreciation item is provided in the trial balance it is to be debited to Profit and Loss Account only. If depreciation on fixed assets is given in the list of adjustments, the same is to be shown in final accounts as follows:
E.g. Depreciation on Plant & Machinery.

1st effect: Record depreciation separately on the debit side of Profit & Loss A/c.
2nd effect: Deduct the amount of depreciation from the related asset on asset side of the Balance Sheet.

(vii) Interest on Capital: If interest on capital is provided, it is an expense for the business and an income for the proprietor. Adjustment effects of interest on capital are given below.
1st effect: Interest on capital is to be shown on the debit side of Profit and Loss Account separately. 2nd effect: Same amount of interest is to be added to the capital of proprietor, on the liability side of the Balance Sheet.

(viii) Interest on Drawings : Interest charged on the drawings is an income to the business and an expense for the proprietor. Adjustment effects of interest on drawings are given below:
1st effect: Interest on drawings is to be shown on the credit sideof Profit and Loss Accountseparately.
2nd effect: Deduct the same amount of interest from the capital of proprietor on liability side of the Balance Sheet.

(ix) Interest on loan taken : Loan taken is a liability of the business. Interest on loan taken is an expense of the business. Adjustment effects of interest on loan taken is shown as below:

1st effect: Show interest on loan separately on the debit side of the P & L A/c.
2nd effect: Add this amount of interest to loan taken on the liability side of the Balance Sheet.

(x) Interest on loan given : Loan given is an asset of the business. Interest due on such loan is an income for the business. Two effects of interest on loan given are shown below:

1st effect: Show interest on loan separately on the credit side of the P&L A/c.
2nd effect: Add this amount of interest to loan taken on the asset side of the Balance Sheet.

(xi) Reserve for Bad and Doubtful Debts Account (R.B.D.D. A/c) : This provision is created on Sundry Debtors. In connection with this account, bad debts incurred during the year and opening balance of R.B.D.D. . A/c (or R.D.D. A/c) are given in the trial balance. Further, bad debts and closing balance of R.B.D.D. A/c (or R.D.D. A/c) are provided in the list of adjustments. Their location and adjustments effects in final accounts . are shown below:

Where: F/B/D → stands for further bad debts.
New Res. D.D. → stand for New Reserve for Doubtful Debts.
Old Res. D.D. → stand for Old Reserve for Doubtful Debts.
R.B.D.D. A/c → stand for Reserve for Bad and Doubtful Debt Account.
Adj. → stands for Adjustment & T.B. stands for Trial Balance.

If (Bad debts + F/BID + NIR) > Old Reserve, the result is to be shown on the debit side of the Profit and Loss
Account.
If Old Reserve> (BID + FIBID + NIR), the result is to be shown on credit side of Profit and Loss Account.

(xii) Reserve for Discount on Debtors A/c : It is calculated on Sundry Debtors. Accounting treatment and adjustment effects of Reserve for Discount on Debtors are same as like adjustment effects of R.B.D.D. A/c

Where: R.D.D. A/c → stands for Reserve for Discount on Debtors Account.
If (Discount + F/Discount + New Reserve) > Old Reserve, result is to be shown on debit side of Profit & Loss account.
If Old Reserve > (Discount + F/Discount + New Reserve), the result is to be shown on credit side of Profit & Loss Account.
Discount on debtors is to be carried out after completion of adjustment effects of reserve for bad and doubtful debts.

(xiii) Provision for Discount on Creditors Account: It is calculated on Sundry Creditors. Accounting treatment and adjustment effects for provision for discount on creditors are given below :

Where: R.D.C. A/c stands for Reserve for Discount on Creditors Account.
If (Discount + Further Discount + New Reserve) > Old Reserve, the result is to be shown on credit side of Profit and Loss Account.
If Old Reserve > (Discount + Further Discount + New Reserve), the result is to be shown on debit side of Profit and Loss Account.

(xiv) Goods Distributed as Free Samples : Newly established firms and even well established firms distribute samples of new product free of charge in the nearby areas to increase their sale. Adjustment effects of free samples are shown below:
1st effect: Show separately as “Goods distributed as free samples”on the credit side of Trading Account or deduct the amount of free sample from purchases on debit side of Trading Account.
2nd effect: Show separately on the debit side of Profit and Loss Account under the heading “Advertisement Account.”

(xv) Loss of Goods by Fire or Theft: Adjustment effects of goods lost by fire or theft are shown below:
(A) If goods are insured :

1st effect: Show separately, on the credit side of Trading Account, the full value of goods lost.
2nd effect: Show separately on debit side of Profit and Loss Account, the difference between value of goods lost and insurance claim receivable i.e. net loss by fire or theft.
3rd effect: Show the insurance claim admitted by the insurance company on the asset side of the Balance Sheet. This is shown as below:

(B) If goods are not insured :

1st effect: Show separately on the credit side of Trading Account the full value of goods lost by fire or theft.
2nd effect: Show separately on debit side of Profit & Loss Account the full value of goods lost by fire or theft.

This is shown as below.