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 1 Introduction to Book Keeping and Accountancy students can recall all the concepts quickly.

Maharashtra State Board 11th Accounts Notes Chapter 1 Introduction to Book Keeping and Accountancy

Introduction-

In the ancient days, in order to satisfy wants, commodities and services were directly exchanged against A other commodities and services. After the introduction of money as a medium of exchange commodities and services were purchased and sold directly for money or money’s worth. Along with civilisation, growth and development of economy, business activities also increased. Later on it became difficult for businessman to remember all the business transactions of the day. Thus, a need was felt to record (i.e. to write) business dealings in a systematic way. This very job of recording or writing the business transactions in a separate book is known as “Book-Keeping”. Book-Keeping records are useful for taking important decisions as to whether the business activities are feasible, profitable and to be continued further or not. The detail information of business and other organisations is also required by the proprietors, managers and other stakeholders like government, customers, employees, researchers, investors to fulfill their different objectives.

Evolution of Accounting:
The system of book keeping was in operation in India, since the time of Chandragupta Maurya. During his regime his minister Kautilya wrote a book called ‘Arthashastra’ in which some references were given regarding the way of recording and maintaining accounting records. This system of recording business transactions in the separate book was known as Deshi Nama.

The person who records the business transactions in the books of accounts is called an ‘Accountant’. In the earlier times of civilisation, accountants were appointed by the wealthy people to keep detailed information of their properties. Accountants used to prepare accounts periodically for the owners of the property. The double entry system of book-keeping was first originated in Italy and developed by Luca De Bargo Pacioli in 1494.

Industrial revolution took place in 18th and 19th century which gave birth to the large scale business organisations such as Partnership firm, Joint stock companies, Cooperative societies, etc. In the large scale business organisations, due to separation of ownership from the management, the need was felt to develop comprehensive accounting information system to provide detail information about the business to the shareholders (owners) and investors.

In the 20th century, a separate branch of accounting called Management Accounting system is discovered and developed to analyses financial information and to provide financial information to the management for decision making.

In the 21st century due to the vast and rapid growth and development in the business activities and business organisations, the individual centric accounting system gradually developed into Social Responsibility Accounting. Thus, in the modern world of business, accounting become the most important aspect of every business organisation.

Meaning And Definition OF Book-Keeping-

(A) Meaning : Book-keeping is an art or system of keeping or maintaining a record of business transactions in a regular and systematic manner. According to R. N. Carter, “Book-keeping is a science and an art of correctly recording in the books of accounts, all those business transactions that result in transfer of money or money’s worth.” In other words, Book-keeping is a science as well as an art of recording pecuniary i.e. financial transactions systematically and in chronological order in a separate set of books.

Book-keeping is a science, because in book-keeping there are a number of well defined rules and principles which we use and follow while recording business transactions. It is a social science because, in book-keeping, we study human behaviour with respect to his earning of money and wealth and spending to satisfy the numerous human wants.

Book-keeping is also considered as an art of recording business transactions, because the writing of accounts in a specific style and format requires education, knowledge, training, skill and experience.
From another point of view, Book-keeping is a continuous process of collecting, analysing, classifying, summarising and recording the different types of business transactions. In brief, book keeping may be defined as “A science as well as an art of collecting, analysing, classifying, summarising and recording all types of business transactions in a significant manner and in terms of money in a separate set of books.

Definition:

• “Book-keeping is a Scientific Method of recording day to day business transactions in words and figures in the books of Accounts so as to show correctly and clearly the financial position of a business.”
• According to J.R. Batliboi, “Book-keeping is an art of recording business dealing in a set of books.”
• Finney and Miller : “Book-keeping is the process of analyzing, classifying and recording transactions in accordance with preconceived plans.”
• L. C. Cropper : “Book-keeping is the art of recording in a suitable form a person’s business dealings, so that, at any time, their nature and effect may be clearly seen.”

Thus, book-keeping involves the following :

• Recording financial business transactions in the main book of accounts called Journal.
• Preparing different accounts in another book of accounts called Ledger. – –
• At the end of the accounting year, balancing all accounts opened and operated in the ledger.
• On the basis of the balance extracted from different accounts, preparing a trial balance for various purposes.

Features of Book-Keeping:

The main features of book-keeping are explained below :

• Book-keeping is process or method of recording business transactions.
• Book-Keeping is a science. This is because the book of accounts is prepared on the basis of some well defined principles and conventions.
• Book-keeping is an art. This is because the preparation of accounts in a specific style and format calls for skill, experience, knowledge and judgement.
• In book keeping only records of monetary (financial) transactions are prepared and maintained.
• Various books of accounts such as journal, subsidiary books, ledger, registers, etc. are prepared to record business transactions.
• The records of business transactions are prepared for specific period of time say one year.
• The records are maintained and preserved for a long period of time. .
• The result of business activities is ascertained on the basis of book-keeping records.

Objectives of Book-Keeping:

The different objectives of book-keeping are given below :

• To keep a complete and accurate records of all financial transactions in a systematic, orderly and logical s, manner.
• To maintain date wise and account wise permanent, correct and complete records of the business transactions . for various purposes.
• Book-Keeping enables the businessman to make permanent record of financial transactions of business
  organisation. This records can be produced in the court of law as an evidence in settlement of any claim or disputes.
• To ascertain the profit earned or loss sustained in the business.
• To know the financial position of the business i.e. capital invested in the business, assets accumulated and acquired and liabilities owed, etc. .
• To know the exact amount due from debtors and the exact amount payable to creditors.
• To know the exact amount of taxes payable to the Government and to do tax planning for the business ventures.
• To detect and prevent errors and frauds committed by others in the business.
• To provide valuable business information to various groups of users.
• To take decisions on significant business matters.
• To know the progress made by the business and to measure the efficiency of business.
• Various laws such as Income Tax, Companies Act, Co-operative Societies Act, Charitable Trust Act, etc. make it mandatory to prepare and maintain books of accounts.

Importance of Book-Keeping :

The importance of book-keeping is explained as follows :

• Record: In this present dynamic world, every day a businessman enters into a number of business transactions with different customers and the nature of each of those transaction is different. It is not possible for a businessman to remember all such transactions, and therefore it is necessary to record these transactions.
• Financial Information: Book-keeping provides valuable and much needed information on profit earned or loss sufferred, balance of assets and liabilities, stock, investments, capital balance, etc.
• Decision making: Owner or top management get valuable information from book keeping records for decision making in the business.
• Controlling: Information obtained from book keeping help the businessman to apply control and check on the expenses and to increase the profitability of the business. Information provided by the accounting system are also of great importance in avoiding wastage and unnecessary expenses. It is also helpful to achieve success in business ventures.
• Evidence: Information recorded in the books of accounts are considered by the court of law as an evidence in settlement of any disputes.
• Comparison: By comparing the financial statements of the past years with the current year and with the financial statements of similar other firms, managements or owners of the business can judge whether the business is making progress or not and accordingly introduce changes in the business planning to increase his profitability.
• Tax Liability: Government authorities can collect taxes like sales tax, income tax and revenue collecting departments can accurately impose and collect taxes from the business firm on the basis of information provided by the books of accounts.

Utility of Book-Keeping :

Utility means usefulness. The utility of book-keeping to different persons and entities is explained as follows : ‘

(1) Businessman or Owner: The businessman or owner who invests his money and assets into his business must know the profitability, financial stability, and solvency of his business concern. This can be ascertained only from the books of accounts. It would not be possible for a businessman to carry-out the business without a systematic record of the business transactions. A businessman can take business decisions more realistically on the basis of the information provided by the books of accounts.

(2) Management: From the Book Keeping records, a manager can provide timely information to the different parties to gain their confidence. Besides this, book keeping records help the management in planning, decision making, controlling and managing the business activities.

(3) Government: On the basis of information provided by the accountant, various departments of the Government will be able to calculate and collect sales tax, income tax and revenues due from business organisations.

(4) Prospective Investors: After studying the book-keeping information, the prospective investors such as
shareholders, debentureholders, creditors, partners can decide whether to invest money into the business or not.

(5) Customers: Book keeping records provide information on the financial capacity and profitability of the business organisations.. This in turn help the customers to find out whether they are being exploited by the businessmen or not.

(6) Creditors & Lenders: Book-keeping has a great utility to creditors and lenders. The creditors get valuable and correct financial informations from the different financial statements published by the business concern. On the basis of such information, they can decide whether to invest further or to extend the credit period or
to recover the amount due from business.

(7) Development: With the help of accounting, businessman can avoid wastages, losses and control the .
expenditure. As a result profitability and revenue earning capacity of the business organisation increase which in turn help the organisation to expand and develop its business.

Difference Between Book-Keeping And Accountancy-

The difference between Book-Keeping and Accountancy is explained as under :

• Meaning: Book keeping refers to the process of recording business transactions in the book of accounts.
  Accountancy refers to the process of summarising and analysing the business transactions and interpreting the effects of those transactions on the business activities.
• Stage: Book-keeping is a first stage of accounting as it involves preliminary work of accountancy. Its work starts immediately after completion of transactions. The work of accountancy starts after the completion of  Book Keeping work. Thus accountancy is the next stage of book-keeping.
• Objectives: The main aim of book-keeping is to provide primary information while the main aim of
  accountancy is to process and interpret profits & losses from the data available in the book-keeping.
• Responsibility: Junior staff or newly recruited staff is responsible for keeping records of business
  transactions. Senior staff is responsible for maintaining accounting records.
• Outcomes: Book-Keeping ultimately results in Journal and Ledger. Accountancy ultimately result in
  preparation of Trading A/c, Profit and Loss A/c and Balance Sheet. .
• Period: Book keeping discloses the day to day details of business transactions whereas accounting gives yearly details of business transactions.
• Scope: Book-keeping is a part and parcel of accountancy and it has a limited and narrow scope whereas accountancy has a vast and unlimited scope.
• Procedure: In book keeping entries for day to day transactions are recorded by following basic principles and rules of double entry book keeping. In accountancy, book keeping information are classified, analysed and summarised to prepare financial statements, reports, ratios etc.
• Principles: To record preliminary information in journal, ledger and subsidiary books elementary knowledge of journalising and posting are required. To prepare accounting statements, reports, final accounts, ratios etc., knowledge of all accounting concepts, principles and conventions are required.

Meaning And Definition Of Accountancy:

Accounting is a broader concept than the concept of Book-Keeping. It refers to the process of summarising and  analysing the business transactions and interpreting the effects of those transactions on the business. The definition of accounting as given by American Accounting Association is stated as follows, “Accounting _ refers to the process of identifying, measuring and communicating economic information to permit informed judgements and decision by the user of accounts.

Kohler’s definition of Accountancy is stated as follows: “Accountancy refers to the entire body of the ‘ theory and process of accounting.”

In brief accounting is a process of recording, classifying, summarising, analysing and interpreting the financial transactions and communicating the results thereof to the users of such information.

Basis (Methods) of Accounting System :

Accounts are recorded and maintained on various basis.

(1) Cash basis: Under this system income is recorded as and when cash is actually received and expenses are
recorded when they are actually paid in cash or by cheque.

Every transaction in which cash comes into the business or cash goes out of the business is recorded with v its specific purpose. Under this system only cash transactions are recorded. Credit transactions as well as barter transactions are not recorded. This method of accounting system is usually followed (Adopted) by the professionals like Doctors, Lawyers, Chartered Accountant, Actors, etc.

(2) Accrual Basis/Mercantile Basis: Under accrual basis or mercantile basis of accounting system, incomes are recorded as and when they accrues or earned and expenses are recorded as and when they are due or become payable. Under this system both the types of transactions viz. cash transactions and credit transactions are recorded. This system records incomes and expenses in the books of accounts as and when they are earned and incurred and not when they are actually received and paid. This system is also called Mercantile basis of accounting.

Example: Professional fees amounted to ₹ 3,000 is due to Chartered Accounting firm as on 31st March 2019, but received by the firm on 1st May, 2019. The accounting year of the firm ends on 31st March every year. As per cash basis, the Chartered Accountant Firm would record professional fees received in the accounting year 2019-20.
As per accrual basis, the Chartered Accountant Firm would record professional fees received in the accounting year 2018-19.

(3) Mixed or Hybrid basis: Under Mixed or Hybrid basis of accounting the principles of both cash basis and accrual basis are followed in recording business transactions. Under this method of accounting system revenues and assets are usually recorded on cash basis and expenses are generally recorded on accrual basis. In brief it is a mixture (combination) of cash basis and accrual basis of accounting. The laws in India do not permit the organisations to use this method of accounting system.

Qualitative Characteristics of Accounting Information –

Qualitative characteristics of Accounting information are explained as follows :

(1) Reliability of Accounting information : The information provided in the financial statements must be reliable. These information must be free from material errors and bias. The information must be presented in good faith. The reliability of the financial statement is dependent on the following points:

• Completeness or verifiability: The information provided in the financial statements is said to be reliable when it is complete within the limits of materiality and cost. Any omission may cause information to be false or misleading on unreliable in terms of its relevance.
• Neutrality: The information given in the financial statements must be neutral in all respect. Such statements or information are not neutral if by selective presentation of information, may affect the decision making power of the users.
• Faithfulness: The transactions and the other events must be represented faithfully in the information. Many times the financial information provided is subject to some risks and they are not faithfully represented.

(2) Relevance of Accounting information: The information given in the financial statements must be relevant to the decision making requirements of the users. The information provided in the financial statements shoqld have quality of relevance when it creates favourable impact on the decision making power of users by helping them to evaluate past, present or future events. The productive and confirm roles of information are related to each other.

The relevance of information is affected by its nature and materiality. Accounting information is said to be material, if its omission from the financial statement affect the decision making for its users.

(3) Understandability of Accounting information : One of the important qualitative characteristics of Accounting information is that the information given in the financial statements should be readily understandable by the users. The information provided should be as simple as possible. It is assumed that the users are having reasonable knowledge of the business and its accounting activities. It is also assumed that the users are having willingness to study the information given in the financial statements. However, information of complex matters should not be excluded simply on the grounds that they are very difficult for certain users to understand.

(4) Comparability of Accounting information: Every user should have enough knowledge and capability to compare the financial statements to identify trends (ups and down) in the financial position and performance of the business unit over the number of years and also of different business units. This is to evaluate their relative financial position, performance and changes in financial position. This qualitative characteristic requires that there should be consistency in choosing accounting policies. Lack of consistency may not allow the early comparability of the financial statements of different periods and different enterprises.

Basic Accounting Terminologies :

(1) Transaction : In common parlance, transaction is a dealing between two or more persons, in which one person gives something to the other and in exchange of that receives something from the other. It is an exchange of goods and services either for cash or for any other goods or services. In other words, it is a business activity which interprets in money terms what business gives and what business receives in that exchange. To complete the transaction at least two persons are required. Purchase of goods, sale of goods, receipt and payment of cash, borrowing and lending, depositing cash into the bank, withdrawal of cash from the bank, etc. are the examples of business transactions.

Business transactions are broadly classified into two categories viz. (a) Monetary transactions and (b) Non¬monetary transactions.

(a) Monetary transactions : The business transactions in which goods and services are directly
or indirectly exchanged for money or money’s worth are called monetary transactions. Business organisations record only monetary transactions in their books of accounts. Monetary transactions “”v are further classified as (i) Cash transactions and (ii) Credit transactions. ,,

(i) Cash transactions: In cash transaction, goods or services are directly exchanged for cash. When
goods or services are purchased for immediate cash payment, it is known as cash transaction, e.g.
goods purchased against immediate cash payment.

(ii) Credit transactions: In credit transaction, goods or services are exchanged for a certain value to be ,
received or paid in the future. In a credit transaction, goods or services are purchased, but payment is
postponed to a future date e.g. Mr. ‘A’ has purchased goods for ₹ 500/- and agrees to pay the amount after a month. It is a credit transaction.

(b) Non-monetary transactions : The business transactions in which goods and services are directly
exchanged for other goods and services are called non-monetary transactions. In this type of transaction,
money does not play any role e.g. purchase of 5 kgs rice in exchange of 1 metre cloth is a non-monetary transaction. It is also called as barter transaction or money less transaction.

(2) Entry : Recording the summary of business transactions in the form of debit and credit in the journal and
in proper form in subsidiary books and ledger is called an entry.

(3) Narration : A brief or short explanation of an entry written just below the entry in a bracket in the
particulars column of journal is called narration. It is started with a word ‘Being’. Narration should be as
short as possible. It should be easy to understand.

(4) Goods : Any commodity or article which is produced or purchased for sale by a trader is called goods. In
other words, any commodity or article in which a trader regularly deals or carries on trade is called goods
for that business or trader.

Goods have the following features, viz.

• Goods may be any commodity or article which has exchange value.
• Goods must be manufactured or purchased by a trader for sale.
• Goods must be stored and exhibited for sale and not for use. For instance, books and literature are goods for publishers or book sellers. Similarly, clothes are goods for a cloth merchant and different kinds of grains stored or kept for sale are goods for a grocer.
• Goods which are stored and not yet sold are the property of the trader.

(5) Capital and Drawings :

(a) Capital: Total amount of cash, goods, assets, etc. invested by the proprietor into his business from
time to time is called capital. In accounting sense, excess of business assets over business liabilities
is described as capital. It is an asset for a proprietor and long term liabilities for the business. It is
received back by the proprietor only on the dissolution of his business. In the form of equation.

Capital = Business Assets – Business Liabilities

Investments into the business, profit earning capacity, withdrawals from the business by the proprietor for
self use, etc. are the main determinants of capital. The amount of capital may be calculated as follows:

(1) Mr. Kamalakar started business with Cash ₹ 1,50,000, Goods worth ₹ 1,40,000. Building valued at
₹ 4,00,000 and Furniture costing ₹ 45,000. Here Mr. Kamalakar’s capital arrived ₹ 7,35,000/-.

(2) Business information of Mr. Ravikant Sharma shows that his business assets are valued at ₹ 15,00,000
and business liabilities are estimated at ₹ 5,00,000. Here Ravikant Sharma’s capital is computed at
₹ 10,00,000/-. [i.e. ₹ 15,00,000-₹ 5,00,000]

(b) Drawings: Word ‘drawings’ is just the opposite to the word ‘capital’ in meaning. Drawings refer to total amount of cash and/or goods withdrawn by the proprietor from the business from time to time for self (personal) use or family use. Drawings are always adjusted with capital. Heavy withdrawals made by a businessman for self use reduces capital in the business. If the businessman controls his drawings, business can be developed further due to less loss of capital. Withdrawals made by a businessman for business purpose is not treated as drawings.

For example, Mr. Ramesh, a cloth merchant, took away 15 metres of cloth for family use on the occasion of the Diwali Festival without paying any thing to the business. The price of cloth per metre is ₹ 250/-. Here, drawings of Ramesh are computed at ₹ 3,750/-.
[i.e. 250 x 15 mts.].

(6) Debtors and Creditors :

(a) Debtors: Debtor refers to a person br an entity from whom money or money’s worth is receivable to a business enterprise. Debt is a total sum of money due from a person with whom the business has dealings. Accordingly, a person from whom such debt is due to a business, is called the debtor. In other words, the debtor is a person who has already taken a loan or services or goods from the business for which he has not yet paid for. A debtor is always under obligation to make payment to a business or a creditor. The following example will make the above ideas clear. Mr. Ashok sold goods worth ₹ 10,000 to Mr. Kishor on the condition that Mr. Kishor will pay that amount of ₹ 10,000 to Mr. Ashok after 2 months. Here, Mr. Kishor is a debtor to Mr. Ashok till he pays the entire amount to Mr. Ashok.

(b) Creditors: A creditor is a person or an entity to whom the business is under obligation to pay a certain
amount of cash. In other words, a person to whom the business owes or is required to pay some amount of cash is called creditor. A creditor is a person who has given a loan or goods or services to the business and for which he has not yet received any amount of cash, or reward. The business is under obligation to pay money to its creditor. For example, Mr. Anil, a businessman borrows money from the Bank of India for one year period for business purpose. Here the Bank of India is a creditor to Mr. Anil, till Mr. Anil clears his loan. .

(c) Bad debts: A sum of money due from other person is called debts. The debts which cannot he recovered from debtors inspite of repeated efforts are called ‘Bad debts’. It is a revenue loss to the business.

(7) Expenditure : An amount spent or incurred by the business organisation on the purchase of goods and
services or for any other consideration received by the business is called expenditure.; e.g. amount spent on purchase of raw material, electricity bill paid, etc.
Business expenditures are classified as (i) Capital expenditure, (ii) Revenue expenditure and (iii) Deferred
Revenue expenditure.

(a) Capital Expenditure: The expenditures which are incurred (1) on acquisition of an asset (2) in putting a new asset in working condition and (3) for acquiring benefits which will last for a long time are called capital expenditures, e.g. purchase of plant and machinery, wages paid for installation or erection charges of machinery, advertisement paid at a stretch for four years, octroi, freight paid on assets, over-hauling charges, etc. are categorised into the capital expenditure.

(b) Revenue Expenditure: The expenditures which are incurred to acquire the benefits which will last for a short period, are called revenue expenditures. It is normal day to day expenditure which do not
. increase profit earning capacity of an organisation, e.g. salaries, rent, interest paid, repairs and renewals, etc. are the examples of revenue expenditures.

(c) Deferred Revenue Expenditure: Heavy expenditure which is incurred in the current year, but benefit of which may be received or accrued to the business in the following two or more years, is called deferred revenue expenditure, e.g. Heavy amount spent on advertisement and publicity is a deferred revenue expenditure.

(8) Cash Discount and Trade Discount:

(a) Discount: An allowance, benefit or reduction in payment in monetary terms given by the trader to buyer or by a creditor to a debtor at the time of sale or repayment is known as discount, e.g. goods costing ₹ 15,000/- sold by a trader to the buyer and accepts ₹ 14,700 in full settlement. Here the difference of t 300 is considered as discount. Discount may be classified into two categories, viz. (a) Trade discount and (b) Cash discount.

(b) Trade Discount: Discount given by the seller to the buyer to increase sales turnover and to enable the buyer to earn a reasonable profit on resale is called Trade discount. It may be given by a manufacturer to a wholesaler or by a wholesaler to a retailer on bulk purchases. Trade discount is calculated on the catalogue price or list price of the goods. Amount of trade discount is deducted from invoice price. It is not shown in the books of accounts.
For instance if goods of ₹ 5,000 are purchased @5% Trade Discount, the value of goods that will be
recorded will be ₹ 4,750. Here Trade Discount = 5000 x \(\frac{5}{100}\) = ₹ 250
Net value of Goods = Catalogue price – Trade discount
= 5,000 – 250 = ₹ 4,750.

(c) Cash Discount: Discount given by the creditor to the debtor on payment of cash is called cash discount. It is the concession given to encourage prompt payment. It is always recorded in the books of accounts, as it is gain to the buyer and loss to the seller.

(9) Solvent and Insolvent:

(a) Solvent: A person who is capable of paying his past and present debts fully from his business and personal property is known as solvent. His financial condition is sound to pay his business debts. Solvency of the businessman increases the goodwill of the business. A solvent person’s property always A exceeds his business debts.
Example: On revaluation of assets and liabilities, it is found that total assets of Sudhakar, a proprietor is ₹ 9,50,000 and his total obligations (debts) are ₹ 2,50,000. Here financial position of Sudhakar is sound as he can easily pay off his total obligations (debts). He is therefore called solvent person.

(b) Insolvent: A person who is unable to pay his debts, is called insolvent. An insolvent person does not
have sufficient assets to pay his debts. His business debts are much larger than his business and personal
assets. He cannot settle the dues of his creditors fully. Insolvency leads to compulsory dissolution of
the business. . .
Example: Total Assets of the proprietor ‘X’ in the business are worth ₹ 2,00,000 whereas his total , liabilities (obligations) are ₹ 3,50,000 and he does not have any personal property to set off business debts. Here in this case ‘X’ is called insolvent, because he cannot pay off all the liabilities of his business.

If the court is satisfied that he cannot pay debts of the business even from his personal property, he will be declared as insolvent by the court of law.

(10) Accounting year : A period of 12 months is called a year. A year which begins with 1st January and ends with 31st December is called the calendar year. Accounts of the business enterprises are usually prepared
for a period of 12 months i.e. one complete year. The year for which the accounts of the business enterprises are prepared is called the accounting year. In India business enterprises may select one of the following periods as its financial year:

• From 1st January to 31st December.
• From 1st April of one year to 31st March of the next year.
• From 1st July of one year to 30th June of the next year.
• From 1st October of one year to 30th September of next year.

Now for Income Tax purpose an accounting year starts on 1st April and end on 31st March of next year.

(11) Trading concern and Not for Profit concern :

(a) Trading Concern: The enterprises which undertake business activities for earning profit are called
trading concerns. They are also called business organisations. They either manufacture or purchase the
goods for resale for a profit. They may be classified as sole trading concern, partnership organisation, company organisation, state enterprises, co-operative societies, etc.

(b) Not for Profit Concerns / Non-trading Concern: The enterprise which undertakes activities
not for earning profit but to provide services to its members or public at large is called ‘Not for profit
concerns’ or ‘Non-profit organisation’, Cricket Club of India, Mahalaxmi Charitable Trust, Educational Institution, etc. Thebe enterprises prepare income and expenditure account to find out whether income
is just sufficient to meet their expenses.

(12) Goodwill: Money value of a business reputation earned by the business over a number of past few years
is called goodwill. It is nothing but the reputation or name established in the market by the business organisation. It is an extra value attached to the business over and above its value. It is an intangible asset of the business.

(13) Profit or Loss ; Income and Revenue :

(a) Profit: Profit means a gain earned by the businessman by undertaking ventures or risks. In accounting terminology, excess of sales revenue over the expenses is called profit.

Symbolically, Profit = Revenue – Expenses.

If a firm sold goods for ₹ 50,000 and all related expenses incurred by the firm during the said period is ₹ 41,000.

Here, in this case profit earned by the firm is arrived at₹ 9,000.
It is calculated as follow:
Sales revenue = ₹ 50,000 and total expenses = ₹ 41,000
Profit = Sales Revenue – Expenses
= 50,000 – 41,000 = ₹ 9,000

(b) Loss: Excess of expenses or expenditures over revenue or income is called loss. Businessmen incur losses on account of several factors like misuse of resources, abnormal wastage, negligence of proprietor, improper planning, competition, lack of innovation, unfavourable policy of the government, etc. Recurring losses lead to compulsory dissolution of the business.

Symbolically, Loss = Expenses – Revenues

If a firm sold goods for ₹ 30,000 and all related expenses incurred by the firm during the said period is ₹ 36,000.
Here, in this case firm incurs the loss of ₹ 6,000.
It is calculated as follow:
Expenses = ₹ 36,000 and Revenue = ₹ 30,000 ,
Loss = Expenses — Revenue
= 36,000 – 30,000 = ₹ 6,000

(c) Income: Revenue received by the business organisation after rendering services or subletting assets is called income. Symbolically:
Income = Amount received after rendering services or renting owned property. If auditorium of the college is subletted to the Bank for ₹ 45,000 per month, the total rent ₹ 5,40,000 in a year becomes an income of the college authorities

(d) Revenue: Income received by the business organisation from its normal business activities especially from the sale of goods and services to the customers is called Revenue.

(14) Assets, Liabilities and Net Worth :

(a) Assets: Property-of any type or description owned and possessed by a person is known as an asset. Assets are not stored for sale but they are kept for the use of the owner. In other words, economic resources which provide benefits to the enterprise are called assets, e.g. furniture, goods, etc.

Assets possess the following features, viz.

• Assets is a property of any type or economic resource which has an exchange value,
• It is belonged to a person or a user,
• It is always stored for use and not for sale.

For example, land and building, furniture and fixtures, bank balance, unsold goods, cash in hand, etc. are called assets. The classification of assets is shown below:

• Fixed Assets are those assets which are held in the business for a long period of time and are generally used for manufacturing goods and services. For example land & building, plant & machinery, motor vehicles, etc. are the fixed assets of an enterprise.
• Current Assets are those assets which are held in the business for a very short period and they are used for maintaining the liquidity of the business. For example, cash in hand, bank balance, stock of goods in hand, amount receivable from debtors, etc. are current assets of the business enterprise.
• Assets like cash, machinery, stock of goods, furniture, etc. are called tangible assets as they can»be seen, touched and felt.
• Assets which cannot be seen, touched and felt, but can be sold and converted into cash are called intangible assets. Use of intangible assets enables its owner to earn income in the form of royalty. For example goodwill, copy rights, patents, trade marks, services of doctors, teachers, bankers, etc. are called intangible assets.
• Assets which neither represent any tangible thing in existence nor have realisable value in the market are called fictitious asset, e.g. preliminary expenses, discount on issue of shares, etc.

(b) Liabilities: Liabilities refer to the total amount of debts or obligations that a business has to pay or fulfill, in future. In other words ‘liabilities’ mean total amount owed by the business to other persons. In short, liabilities represent the total amount payable to outside parties at different dates. For example, bank overdraft, bank loan, sundry creditors, bills payable, capital, loan taken from financial institution, etc. are called business liabilities. Liabilities may be classified as Fixed Liabilities and Current Liabilities.

(i) Fixed Liabilities: Liabilities which are settled or paid only on winding up or dissolution of the organisation are called fixed liabilities. It may be in the form of owner’s capital, share capital, secured loans like debentures, bonds, loans from banks, loans from financial institutions, etc. Fixed liabilities are refunded only after a long period of time. Fixed liabilities constitute long term sources of finance.

(ii) Current Liabilities: Liabilities which are payable within a year are called current liabilities. Short term obligations or debts which are matured within a year or within a operating cycles are called current liabilities. Current liabilities constitute short term sources of finance. They arise in the regular course of business operations. They are usually unsecured. Bank overdraft, Sundry Creditors, Bills Payable, Outstanding expenses payable are considered as current liabilities.

(c) Net Worth: Worth means value or price. Accordingly, net worth refers to the net value of the business enterprise in terms of its assets and liabilities. It implies the excess of assets over liabilities as disclosed by a firm’s balance sheet, i.e. capital owned by a business. In other words, net worth refers to the value of a business enterprise when its liabilities have been deducted from the value of its assets. In terms, of equation,

Net Worth = Market value of total assets shown in the balance sheet – Current liabilities

Example: Suppose, the total assets of the business is ₹ 7,50,000 whereas the total liabilities of the business is ₹ 3,65,000.
Here, net worth of th business is calculated as follows:
Net Worth = Value of Total Assets — Value of Total Liabilities
= 7,50,000 – 3,65,000 = ₹ 3,85,000

(15) Contingent Liabilities : The contingent liabilities are the liabilities whose occurrence depends upon the happening of a certain events which may or may not take place. Such liabilities may or may not occur in the future. These liabilities are shown in the balance sheet on the liabilities side only in the inner column and their description is written in the foot note. These liabilities are not taken in the balance sheet total. They are considered as probable losses of the business enterprise. E.g. demand of worker for compensation of ₹ 20,000 pending before the court of law.

Accounting Principles-

The basic aims of book-keeping and accountancy are to record the business transactions in a summarised form, systematically and in chronological order in the books of accounts and to prepare various accounting statements and report periodically to communicate the result and financial position of the business to the stakeholders or concerned parties. To achieve these aims, accounting is based on universally accepted and scientifically laid down principles. The basic fundamental truth of accounting or rules of conducts or procedures which are universally accepted and followed by the accountants every where without unreasonable likes or dislikes to record business transactions and to prepare accounts are called accounting principles. Through usage, necessity and experience, these accounting principles are gradually developed over a long period of time.

According to the Institute of Chartered Accountants of India (ICAI), accounting conventions, accounting concepts, accounting principles, accounting postulates, etc. are the basic points of agreement on which financial accounting theory and practice are founded.

Accounting principles are also considered as general laws or precedents for taking decisions and actions in the field of business.

Accounting Concepts-

Concept means the general idea which conveys certain meanings. Accordingly accounting concepts imply general notion or abstract ideas on which accounting is based.

Accounting is the language of the business with the help of which financial information are transmitted to the concerned parties of the business. In order to communicate the business information exactly with the same meaning to all interested parties related to the business, accountants have discovered a number of accounting concepts. Accounting concepts are general guidelines for sound accounting practices.

The different accounting concepts are discussed as follows :

(1) Business entity concept : The business entity concept suggests that a business has a separate entity and has an independent legal existence distinct from the person who owns it. Although a business has no body, soul, life and existence, still the law recognises it as a legal person. This accounting concept enables the accountants to record the transactions of the owner or proprietor separately from the transactions of the business. In the absence of such distinction the private affairs of the proprietor would have mixed up with the affairs of the business. As a result, the true and clear picture of the state of affairs of the business would not have been made available. The concept of business entity is applicable to all forms of business organisations such as sole trader, partnership, joint stock companies, co-operative societies, etc.

Illustration: A proprietor Mr. Ashok has spent ₹ 13,000 from business funds on Travelling and Conveyance. This includes a bill for the amount of ₹ 4,500 spent on personal and family travelling. In this case only ₹ 8,500 should be charged to Profit and Loss Account under the heading of Travelling and Conveyapce and ₹ 4,500 should be considered as drawings and each amount of drawings should be deducted from capital of the proprietor.

(2) Money measurement concept: This accounting concept states that in the books of accounts, accountant records only those business transactions which are financial in nature and capable to be expressed in monetary terms. It means the qualitative and quantitative aspects which can not be measured in terms of money, are not recorded in the books of accounts.

In India all the accountants records business transactions in Indian Currency i.e. Rupee (₹).
Illustration: A businessman invested the following properties (Assets) into the business: Building with 5 rooms at the cost of ₹ 40,00,000, Cash ₹ 5,00,000 Furniture costing ₹ 40,000 and raw materials 2 tonnes at the cost of ₹ 80,000. Here the total assets of the business is 40,00,000 + 5,00,000 + 40,000 + 80,000 = ₹ 46,20,000. In the books of accounts, the accountant records assets of ₹ 46,20,000 and Capital at ₹ 46,20,000.

(3) Cost concept: According to this accounting concept, an asset of the business is recorded in the books of account at the price paid to acquire or produce it, i.e. at its cost and not at its current market value. The cost at which assets are acquired and recorded, provides the base for the subsequent accounting for that asset. E.g. if a plot of land is bought for ₹ 2,50,000 by a business, it will be recorded in the books of accounts at ₹ 2,50,000 for further accounting. A year later if its market value increases to ₹ 4,00,000 or even more, then no change will be made in the books of account so to reflect this increase in its value. This concept enables the accountant to depreciate assets correctly and show their correct value in the books of accounts. This concept prevents arbitrary value being put on the assets purchased.

(4) Consistency concept : This accounting convention states that once a particular accounting practice, method or policy is adopted to prepare accounts, statements and reports, it should be continued for years together and should not be changed unless unavoidable circumstances force the enterprise to change it. If the change is unavoidable, the change and its effects should be stated clearly. If consistency is maintained in the accounting practice or procedures over many years, a comparison of two different accounting periods may be made easily to draw meaningful conclusions.

Illustration: It would be improper to depreciate the machinery according to one method of depreciation in one year and to switch over to another method in the next year.

(5) Conservatism : This accounting concept suggests that while preparing accounting statements, planning, policies, strategies and budgets, all possible or anticipated losses must be taken into consideration while unrealised, prospective or anticipated profit should be ignored. This is also known as “the policy of playing a safe game.” It is also called “Principle of prudence.” According to this accounting concept, closing stock is valued at the market price or cost price whichever is lower. Similarly, provision for bad and doubtful debts is also permitted and made every year. If this accounting convention is not applied or followed continuously, it may result into an understatement of incomes, assets and overstatement of liabilities and provisions. Illustration: The closing stock of a factory is valued at cost price ₹ 80,000. However, its market value determined at ₹ 86,000. According to conservatism concept, here closing stock is to be valued at ₹ 80,000 which is lower than it market value ₹ 86,000.

(6) Going concern concept: According to this concept, it is assumed that business will be carried out indefinitely for a long period of time in the future and accordingly business transactions are undertaken and recorded. Hence in this concept it is assumed that the business will continue for a long time. It has continuity of life. It is not to be closed at the end of each year. It is assumed that business is permanent. This Concept is also called continuity concept or permanency concept. Fixed assets like plant and machinery, furniture and fixture, land and building, motor vehicles, etc. are purchased on the assumption that a business is a going concern. This accounting concept enables the accountants to make distinction between the capital expenditure and revenue expenditure. Managerial functions like planning, financing, organising, controlling, etc. are performed in every organisation on the basic assumption that the business is a going concern.

(7) Realisation concept: This accounting concept explains that sale is supposed to be completed when the title and possession of goods are passed from the seller to the buyer and in exchange the payment is received by the seller from the buyer. Revenue or income is considered to be earned on the date on which its actual payment is received. In other words, income realised by selling goods or by rendering services during the accounting year should be considered in the income statement of that accounting year. Since accounting is the historical records of transactions, it records what is actually received and paid. In the case of installment sale or hire purchases, the sales are treated to have been completed only to the extent to which the installment are received. Similarly, in the case of contract account, profit is calculated on the basis of work certified.

Illustration: In business there may be a building whose purchase price i.e. cost is shown at ₹ 2,00,000. Now the market price of that building may be ₹ 10,00,000/-. It does not mean that the profit of ₹ 8,00,000 is realised. Such profit should not be recorded in the books of accounts.

(8) Accrual concept: This accounting concept states that revenue is recognised when they are earned and not when they are received. Similarly-, costs are recognised as soon as they are incurred and not when they are paid. This accounting concept enables the accountants to measure the income for a particular period by calculating the difference between the revenue recognised in that period and expenses incurred to earn that revenue. Accrual accounting is a basic accounting concept used in preparation of Trading Account, Profit and Loss Account and the Balance Sheet.

Illustration: A firm has deposited ₹ 5,00,000 with the Bank in Fixed deposit carrying interest @ 12% p.a. on 1st July, 2010 for 5 years. Bank is required to pay interest on maturity along with principal amount, i.e. on 30th June, 2015.

As per the principle of accrual, interest for 9 months i.e. from 1st July 2010 to 31st March, 2011 of ₹ 45,000 is to be shown as “interest accrued” on the credit side of Profit and Loss A/c as on 31st March, 2011. i.e. in the accounting year 2010-11, although interest is not received in cash.

Dual aspect concept: This accounting concept explains that every business transaction has two aspects viz. (i) acquisition or increase in asset of the business and (ii) creation or increase in claims against business. Assets refer to the valuable things owned by the business. Capital refers to the proprietor’s contribution to the business to provide fund to undertake activities. Capital is the owner’s claim against the business, e.g. a capital of ₹ 5,00,000 received in cash by the business from the proprietor has dual aspects viz. business has cash i.e. asset of ₹ 5,00,000 and the proprietor has a claim of ₹ 5,00,000 against the business entity called capital. If you put the same idea in the form of equation, we can state,
Capital (₹ 5,00,000) = Assets (₹ 5,00,000)

A month later, the business has borrowed ₹ 2,00,000 from the bank to meet its increasing requirement. Now, the asset of the business has increased by ₹ 2,00,000 on the one hand and a claim against the business has also increased by ₹ 2,00,000. We can state the above situation in an equation form as follows:
Capital (₹ 5,00,000) + Liabilities (Bank Loan ₹ 2,00,000)
= Assets 7,00,000 (₹ 5,00,000 + ₹ 2,00,000)
The above equation can be restated by interchanging the terms as follows:
Capital (₹ 5,00,000) = Assets (₹ 7,00,000) – Liabilities (₹ 2,00,000)
OR
Liabilities (₹ 2,00,000) = Assets (₹ 7,00,000) – Capital (₹ 5,00,000)
Thus, the accounting system called double entry book-keeping system is set up to record dual aspects of every business transaction in the books of accounts.

(10) Disclosure : According to concept of full disclosure, accounting must disclose all the material facts and information so that interested parties after reading such accounting report can get a clear view of the state of affairs of the business. Accounting statements must be prepared honestly and they should be free from any bias or prejudice. The statements of accounts so prepared by the accountants must neither hide any material information nor exaggerate any facts. Disclosure does not mean leaking out the business secrecy, but to disclose all the significant information and fact keeping in view various accounting assumptions. This accounting concept is more relevant to the joint stock company where there is a divorce between ownership and management. The management of the company must prepare financial statements and reports of the functioning of the company periodically and these statements must disclose the true and fair view of the state of affairs of the company.

(11) Materiality : The term ‘material’ means ‘relatively important’. Accounting information is said to be material, if its omission from the financial statement affects the decision making for its users. According to convention of materiality, accountants must disclose all material facts and information which highlights the financial position and profitability of the business organisation. However, materiality will differ or change with nature, size and tradition of the business. What is material for one organisation may be immaterial
for another organisation.

(12) Matching Cost Concept : This concept suggests that while determining the exact or accurate profit or income, we have to compare or match the revenue of the business with the cost that is incurred to earn that revenue. In other words, only relevant cost or expenses of the period are required to be deducted from the relevant revenue of that year. For instance if in the accounting year 2011-12, the revenue of ₹ 18,00,000 is earned, by way of sales, this entire revenue is not the profit. In order to calculate the profit, we have to deduct cost of goods sold from the sales revenue. In the above example, if the cost of goods sold is ₹ 15,00,000, then the gross profit would be ₹ 3,00,000. The gross profit here is ascertained by comparing and matching the sales revenue with the cost of goods sold.

Importance of Accounting Concepts :

• With the help of accounting concepts accountant can easily prepare reliable financial statements such as cash flow statement, fund flow statement, trading A/c, profit and loss A/c etc. They add the reliability to the financial statements.
• Accounting statements are helpful to keep and maintain uniformity in presentation of financial statement. Uniformity is helpful for comparison of financial statements of two or more business entries and also different periods.
• Accounting concepts provide acceptable basis of measurement.
• They are helpful to provide proper information ahout the business to various interested parties.
• They provide valid and appropriate assumptions for preparation of financial statements and reports.

Accounting Standards (AS) and International Financial Reporting Standard (IFRS)-

(A) Accounting Standards:

(1) Meaning: Accounting standards may be defined as, “Codified Generally Accepted Accounting Principles (GAAP), uniform accounting rules and guidelines to prepare financial statements of different business units in a uniform manner for easy comparison and disclosures of business information to the users.” Standard of Accounting are recommended by the Institute of Chartered Accountants of India (ICAI) and prescribed by the Central Government in consultation with the National Advisory Committee on Accounting Standards (NACAS). Accounting Standards are written policy document covering the different aspects such as recognition, measurement, treatment and presentation.

Kohler States, “Accounting Standards are codes of conduct imposed by customs, law or professional bodies for the benefit of public accountants and accountants generally.”

(2) Need for accounting standards:

• To promote better understanding of financial statements. Accounting standards reduce confusion about the accounting treatments used to prepare financial statements.
• To facilitate accountants to follow uniform procedures and practices.
• To enable or help the organisation to make meaningful comparison of financial statements of different companies situated at different places.
• To standardise the diverse accounting policies and practices with a view to eliminate the non-comparability of financial statements and add the reliability to the financial statements.
• To fulfil and complete the legal requirements more effectively.

(B) International Financial Reporting Standards (IFRS):
International Financial Reporting Standards (IFRS) are prepared and issued by the International Accounting Standard Board (IASB). IFRS is a set of International Accounting Standards which explain and show how different types of financial transactions and other events should be shown or reported in the financial statements. IFRS are prepared and issued to develop Accounting Standards that would be acceptable world wide and to improve financial reporting internationally.

(C) Accounting Standards in India :
In India, the Council of Institute of Chartered Accountants of India (ICAI) has issued accounting standards. Accounting Standards Board (ASB) was constituted by ICAI on 218t April 1977. ASB recognised the need for Accounting Standards in India and by considering the applicable laws, custom, usage, business environment and International Accounting Standards,framed Accounting Standards to be followed in India. The council of Institute of Chartered Accountants of India has so far issued 31 Accounting Standards. Some of those

By going through these Maharashtra State Board Book Keeping & Accountancy Notes 12th Chapter 6 Dissolution of Partnership Firm students can recall all the concepts quickly.

Maharashtra State Board 12th Accounts Notes Chapter 6 Dissolution of Partnership Firm

Introduction, Meaning and Definition of Dissolution of Partnership Firm-

Introduction : The term ‘dissolve’ means ‘to come to an end or bring to an end.’ Accordingly ‘dissolution’ means termination of a formal or legal relationship such as a business, marriage, etc. There is a difference between the dissolution of partnership and dissolution of partnership firm. Dissolution of partnership refers to severing or discontinuing the relation or connection by one or more partners with other partners without breaking or putting an end to business activities of the partnership firm. In this case, business activities of the firm are continued by remaining partners. Dissolution of partnership firm implies complete closure or breakdown of relations among all the partners and stoppage of all business or trading activities of the firm. Dissolution of partnership firm is a broader concept which also includes dissolution of partnership. Dissolution of partnership is a narrow concept. It does not include dissolution of partnership firm.

Meaning and Definitipn of Dissolution of Partnership Firm : Dissolution of a partnership firm is the end or closure or termination of the firm by break-up of the relation among the partners. In such a case, there is a stoppage of all trading activities. Dissolution has broader meaning in legal terms. A word ‘DISSOLUTION’ comes from the Latin word ‘DISSOLUTION’. According to the provisions of the Partnership Act, 1932, (Section 39) “the dissolution of partnership between all the partners of a firm is called the dissolution of the firm”.

In other words, dissolution of a partnership firm means complete closure of relation among all the partners. In such a case the firm ceases to exist.

Circumstances / Reasons for Dissolution of Partnership Firm –

A partnership firm may be dissolved in various ways. They are as follows :
(A) Dissolution of partnership without court order : A partnership firm may be dissolved :

• When all partners or all partners except one decide to dissolve the firm, or the firm may be dissolved in accordance with an agreement signed previously or initially by all the partners.
• When the period for which the partnership was formed has come to an end.
• When the specific venture or object for which partnership was formed is completed.
• When all partners or all the partners except one are declared insolvent.
• When the business of the firm is declared as illegal or unlawful.
• When the partnership is at will and one of the partners has given a 14 days’ notice in writing to all other partners to dissolve the firm.

(B) Dissolution by court order : The partnership firm will be dissolved by the court if any one of the
partners files a suit i.e. legal application in the court of law. Under the following circumstances the court orders to dissolve the partnership firm :

• When a partner becomes unsound mind / insane or permanently incapable of performing his
  duties.
• When a partner is guilty of misconduct which affects the business of the firm.
• When a partner frequently breaks or violates the partnership agreement.
• Where a partner transfers his interest in the firm to an outsider without obtaining consent of other partners.
• When the business- of the firm cannot be carried on except at a loss.
• Any other reason considered by court as just and equitable.

Difference between Dissolution of Partnership and Dissolution of Firm-

Effects of Dissolution of Partnership Firm –
The effects of dissolution of partnership firm are stated as follows :

• All trading or business activities are closed down.
• All assets of the firm are sold out.
• All liabilities of the firm are paid off or discharged according to the preference of payment.
• If any surplus left, it will be divided among the partners in their profit sharing ratio.

Accounting treatment / Settlement of accounts on Dissolution of Firm –

In order to meet outside liabilities, the partnership firm raises funds by selling its assets. According to the provisions made under Section 48 of Partnership Act, 1932, the liabilities are paid as per the order given below:

• Payment of realisation expenses incurred while selling various assets.
• Repayment of loans and payment to creditors, outstanding expenses, Bank overdraft, Bills payable, Bank loans, Loans from other financial institutions, etc.
• Repayment of loans obtained from partners.
• Repayment of capital balances of partners to the extent possible.
• If any surplus left, it will be divided among the partners in their profit sharing ratio.

Accounting Procedure –

The accounting procedure adopted for dissolution of partnership may be
classified under the following two types :
(A) Simple Dissolution and (B) Dissolution Under Insolvency Situation.

(A) Simple Dissolution : When all partners remain solvent and firm is dissolved due to any reason it is called simple dissolution. On dissolution of the firm the following ledger accounts are opened to record various transactions, viz. (a) Realisation A/c (b) Partners’ Capital A/cs (c) Partners’ Current A/cs (under fixed capital method) (d) Cash or Bank A/c.

(a) Realisation Account : An account which is opened and operated at the time of dissolution by the partnership firm to record the entries of taking over and sale of assets and taking over and payment of liabilities of the firm and to find out profit or loss on realisation of assets and liabilities is called Realisation A/c. After recording all the entries relating realisation of assets and liabilities, this account is closed and balanced. The debit balance of Realisation A/c indicates loss incurred on realisation of assets and liabilities. The credit balance on Realisation A/c shows profit earned on realisation of assets and liabilities. The balance shown by Realisation A/c is transferred to all partners’ Capital Accounts or Current Accounts.

(b) Partners’ Capital Accounts : Capital balances of all partners shown in the last Balance Sheet are transferred to Capital Account of each partner on credit side as ”By Balance b/d”. Usually Partners’ Capital Account show debit balances.

(c) Partners’ Current Accounts : If fixed capital method is followed by the firm, along with Capital Account a Current Account for each partner is opened. Current Account may either show debit balance or credit balance. Entries relating to taken over of assets, payment of liabilities, transfer of Profit and Loss A/c balance, transfer realisation profit or loss, etc. are passed through Current Accounts. At the end, Current Accounts are closed and balances appearing in those accounts are transferred to respective Partners’ Capital Accounts.

(d) Partner’s Loan Account : When partner Loan Account has credit balance, it is not transferred to Credit side of Realisation Account but amount is paid off after paying all third parties due. If Partner Loan Account has debit balance, Partner’s Loan should be debited to Partners’ Capital / Current Account directly.

(e) Cash Account or Bank Account : On the dissolution of partnership firm, Cash A/c or Bank A/c is opened and balance of cash or bank shown in the last Balance Sheet is transferred to this account on debit side as “To Balance b/d.” In case of Bank Overdraft, the balance is shown on the credit side of Bank A/c as “By Balance b/d”, if Bank A/c is opened and operated. In that case cash balance is transferred to Bank A/c on debit side by passing the entry :

All the receipts and payments are recorded in this Account. At the end this Account gets automatically closed.

Accounting entries to close : Under simple dissolution, the accounting procedure may be divided into three stages viz. (A) Transfer Stage, (B) Realisation or Disposal Stage and (C) Distribution Stage.

(A) Transfer Stage : In this stage all the assets except cash balance, bank balance and Profit and Loss A/c (debit) balance, are transferred at book value to debit side of Realisation A/c and all the liabilities except partner’s loan, capitals, reserves, Profit and Loss A/c (Credit) balance are transferred at book value to credit side of Realisation A/c.

Pro forma journal entries :

(1) Transfer of assets : (except cash and bank balance and Profit and Loss A/c debit balance) :

(Being the assets transferred at book values)

(2) Transfer of third party liabilities :

(Being third party liabilities transferred at book values)

(3) Transfer of provisions against assets :

(Being various provisions made to assets transferred to Realisation A/c)

(4) Transfer of accumulated profit and reserves :

(Being accumulated loss and deferred expenses not yet written off transferred to all Partners’ Capital/Current A/cs in their profit sharing ratio)

(5) Transfer of accumulated loss appearing on the assets side of Balance Sheet:

Note : (i) Balance of Cash A/c and Bank A/c and Partner’s Loan A/c should not be transferred to Realisation A/c. In such cases separate A/c for Cash or Bank and Partner’s Loan should be opened and balance shown in the last balance sheet should be transferred to those accounts, (ii) In case of sundry debtors, gross amount of debtors before deducting R.D.D. should be transferred to debit side of Realisation A/c and R.D.D. amount should be transferred to credit side of Realisation A/c.

(B) Realisation or Disposal Stage : In this stage all assets including unrecorded assets are sold out i.e. realised into cash. Assets may be taken over by any partner after adjusting the agreed amount to its Capital/Current A/c. From the collected sales proceeds (cash) liabilities and dissolution expenses are paid. Partner’s loan is also paid off in this stage.

Pro forma journal entries :

(1) Sale of recorded/unrecorded assets :

(Being assets sold and cash received)

(2) Taken over or recorded as well as unrecorded assets by a partner :

(Being assets taken over by a partner)

Note: Against the due amount to creditor, when asset is taken over by a creditor in part or in full payment due, due amount is to be decreased to that extent and balance amount will be paid to him. Here entry for the net payment is mandatory while entry for asset taken over by the creditor is not required.

(3) (a) Payment of recorded as well as unrecorded liabilities by the firm :

(b) Payment of recorded and unrecorded liabilities by a partner :

Note : If nothing is mentioned about the payment of liability, then it is paid at book value.

(4) (a) Payment of realisation expenses :

(b) Payment of realisation expenses by a partner :

(5) Payment of commission given to a partner for realising assets of the firm :

(6) Payment of contingent liability by a firm :

(7) Payment of partners’ loan :

(C) Distribution Stage : In this stage Realisation A/c is closed and balanced. The debit balance i.e. loss or credit balance i.e. profit is transferred to Partners’ Capital or Current Accounts in their profit sharing ratio. Then Current Accounts of the partners are closed and balance appearing thereon is transferred to Capital Accounts of the partners. At the end Capital Accounts of all partners are closed by making payments to or receiving cash from the partners.

Pro forma journal entries :

Treatment of unrecorded (undisclosed) assets and liabilities : On the date of dissolution in the books of accounts, some assets and liabilities are not recorded, so entries of like this assets and liabiliies are not transferred to Realisation account. But entries for like this unrecorded assets and liabilities are recorded in the books when they are realised or paid. Related entries are as follow:

Treatment of Goodwill on Dissolution : When goodwill appears in the books, like other assets, it will be transferred to debit side of Realisation A/c, like all other assets. If goodwill is not appear in the books, wheatever sale amount is received, it will be debited to Cash / Bank A/c and credited to Realisation A/c.

(1) When Goodwill Account appears in the Balance Sheet:

(i) Transfer of Goodwill to Realisation Account:

(ii) When Goodwill is realised on dissolution:

(2) When Goodwill Account does not appear in the Balance Sheet:
Here, no entry for transfer of goodwill require.

(i) When Goodwill is realised on dissolution :

(ii) When partner purchases Goodwill:

Pro forma of Ledger Accounts :

(1) Realisation Account :

(2) Partners’ Capital Accounts : (A) If Fixed Capital Method is followed by the firm :

It is assumed that opening balance of Current A/cs of A and B showed credit balances and that of C showed a debit balance.

(B) If Fluctuating Capital Method is followed by the firm :

(3) Cash/Bank A/c :

(B) Dissolution Under Insolvency Situation : A person whose liabilities exceed his assets is called an insolvent person. A partner whose capital account shows debit balance and who is not in a position to repay the amount of debit balance on his capital account to the firm is called an insolvent partner. In other words, a partner who is unable to meet his capital deficiency even from his private property is called an insolvent partner. A partner who is in a position to meet his capital deficiency is called a solvent partner. The debit balance of capital account of an insolvent partner which he cannot pay is called his capital deficiency. The capital deficiency of insolvent partner represents a loss to the firm. The capital deficiency of insolvent partner is to be borne by solvent partners in their profit sharing ratio.

Accounting procedure under Fixed Capital Method :

(1) Transfer of balance on insolvent partner’s Current A/c to his Capital A/c :

(Being insolvent partner’s deficiency in Current A/c transferred to his Capital A/c)

(2) Amount recovered from insolvent partner’s estate :

(Being cash recovered from the estate of insolvent partner)

(3) Transfer of deficiency on insolvent Partner’s Capital A/c to solvent Partners’ Current Accounts :

(Being insolvent partners’ capital deficiency transferred to solvent partner Current A/c in their profit sharing ratio)

(4) Transfer of balance on solvent Partners’ Current A/cs to their Capital A/cs :

(Being balance on Current A/cs transferred to Capital A/cs)

(5) Final settlement of solvent Partners’ Capital dues :

(Being amount paid to solvent partners in final settlement)

Accounting procedure under Fluctuating Capital Method : Under this method all the adjustments are made through Capital Accounts of the partners.

Transfer of capital deficiency of insolvent partner to solvent partners’ Capital A/cs :

(Being insolvent partners’ capital deficeincy transferred to solvent Partners’ Capital A/cs in their profit sharing ratio)

When all partners are insolvent: If all the partners of a firm become insolvent, it is clear that their capital deficiencies will have to be borne by the outside creditors, who will not be able to recover their claims in full but will get only a part of their dues in terms of a dividend of so many paise in the rupee. The available cash in the firm is first used to pay dissolution expenses. The balance amount is paid to creditors proportionately in the ratio of their respective balances.

Accounting treatment before making distribution of insolvent partners’ capital deficiency :

• Transfer only assets to Realisation A/c at their book values to its debit side.
• Outsiders liabilities should not be transferred to Realisation A/c. Open each liability’s A/c separately.
• Adjust the loss on realisation to Partners’ Current A/cs or Partners’ Capital A/cs as the case may be.
• Close the Partners’ Current A/cs and also the Partners’ Loan A/cs by transferring the balances
  of such accounts to the capital accounts of the respective partners.
• Record the amount of cash recovered from the partners by debiting Cash/Bank A/c and
  crediting related Partners’ Capital A/cs.
• Close the Partner’s Capital A/cs and transfer the capital deficiency of each partner to a separate
  account called ‘Deficiency A/c’.
• Distribute the available cash (i.e. opening balance of cash + cash received on sale of assets + cash received from private estate of partners) to various creditors in the proportion of their dues.
• Close the Various Liabilities A/cs by transferring unpaid balances to ‘Deficiency A/c’.
• Ultimately ‘Deficiency A/c’ is suppose to tally.

By going through these Maharashtra State Board Book Keeping & Accountancy Notes 12th Chapter 9 Analysis of Financial Statements students can recall all the concepts quickly.

Maharashtra State Board 12th Accounts Notes Chapter 9 Analysis of Financial Statements

Meaning, Objective and Limitations of Financial Statement Analysis-

Meaning: The statements which are prepared by the business enterprises periodically to ascertain or measure the profitability, operational efficiency, solvency, growth of the business concern and judge the financial strength and status are called financial statements. These statements furnish a complete picture of the firm’s financial conditions and managerial performance. The financial statements are prepared by the profit concerns as well as ‘non-profit’ concerns usually at the end of the financial year. The financial statements of the business enterprises for an accounting period consist of the following :

(1) Balance Sheet/A position statement (2) Profit and Loss A/c/An Income statement.
Financial statement analysis is a study of financial relationship among the various financial items (factors) and the trend revealed in the financial statements. Thus, analysis of financial statements involves collection and a methodical classification of the data given in the financial statement and a comparison of various figures with each other. Financial statement analysis involves two aspects viz.

• Analysis of data which means methodical classification of financial statements and
• Interpretation of data which means explanation of meaning and significance of data. These two aspects are complementary to each other.

Objectives:

• To help in planning:An analysis of financial statements facilitates the business enterprises to understand its financial strength and soundness for future planning.
• To assist in estimating the earnings of business: Analysis of financial statements assist in knowing the earning is satisfactory or reasonable return on its investments is there or not. It also gives the idea of profitability of entire organisation and of every department.
• To assist in investment making decision: Investors are always eager to know liquidity of the business, ability of repayment of loan and its interest on borrowings which depends on the solvency and profitability of business organisation.
• To help management in assessing the efficiency of the organisation: Analysis of financial statements helps the business organisations to know the operational efficiency of its management. It also help to judge whether financial policies adopted by the management are appropriate or not.
• To provide financial information about economic resources: From the accounting data information and financial statements one can know the economic resources of the company.
• To provide information about changes in net resources arising out of business activities: From the financial statements one can know the net resources like payment of salary, wages, bonus and incomes sources.
• To disclose other information that is relevant to the need of the users of the financial statements: Financial statements also disclose other information which may useful to the government, employees, creditors, investors, etc.

Limitations : Analysis of financial statements depends upon the data and information provided by the
organisation.

(1) Qualitative information are ignored : The financial statements consider only the monetary aspects which can be measured. These statements ignores the qualitative, aspects such as development of team of loyal and efficient workers, harmony, reputation, prestige and efficiency of management competition, etc. There are some of the important matters which need to be considered for the business prospects.

(2) Historical cost: The information provided by the financial statements are historical in nature. This is because it considers and uses historical cost and book values of assets. It altogether fails to consider the changes that take place in price level.

(3) Based on ‘accounting concepts and conventions : Financial statements are prepared on the basis of certain accounting concepts and convention, so financial position as disclosed by these statements may not be realistic and their analysis cannot be much useful in practical life.

(4) Influenced by personal judgement : In the analysis of financial statement, many items are left for the personal judgement of an accountant. For instance, selection of method of depreciation, inventory valuation, writing off deffered revenue expenditure, etc. The soundness and reliability of such judgement depend on the competence, experience, ability and honesty of an accountant. However, convention of consistency acts as a controlling factor on making indiscreet personal decisions.

(5) Being uncomparable: Differences in date of preparation, nature of business, age of business, method of accounting, monopolistic market, etc. make the financial statement uncomparable.

(6) Static statement: Financial statements represents absolute figure which are static in nature and do not present the process by which the figures are arrived.

(7) Affected by window dressings : Sometimes management try to show excellent picture of business through financial statements which is not actually acceptable, e.g. To show excellent profit, sales figures may be taken at increased value, closing stock may be overvalued, last moment purchase not disclosed, etc. This is known as window dressing.

From the above discussion one can say that financial statements should not be taken as true indicator of financial strength and weakness of the business and do not take any serious decision based on it.

Analysis of Financial Statements :

Balance Sheet: The Balance Sheet required to be arranged in vertical format which is suitable for further analysis. Its format is given below :

Income Statement: The Profit and Loss Account need to be arranged in a vertical format which is suitable for further analysis. It is also called as Vertical income statement. Its format is given below:

Tools for Financial Statement Analysis : The financial statements provide only figures of assets, liabilities, expenses, revenues, profit or loss of the business. For decision making only presentation and ascertainment of the figures are not sufficient. In order to make decision making easier and meaningful, analysis of financial statement is required. For analysis of financial statement various tools such as (i) Comparative Financial Statements, (ii) Common Size Statements, (iii) Cash Flow Analysis, (iv) Ratio Analysis are used.

(A) Comparative Financial Statements : The financial statements which contain the figures of two or more consecutive accounting periods to give comparative views of the financial performance and position of a business enterprise are called Comparative Financial Statements. In these statements, the figures for two or more successive years are placed side by side to facilitate comparison. Accordingly, horizontal or comparative analysis means a process of calculating in absolute figures or in percentage form, the changes from the comparative statements.
For this purpose following two statements are required : (1) Comparative Balance Sheet and
(2) Comparative Income Statement.

(1) Comparative Balance Sheet : The comparative Balance Sheet contains the figures of liabilities and assets of the current year and the previous years to facilitate easy comparison. Such comparative statements indicate the trend (increase or decrease) of the changes in the financial performance and position of the business enterprises.

Methods of preparing Comparative Balance Sheet:
Comparative Balance Sheet is prepared by comparing the individual items of Assets and Liabilities and finding out absolute and percentage increase or decrease in them.

Steps to prepare Comparative Balance Sheet:

• Enter the details of Assets and Liabilities in the first column.
• In the column number 2 and column number 3 enter the figures of previous year and current year Balance Sheet respectively.
• In column number 4 enter the absolute changes i.e. ‘Increase’ or ‘Decrease’ by comparing the figures of column 2 and column 3.
  Absolute change = Current year – Previous year.
• Record the percentage changes in fifth column.
  Percentage change = \(\frac{\text { Absolute change }}{\text { Amount of previous year }}\) x 100

Example No. 1 : Balance Sheet of ‘X’ Ltd. Co. for the year ending 31st March, 2019 and 31st March, 2020 is given below:

You are required to prepare Comparative Balance Sheet of ‘X’ Ltd. Co. as on 31st March, 2019 and 31st March, 2020.
Solution:
Comparative Balance Sheet of ‘X’ Ltd. Co. as on 31st March, 2019 and 31st March, 2020.

2) Comparative Income Statement: A comparative income statement i.e. Profit and Loss Account contains the figures of expenses and incomes of the current year and the previous year for easy comparision.
Comparative income statement shows increase or decrease in various Trading and Profit and Loss Account.

Steps to prepare comparative income statement:

• Record the amount of Income and Expenditure in first column.
• Record the figures of previous year income statement in second column.
• Record the figures of current year income statement in third column.
• Record the absolute changes i.e. diffrence between current year and previous year in fourth column.
• Absolute change = Current year – Previous year.
• Record the percentage changes in fifth column.

Percentage change = \(\frac{\text { Absolute change }}{\text { Amount of previous year }} \times 100\)

Example No. 2: Income Statement of ‘X’ Ltd. Co. for the year ending 31st March, 2019 and 31st March, 2020 is given below:

You are required to prepare Comparative Income Statement of X Ltd. Co. for the year ended 31st
March, 2019 and 31st March, 2020.
Solution:
Comparative Income Statement of ‘X’ Ltd. Co. for the year ended 31st March, 2019 and 31st March, 2020:

(B) Common Size Statement : Common Size Statement is a type of financial analysis in which the financial statements of the same period are compared and figures of each item are converted into percentage of some common figure or base. In this analysis, the income statement and position statement of two consecutive years of the same organisation or income and position statements of two similar units for the same period are used to draw useful conclusions.

For common size statement analysis, in Income statement usually the sales figure is taken as base, i.e. 100. All the other figures are converted into percentage form to sales. In position statement, the total assets and the total liabilities are taken as base, i.e. 100 each. All the figures on the respective sides are expressed in percentage to the total assets and the total liabilities respectively to draw meaningful conclusions.

Steps to prepare common size statements :

• Write absolute figures of each item of Balance Sheet or of Income Statement for two consecutive years.
• Select (choose) common base (as 100), e.g. in case of income statement sales figure as 100.
• Work out percentage of each item for two periods.

Example No. 3 : Balance Sheet of ‘Y’ Ltd. Co. for the year ending 31st March, 2019 and 31st March,
2020 is given below:

You are required to prepare common size statements for the year ending 31st March, 2019 and 31st March, 2020.
Solution :
Common size statements for the year ending 31st March, 2019 and 31st March, 2020

Working Notes :

Example No. 4 :
Income statements for the year ending 31st March, 2019 and 31st March, 2020 are given below:

Solution:
Common Size Statement for the year ending 31st March, 2019 and 31st March, 2020:

Working Notes :

Here base or aggregate is net sales. In the year ending 31 -03-2019 Net sales ? 10,00,000 is taken as base i.e. 100 % and in the ending 31 – 03 – 2020 Net sales ? 12,00,000 is taken as base i.e. 100 %.
For 31 – 03 – 2019 % of cost of goods sold = \(\frac{\text { Cost of goods sold }}{\text { Net sales }}\) x 100 = \(\frac{5,80,000}{10,00,000}\) x 100 = 58%
For 31 – 03 – 2020 % of cost of goods sold = \(\frac{6,20,000}{12,00,000}\) x 100 = 51.67 %

Benefits or advantages of common size statements :

(1) Common size statements are very useful for comparing the profitability. It gives the different trends in different items of Balance Sheet and Income statement.
(2) It is also useful for inter firm comparison i.e. comparison of income and position statements of two similar units in the organisation for the same period.

(C) Cash Flow Analysis : A statement which shows the inflows (receipts) and outflows (payments) of cash and cash equivalents of a business enterprise over a financial year, is called a cash flow statement. It indicates the different sources from which the cash comes into the business and the different uses to which the cash has been put. It helps the management in assessing the potential of the business enterprise in paying short-term loans. It is prepared month-wise to ascertain the cash available for various business purposes.

Steps to Prepare Cash Flow Statement : In Cash Flow Statenient its ‘inflow’ and outflow of Cash and Cash equivalents are grouped into:

• Cash flow from operating activities
• Cash flow from Investing activities
• Cash flow from financing activities
  This is shown In the following diagram (chart):

Importance of cash flow statement:

• Useful in short-term financial planning and decision making: Cash flow statement provide information on uses of cash and cash equivalents for particular period. It is useful to prepare short-term financial planning and decision making on different areas.
• Helps in analysis of liquidity position : Cash flow statement may be prepared on monthly or quarterly basis. It helps to understand liquidity of the firm in better way. Such analysis of liquidity is useful to bank and financial institutions as it show ability of firm to repay Loans.
• Helps in efficient cash management: Cash flow statement provides information on surplus or defect of cash. If there is surplus, management makes arrangement for its investment and for deficit if any it arranges for short-term credit or loan.
• Helps in comparative study of cash flow statement and cash budget: Cash flow statement and cash budget are compared and cause of difference between them are analysed and necessary corrective measures are taken by the firm to generate or use cash.
• Helps in study of receipts and payments of cash : Cash flow statement gives information of the speed at which cash is collected from debtors, stock and other current assets and the speed at which current liabilities like creditors, Bank overdraft, etc. are paid off. This helps management to find true position of cash in future.
• Helpful in dividend declaration and payment of dividend : From cash flow statement, management ascertains the position of cash for payment of dividend.
• Tools of planning for projecting future investments and financial plans: Cash flow statement is useful to the management for projecting future investing and financial plans for the business.

Presentation of Cash Flow Statement : As per AS – 3 format for presentation of cash from statement
by classifying business transactions of a specific period into three categories viz. Operating, Investing
and Financing is as follows :

Uses of Cash Flow Statement:

• Cash flow statement facilitates the business organisation to know the liquidity position of the business.
• It helps to understand how net profit has increased even though cash balance is decreased.
• It also helps to know how cash balance has increased even though firm incurred net loss.
• It facilitates the business firm to know how the requirements of working capital were met by the fund raised through current operations.
• It helps to know the external sources of raising finance to meet needs of finance.
• It helps the firm to understand whether the firm sells its non-current assets or not.

Meaning, Objectives and Classification of Accounting Ratios-

(1) Meaning : A relationship between two numbers or quantities, when expressed either in number, fraction, proportion or in percentage is called ratio. Accounting ratio expresses the relationship between two accounting figures and measures the ability i.e. financial strength of the business enterprise to pay its liabilities and judge its earning capacity. The use of different types of accounting ratios to evaluate the financial performance of the business enterprise, is called the ratio analysis.

Example : If total sales is ₹ 5,15,500, Sales returns is ₹ 5,500 and Gross profit is ₹ 1,27,500, calculate
Gross Profit ratio.
Solution :
Net sales = Total sales – Sales returns
= 5,15,500-5,500 = ₹ 5,10,000
Gross Profit ratio = \(\frac{\text { Cross profit }}{\text { Net sales }}\) x 100 = \(\frac{1,27,500}{5,10,000}\) x 100 = 25 %
Net sales 5,10,000

(2) Objectives : The objectives of ratios are explained as follows :

• It facilitates easy comparative analysis of profitability, liquidity and solvency of the business.
• It is helpful to know the changes that take place in the business.
• It helps in decision making in vital areas such as operating, investing and financing. It shows how far it is helpful to improve the performance.
• It is helpful to make different types of comparisons like (i) Intra firm comparison i.e. comparison within the firm over number of years and (ii) Inter firm comparison i.e. comparison between two firms when specific standard for the firms or industry is established.

(3) Classification : The classification of ratio is shown in the following chart :

Introduction to Ratios-

(1) Current Ratio : The ratio of current assets to the current liabilities is called Current ratio. This ratio measures the ability of the business enterprise to fulfil the current obligations. It is one of the indicators which judges the financial position of a business enterprise. The current ratio between 2 : 1 to 3 : 1 is considered more satisfactory or ideal. The ratio of 2: 1 indicates that the current assets are twice the current liabilities. The formula for calculating the current ratio is given below:
Current ratio = \(\frac{\text { Current assets }}{\text { Current liabilitles }}\)

(Where the current assets include cash and bank balance, loose tools, bills receivable, sundry debtors, stock of inventories, i.e. raw-materials, semi-finished and finished goods, prepaid expenses, marketable securities, short-term loans and advances given, incomes accrued, disposable investments, etc.

The current liabilities include sundry creditors, bills payable, bank overdraft, dividend and taxes payable, outstanding expenses, debentures payable within a year, short-term loan taken, provision for taxation, proposed and unclaimed dividend, income pre-received i.e. income received in advance, etc.)

(2) Liquid Ratio (Quick Ratio or Acid Test Ratio) : The ratio of quick assets to current libilities is called Quick ratio or Acid test ratio. The assets which can be converted into cash immediately, or at a short notice are called Quick assets. All current assets except stock and prepaid expenses are considered as quick assets. Quick ratio of 1 : 1 is considered as an ideal ratio. It measures the liquidity position of business enterprise.

The formula for calculating liquid ratio is given below :
Liquid or Acid test ratio = \(\frac{\text { Quick assets }}{\text { Current liabilities }}\)
(Where Liquid or Quick assets = Cash + Bankbalance + Debtors + Bills receivable + Marketable securities)
Quick Ratio = \(\frac{\text { Quick assets }}{\text { Quick liabilities }}\)
(Where Quick liabilities = Current liabilities Less Bank overdraft, Advance received and Cash credit.) .

(3) Gross Profit (Turnover) Ratio : Gross profit ratio indicates the relation of the gross profit to the net sales. It is expressed in the percentage form. It is calculated to measure the efficiency of the production department. It is calculated by using the following formula :
Gross Profit ratio = \(\frac{\text { Gross profit }}{\text { Net sales }}\) x 100

[Where

• Gross profit = Net sales – Cost of the goods sold.
• Net sales = Total sales – Sales returns.
• Cost of Goods sold = Opening stock + Purchases + Direct expense – Closing stock]

It shows the gross margin on commodity sold. Higher gross profit ratio shows good position of business.

(4) Operating Profit Ratio : Operating profit ratio measures the relationship between operating profit and net sales.
Operating Profit ratio = \(\frac{\text { Operating Profit }}{\text { Net Sales }}\) x 100

Where Operating Profit = Gross Profit – Operating Expenses.
Net sales = Sales – Return – Allowances
Expenses may be categorised into two parts viz. (i) Operating expenses and (ii) Non-operating expenses.

Operating Expenses: Expenses which are incurred by the business enterprises for routine operation of the business are called operating expenses. They include office expenses, administrative expenses, selling and distribution expenses, etc. When such expenses are deducted from gross profit, we get operating profit.

Non-operating Expenses : Non-operating expenses include depreciation charged on fixed assets, loss incurred on sale of fixed asset or investment, loss by fire, goodwill written off, discount on issue of shares and debentures, preliminary expenses, etc. ‘

(5) Net Profit Ratio : The net profit ratio shows the relationship between the net profit and the net sales. It is expressed in percentage form. This ratio is helpful to measure the over-all efficiency of the business enterprise. The formula to calculate the net profit ratio is given below:

• Net Profit Ratio = \(\frac{\text { Net profit }}{\text { Net sales }}\) x 100
• Net Profit Ratio = \(\frac{\text { Net Profit Before Tax }}{\text { Net sales }}\) x 100
• Net Profit Ratio = \(\frac{\text { Net Profit After Tax }}{\text { Net sales }}\) x 100
  (Where Net profit = Gross profit + Non-operating incomes – Operating expenses – Non-operating expenses.)

Non-operating income includes income from non-trading activities, e.g. interest received, dividend received, any compensation received, refund of tax, profit on sale of fixed assets and investments. For calculating this ratio, Net profit may be taken either before tax paid or net profit after tax paid. The main aim of this ratio is to understand return on investment.

Operating Ratio: The ratio which expresses the relationship between total operating costs and net sales is called operating ratio. This ratio is expressed in percentage form.

Operating Ratio = \(\frac{\text { Cost of Goods Sold + Operating Expenses }}{\text { Net sales }}\) x 100
Where Cost of goods sold = Opening stock + Purchases + Wages – Closing stock

Operating Expenses = Office and Administrative expenses + Selling and distribution
expenses + Finance expenses (excluding interest on Loans and debentures)
Net sales = Sales-Returns-Allowances.

(6) Return On Investment (ROI) : This ratio indicates the relationship between the profit before interest and tax and total investment of the business enterprise. This ratio is computed to measure the over-all efficiency or profitability of the business enterprise. This ratio is computed by using the following formula :

Return On Investment ratio= \(\frac{\text { Profit before interest, tax and dividend }}{\text { Capital employed }} \times 100\)
Where Capital investment or Capital employed = Equity share capital + Preference share capital + Reserve and Surplus + Debenture capital + Other-long term loan. OR We can use the following formula to calculate capital employed
Capital employed = Fixed assets + Current assets – Current liabilities.
This ratio indicates the ability of the company to generate the profit per rupee of capital employed.

(7) Return On Capital Employed (ROCE) i This ratio indicates the relationship between Net profit before interest and tax and Net capital employed by the proprietor. In case of the company net capital employed refers to shareholders’ capital, i.e. the funds supplied by equity shareholders and Preference shareholders. It is computed by using the following formula :
Return On Capital Employed = \(\frac{\text Net profit before interest and tax }{ Net capital employed or equity }}\)
Net Capital Employed = Total assets – Current liabilities
= Fixed assets + Current assets – Current liabilities.
This ratio indicates whether shareholders’ fund is efficiently used or not. As far as possible Return On Capital Employed ratio should be higher than Return On Investment ratio.

By going through these Maharashtra State Board Secretarial Practice 12th Commerce Notes Chapter 1 Introduction To Corporate Finance students can recall all the concepts quickly.

Maharashtra State Board Class 12 Secretarial Practice Notes Chapter 4 Issue of Debentures

→ The company can make a public issue of debentures only when:

• Company or its Promoters or its Directors are not prohibited from accessing securities market by SEBI.
• Company or its Promoters or its Directors have not declared themselves as defaulters or has not defaulted in repaying principal, interest or debt for a period of more than 6 months.

→ The company can issue debentures to its members through:

• Public Offer
• Private Placement

→ The company can also list its debentures on stock exchanges.

→ Section 71 of the Companies Act 2013, deals with the issue of debenture.

→ SEBI Regulation 2008 deals with provision for issue and listing of debenture which is not convertible.

→ SEBI Regulation 2009 deals with the provision for the issue of debenture and the listing of debenture that are convertible.

→ The Board of Directors has the power to issue debentures at:

• Par
• Premium
• Discount.

→ The Board of Directors can issue debentures up to a limit mentioned in the Articles of Association. Special Resolution is required to be passed in General Meeting to issue more debentures.

→ Following provisions are to be followed while issuing debentures:

• Provisions laid by Companies Act, 2013
• Provisions laid by Companies (Share Capital and Debentures) Rules 2014
• SEBI Regulation

→ Company issuing prospectus or more than 500 debentures has to appoint one or more Debenture Trustees.

→ Debenture Trust Deed is an agreed contract between the company and Debenture Trustee containing terms and conditions.

By going through these Maharashtra State Board Book Keeping & Accountancy Notes 12th Chapter 5 Reconstitution of Partnership (Death of Partner) students can recall all the concepts quickly.

Maharashtra State Board 12th Accounts Notes Chapter 5 Reconstitution of Partnership (Death of Partner)

Meaning-

Death means the permanent end of all functions of life in an organism. Accordingly when a partner dies, he no more remains as partner of a firm. On death of a partner, he ceases to be partner of a firm on natural grounds. Thus, death of a partner is equivalent to compulsory retirement. The surviving partners may continue the business if partnership firm makes provisions in partnership deed. On the death of a partner, total amount due to deceased partner is transferred to his Legal Heir’s Account or Legal Representative’s Account or Executor’s Account. Surviving partners make arrangement to make payment of deceased partner’s dues with his legal representative who is entitled to interest at 6 % p.a. on the amount due from the date of death to the date of payment. On death of a partner, profit sharing ratio of the surviving partners get increased because profit sharing ratio of deceased partner gets divided and received by surviving partners.

New Profit Sharing Ratio-

New profit sharing ratio is a ratio in which the continuing partners share the future profit or loss of the firm after the death of a partner.

Gain (Benefit) Ratio-

Profit sharing ratio which is acquired by the continuing or surviving partners on account of death of a partner is called Gain Ratio or Benefit Ratio. Gain ratio is calculated by using the following formula : Gain ratio = New ratio – Old ratio. Usually gain ratio is used by the firm to write off goodwill raised only to the extent of deceased partner’s share.

Revaluation of Assets and Liabilities-

At the time of death of a partner, all the assets and liabilities of the partnership firm are usually revalued and changes in their values are effected through a Profit and Loss Adjustment Account or Revaluation A/c. A reduction in the values of assets and an increase in the values of liabilities are debited to this Account while an increase in the values of assets and a reduction in the values of liabilities are credited to this Account. Tp transfer the deceased partner’s share in profit or loss made on revaluation of assets and liabilities, the following journal entries are passed :

(a) Transfer of profit on revaluation :

(Being share of deceased partner in revaluation profit transferred to his Capital A/c)

(b) Transfer of loss on revaluation :

(Being share of deceased partner in revaluation loss transferred to his Capital A/c)

Note : Please note that journal entries for revaluation of assets and liabilities are the same as those for admission of a partner. For pro forma journal entries and ledger accounts for revaluation of assets and liabilities, refer to Chapter 3 on Admission of a Partner in this book.

Amount due to deceased partner’s executor-

In order to ascertain the total amount payable to the deceased partner’s executor the following counting items are considered :

(1) Capital balance : Capital balance of the deceased partner shown in the last Balance Sheet is required to the transferred to Capital Account of the deceased partner on credit side as ‘By Balance b/d’.

(2) Interest op capital : If there is a provision in the partnership deed to pay interest on Partners’ Capital, the interest bmegpital for the period beginning from the date of the last Balance Sheet to the date of death of a partner is calculated at specified rate and transferred to his Capital Account by recording the following journal entries :

(3) Transfer of the deceased partner’s share in general reserve, undistributed profits and unadjusted losses : If there are any items like Reserve Fund/General Reserve/undistributed profits or unadjusted losses shown in the last Balance Sheet, then the share of the deceased partner in those items should be calculated and transferred to his Capital Account by recording the following journal entries :

(a) Transfer of general reserve and undistributed profits :

(Being share of deceased partner in general reserve and undistributed profit transferred)

(b) Transfer of unadjusted losses :

(Being share of deceased partner in unadjusted losses transferred)

(4) Share of goodwill : On the death of a partner, goodwill of the firm is to be valued as per the terms and conditions contained in the partnership agreement of the partnership firm and accordingly the share of the deceased partner can be ascertained. The share of goodwill of the deceased partner is transferred to his Capital Account by passing the following journal entry :

(Being share of deceased partner in goodwill transferred to his Capital A/c)

(5) Salary due to a deceased partner : If there is a provision in the partnership deed to pay salary to partners, salary payable for the period from last Balance Sheet to the date of death of a partner is calculated and then transferred to the deceased Partner’s Capital Account by recording the following journal entry :

(Being salary due to deceased partner transferred to his Capital A/c)

(6) Drawings of the partner : Deceased partner’s drawings for a period from the date of last Balance
Sheet till the date of his death are to be calculated and transferred to his Capital Account by recording the following journal entry :

(Being drawings of the deceased partner adjusted to his Capital A/c)

(7) Interest on Drawings : If there is a provision in the partnership deed to charge interest on partner’s drawings, the interest on drawings for the period beginning from the date of last balance sheet to the date of death is calculated at specified rate and transferred to his Capital Account by recording the following journal entry :

(Being interest due on drawings adjusted to Capital A/c)

(8) Share of the deceased partner in the accrued profits of the firm i.e. profits accrued to firm from the date of last Balance Sheet to the date of death of a partner : The accrued profit of the firm from the date of the last Balance Sheet to the date of death of a partner may be calculated either on the basis of the last year’s profit or the average of the profits for last two to five years. Deceased partner’s share for a period from the date of the last Balance Sheet to the date of death, in the accrued profit of the firm can be calculated by using the following formula :

Deceased partner’s share in accrued profit = Deceased partner’s profit sharing ratio x proportionate period for which he was in the firm during the accounting year of death x Average accrued profit of last year’s profit.
To transfer this share of profit to the Deceased Partner’s Capital A/c the following journal entry is to be passed :

(9) Share in revaluation of Assets and Liabilities :
For this, refer to Brief Overview point no. 5.4 of this Chapter.

Settlement of amount due-

After recording all the above entries, the total amount due to a deceased partner is calculated and then it is to be transferred to the Deceased Partner’s Executor’s A/c or Legal Heir’s A/c. To effect this transfer, the following journal entry is recorded in the books of the firm :

If any payment is made to Deceased Partner’s Executor/Legal Heir, then the following journal entry is passed :

The balance left in Deceased Partner’s Executor’s A/c/Legal Heir’s A/c is then treated as Deceased Partner’s Executor’s / Legal Heir’s Loan.

Accounting treatment-

Deceased Partner’s Capital Account:
In order to ascertain the amount due to a deceased partner’s executor or legal heirs or legal representative, his Capital Account is prepared. It is shown below :

By going through these Maharashtra State Board 12th Science Biology Notes Chapter 15 Biodiversity, Conservation and Environmental Issues students can recall all the concepts quickly.

Maharashtra State Board 12th Biology Notes Chapter 15 Biodiversity, Conservation, and Environmental Issues

Introduction-

• Biodiversity: A variety of life that includes a vast array of species from microorganisms, viruses, algae, fungi, plants and animals present in different habitats on the earth is called biodiversity.
• Diversity is seen in shape, colour, form, mode of nutrition, habitats, reproduction, motility, duration of the life cycle, life span, etc. All of these adaptations help in the survival of species and hence diverse forms are seen.
• The term Biodiversity was coined by Walter Rosen in 1982.
• Edward Wilson popularised the term. He described it as combined diversity at different levels of biological organisation.
• Definition of biodiversity: Biodiversity is the part of nature that includes differences in the genes among individuals of a species, variety of animal and plant species in different habitats, regions, countries and the world which form different types of ecosystems within a defined area.
• Biodiversity was developed for 3.5 billion years when the evolution took place gradually.

Levels of biodiversity-

• Various levels at which diversity can be seen ranging from molecular to ecosystem levels. The three main levels, which form a hierarchy and interrelation: Genetic diversity, species diversity (community), and ecosystem diversity (Ecological diversity).
• Genetic diversity: Also called intraspecific diversity. The diversity present in the number and types of genes and chromosomes present in different species and variations in them and their alleles in the same species is called genetic diversity. Subspecies and races are also examples of genetic diversity.
• Species diversity: Also called interspecific diversity. The diversity in the number of species of plants and animals which are present in a particular region is called species diversity. Species diversity decides species richness (variety of species) and species evenness (number of individuals of different species).
• Ecological or ecosystem diversity: The diversity of different types of ecosystems and habitats
  within a given geographical area is called ecological or ecosystem diversity. E.g. Deserts, rain forests, deciduous forests, estuaries, wetlands, grasslands are different ecosystems with diverse features.

Patterns of biodiversity-

• Latitudinal and altitudinal gradient and species-area relationship are the two patterns of diversity.
• Latitudinal species diversity: There is greater species richness at a lower latitude which steadily declines towards the poles. This is called as distribution of diversity along the latitudes.
• The overall stability of tropical regions, lesser annual climatic changes, availability of plenty of sunlight, lesser drastic disturbances like periodic glaciations, lesser migrations causing reduced gene flow, normal temperature, and higher annual rainfall are all the factors that cause more diversity in these regions.
• Altitudinal species diversity: The diversity is more at lower altitudes, but at higher altitudes, it declines due to change in climatic conditions and drastic seasonal variations.
• Species area relationship: The number of species present in any area is directly proportional to the size of this area. Species richness increases with an increase in the area up to a certain limit this was observed by Alexander wan Humboldt.
• Importance of species diversity to the ecosystem: A stable community has fairly constant average biomass production over a particular time period. It withstands the disturbance and recovers quickly and also resists the invasive species.
• Productivity stability hypothesis (David Tillman): Rich diversity leads to lesser variation in the production of biomass over a particular time period.
• Rivet Popper hypothesis (Paul Ehrlich): Relationship between diversity and wellbeing of the ecosystem is not linear. When key species are lost there is a threat in a very short span of time which affects the food chain, food web, energy flow, and natural cycles resulting in an imbalance of the ecosystem.

Biodiversity current scenario-

• According to the IUCN data (2004), over 1.5 million species have been documented so far but still lot more are yet to be studied.
• Most of the temperate species have been studied but tropical species are yet to be explored.
• Robert May estimated that there are 7 million species on the earth.
• India has 8.1% of total global biodiversity. India is one of the 12 mega diversity countries. On total Indian land area which is 2.4% of the world, there are about 45000 plant species and 90000 animal varieties. 22% of global natural wealth has been recorded so far.
• But due to rapid deforestation and reclamation, many species and varieties could be lost forever before they are documented.

Loss of biodiversity-

1. Imbalance in the ecosystem occurs if biodiversity is lost. Extinction of species means a threat to biodiversity.
2. Three types of extinctions are :

• Natural extinction: Occurring due to natural causes such as forest fires, earthquakes, volcanic eruptions, etc.
• Mass extinction: Great impact causing major loss of species.
• Manmade or Anthropogenic extinction: Habitat destruction, hunting, settlement, overexploitation, reclamation are man-made causes of extinction.

3. There were five mass extinctions during different stages of the history of Earth.
4. The sixth extinction is taking place now which is a hundred to a thousand times faster than that
occurred in pre-human times.50% of diversity is said to be lost and this loss of biodiversity can alter environmental processes such as plant productivity and disease cycles.

5. Causes of biodiversity losses :
(1) Four major causes of biodiversity loss, known as an evil quartet.

• Habitat loss and fragmentation
• Overexploitation
• Alien species invasion
• Co-extinctions

(2) Extinct species: The species which are totally eliminated from the Earth.
E.g. Dinosaurs

(3) Endangered species: The species having dwindling numbers.

(4) The international union for conservation of nature and natural resources (IUCN) maintains a red data Book or red list to record the conservation status of plant and animal species.

(5) Categories of species according to IUCN:

• Extinct (EX)
• Extinct in the wild (EW)
• Critically endangered (CR)
• Endangered (EN)
• Vulnerable (VU)
• Near threatened (NT)
• Least concern (LC)
• Data deficient (DD)
• Not evaluated (NE)

Conservation and biodiversity-

1. Protection, upliftment, and scientific management of biodiversity so that it can remain at optimum level and give us sustainable benefits is called conservation of biodiversity.
2. Reasons for conservation of biodiversity :

(1) Narrowly utilitarian reasons: Humans obtain benefits from biodiversity in the form of resources for food, cloth, shelter industrial products, aesthetic products, ornaments, artifacts, and medicines.
Bioprospecting is done for systematically searching the new sources of chemical compounds, genes, microorganisms, and other valuable products that we could obtain from nature.

(2) Broadly utilitarian reasons: Oxygen supply, seed dispersal, pollination, extra aspects that nature gives us free.

(3) Ethical reasons: Humans share the earth with all the other diverse life forms and all of them have equal rights to survive. Therefore, ethically we should not finish them for our prospective economic use.

3. Conservation of biodiversity :

(1) In situ conservation :

• The protection of an organism in its natural surrounding or habitat is called in situ conservation.
• 34 biodiversity hotspots having high species richness and high density are strategically protected under in situ conservation in India.
• Traditionally used varieties for farming and horticulture are also conserved by this method.
• The Western Ghats, Indo-Burma, and Eastern Himalayas are 3 of world’s biodiversity hotspots located in India.
• In India, there Eire 14 biosphere reserves, 90 national parks, 448 wildlife sanctuaries, sacred groves are also typed of in situ conservation in which flora and fauna are protected in the name of God.
• Sacred groves are found in Khasi and Jaintia hills in Meghalaya, in Western Ghats of Maharashtra (especially Sindhudurg district), and Karnataka, Aravalli hills of Rajasthan and Bastar, Chanda and Sarguja areas in Madhya Pradesh.

(2) Ex-situ conservation :

• Critically endangered species are protected in captivity, which is called ex-situ conservation.
• An ex-situ conservation, living beings are protected in wildlife safari parks, zoological parks, botanical gardens, etc.
• Seed banks, tissue culture, cryopreservation, etc. are modern techniques that are used in this conservation method.

Biological Diversity Act 2002-

1. Earth Summit, held at Rio de Janeiro came out with the Convention on Biological Diversity (CBD-1992).
2. Indian Government has passed Biological Diversity Act (BD Act) in the year 2002 in compliance with CBD.
3. It gives framework for the sustainable management and conservation of our country’s natural resources. The law excludes value added products and human genetic material.
4. The main objectives for proposing this act are

• Regulation of access to Indian biological resources.
• Scientific cataloguing of traditional knowledge about ethnobiological materials.

5. There is three tier system in India, comprising of

• National Biodiversity Authority (NBA) at the national level
• State Biodiversity Boards (SBBs) at the state level
• Biodiversity Management Committees (BMCs) at the local level.

Environmental issues-

1. To protect and improve the quality of our environment, Indian Government has passed the Environment Protection Act in 1986.
2. Reasons for rampant loss of natural resources :

• Exponential growth of human population
• Industrial development
• Uncontrolled exploitation of nature
• Utilization and production of synthetic materials
• Construction activities
• Resultant pollution

3. Types of pollution :

• Air pollution, Noise pollution, Water pollution, Radioactive pollution, Soil pollution are different types of pollution.
• Pollutant: Substance that causes pollution is called a pollutant.

4. Air pollution :

(1) Unfavourable alteration in air quality causing damage to the respiratory system is called air pollution.
(2) Duration of exposure, concentration of pollutant and type of organism decide the severity of damage caused by air pollution.
(3) In plants, yield of crops are affected. Premature death of plants is another effect of air pollution.
(4) Major cause of air pollution is automobile traffic.

(5) Types of air pollutants : Two main types -> Particulate and Gaseous pollutants.

• Particles of less than 2.5 micrometres in diameter are extremely harmful to humans.
• Gaseous pollutants : CO, CO₂, SO₂, NO, NO₂, etc.

(6) Control measures for air pollution : For controlling emissions of gases and particulate pollutants which are released through vehicles and industries following devices are used :

• Electrostatic precipitator
• Exhaust gas scrubbers
• Catalytic converters

(7) Noise pollution :

• Noise is considered as an air pollutant which causes psychological and physiological changes in human beings.
• Sound level can damage the ear drum causing permanent hearing loss. Other problems that noise causes are sleeplessness, increased heartbeat, altered breathing, psychological stress, interference in learning etc.
• Sources of noise pollution : Machines, transportation, construction sites and industry.
• Using sound absorbing material can cause reduction in noise pollution.

5. Water pollution :

• Most of the water pollution is manmade.
• Smelling water having many pathogens, heavy metals and oils is called polluted water.
• Water Prevention and Control of Pollution Act 1974 to safeguard the water resources.
• Domestic sewage and Industrial effluents cause water pollution.
• (5) Domestic sewage contains biodegradable organic matter which can be removed by treatment.
• BOD or biochemical oxygen demand is a measure to estimate biodegradable organic matter present in the polluted water.  It is defined as the amount of dissolved oxygen required by microorganisms for decomposing the organic matter present in water which is expressed in milligram of oxygen per litre (mg/L) of water.
• Algal bloom : Excessive growth of free floating planktonic blue green algae causes algal bloom. It releases toxins in the water causing death of inhabitant fish. –
• Water hyacinth (Eichhornia crassipes) : Commonly called Terror of Bengal’ is an invasive species which grows excessively in water bodies and cause nuisance.
• Natural eutrophication : Ageing of lake over a very long period due to nutrient enrichment of water is called natural eutrophication.
• Cultural or accelerated eutrophication: Pollutants passing in the water body due to human activities cause cultural eutrophication in which there is accelerated aging process for the water body.
• Biological magnification or biomagnification : Accumulation of certain pollutant in the tissues of organisms and their increasing concentrations along the food chain is called biomagnification. E.g. DDT and mercury show biomagnification.

6. Thermal pollution : When the temperature of water is raised due to human activities, it causes thermal pollution. E.g. Effluents from thermal and nuclear power plants. Sensitive organisms are killed due to raised temperature, thus thermal pollution causes loss of flora and fauna.

7. Ecosan or Ecological sanitation :

• Use of excreta as agricultural manure in a safe and reusable manner is called ecological sanitation.
• Principle of recovery and recycling of nutrients is practised in this way.
• Ecosan is a closed system toilet which requires no water and is an alternative to leach pit toilet.
• Through such toilets composted organic manure is formed.

8. Reverse osmosis : Sewage water is reused after performing reverse osmosis.
It solves the problem of water scarcity and treatment of sewage water.

9. Rainwater harvesting : By harvesting rainwater, scarcity of water can be solved. For new constructions now it is mandatory to have provision for RWH.

10. Solid waste management :

(1) Everything that is disposed into the trash is called solid wastes.

(2) Municipal wastes : Wastes from homes, offices, stores, schools, hospitals, etc. together are called Municipal wastes. Municipality collects and disposes the same. It may contain paper, food wastes, plastics, glass, metals, rubber, leather, textile, etc.

(3) One of the ways to dispose the solid waste is to burn them. Volume of the waste is reduced by burning but burning creates air pollution.

(4) Sanitary landfills : Dumping the trash in open can attract rats and flies causing open dumps as the breeding ground for these pests. Therefore, sanitary landfills are created. At sanitary landfill sites, the wastes are compacted and buried in trenches. Everyday newer trash is added to landfills.

(5) However, this method is not a fool proof solution for the waste management as in large metro cities amount of trash is increasing day by day and hence such landfills are falling short. There is also seepage of dangerous chemicals from the sanitary landfills which results into the pollution of underground water reserves.

(6) Therefore, every human being should be sensitized towards the environmental issues. Common man should have ecological conscience to reduce the non-biodegradable trash.

(7) The solid wastes are categorized into three types :

(1) Bio-degradable
(2) Recyclable
(3) Non-biodegradable.

(8) The generated garbage should be sorted prior to disposal. The matter that could be reused or recycled should not be thrown into trash but to be given to kabadiwallahs and rag¬pickers.

(9) The biodegradable materials undergo natural breakdown. Therefore they can be buried deep down in the ground in pits.

(10) The non-biodegradable material should be reduced at source to curb the garbage generation. Packaging material, plastics, polybags, etc. which are used to a greater extent in modern times cause environmental pollution. Use of eco-friendly packaging and reduction in plastic has been advocated by the State Governments.

(11) Biomedical wastes : Hazardous wastes generated by hospitals contain disinfectants, harmful chemicals and disease-causing pathogenic microorganisms. Therefore such wastes should be carefully handled, treated and then disposed. For disposal of harmful biomedical wastes the incinerators are used.

(12) Electronic wastes (e-wastes) :

• e-wastes are any material of electronic origin, such as irreparable computers, mobile phones, CDs, floppies, batteries, etc.
• e-wastes are managed by burying them in landfills or they are incinerated.
• e-wastes generated in the developed world are exported to developing countries for further recycling and disposal.
• In China, India and Pakistan, metals like copper, iron, silicon, nickel and gold are recovered from e-wastes during recycling process.
• Developed countries, have facilities for recycling of e-wastes. But it involves manual participation and this exposes the workers to toxic substances present in e-wastes. For treating e-wastes, recycling is the only control measure. But it has to be done in an eco-friendly r manner.

11. Anti-plastic notifications : Government of Maharashtra has banned used of plastic by notification (23rd June 2018). This is a mission to make ‘Plastic Free Maharashtra’.

Greenhouse effect and Global warming-

1. Greenhouse effect :

• The greenhouse effect is the phenomenon that occurs naturally on the earth.
• The average temperature at surface of earth is increased due to greenhouse effect. If it would
  not have been there, the temperature of the earth would have been -18 °C. But due to the greenhouse now it is at the average 15 °C. This was called a good greenhouse effect.
• But in recent years the excessive greenhouse effect is causing generalized global warming and climate change.
• Infrared radiations are trapped due to atmospheric gases such as carbon dioxide, methane, etc. These gases absorb a major fraction of it and re-radiate the heat energy back to the earth’s surface. This exchange of heat goes in a cyclic manner.
• Carbon dioxide and methane are main greenhouse gases; additionally, chloroflorocarbons (CFC), Nitrous oxide (N₂O) and water vapours add to this effect.

2. Global warming :

(1) Due to air pollution and increased burning of fuels there is an increase in the proportion of greenhouse gases. The loss of forests and tree cover also adds to the increased CO₂ concentration. All this has led to global warming.
(2) In the last 100 years there is an increase in the Earth’s temperature by about 0.6 °C. Especially in last three decades the climate change is severe. Problems like El Nino effect; melting of polar ice caps, Alps and Himalayas, etc. and increasing sea level leading to coastal submergence are all due to global warming.

3. Measures to reduce greenhouse effect and Global warming : Reduction in use of fossil fuel, improving efficiency

Ozone depletion-

1. In the upper stratosphere strata there is ozone layer. It is continuously formed by action of ultraviolet radiations on molecular oxygen. Molecular oxygen also degrades back into ozone in the stratosphere. Ozone layer absorbs ultraviolet radiation from the sun and protects the flora and fauna from deleterious effects of radiation.

2. Living organisms are affected due to UV radiation because it causes damage to their DNA and proteins by breaking the chemical bonds within DNA and proteins.
3. The unit for measuring thickness of ozone is Dobson unit (DU).

4. A balance between production and degradation of ozone in the stratosphere is lately disturbed due to excessive proportion of chlorofluorocarbons (CFCs) in the atmosphere.

5. Chlorofluorocarbons are used in refrigerators. When released they move upward and reach stratosphere. The ultraviolet rays in stratosphere, react with CFC and release Cl- atoms. Ozone is degraded by Cl “atoms.

6. This later causes ozone depletion or formation of ozone hole as it is clearly seen over the Antarctic region.

7. Deleterious effects of Ozone depletion :

• Aging of skin.
• Damage to skin cells causing skin cancers.
• Inflammation of cornea of human eye causing snow-blindness cataract.
• Permanent damage to the cornea.
• UV-B radiation cause damage to DNA and mutations.

8. Montreal Protocol : An international treaty signed at Montreal (Canada) in 1987 (effective in 1989) to control the deleterious emission of ozone depleting substances like CFCs.

Deforestation –

1. Converting forested land into barren land is called deforestation.
2. Tropical forests are reduced by about 40% whereas temperate forests are lessened by 1% in the temperate region.
3. India is facing severe deforestation. There was 30% of forests in Indian land in early twentieth century. Now it has reduced to 19.4%.
4. It is recommended by National Forest Policy (1988) of India that the hilly area should have 67% while the plain area should have 33% forest cover.
5. Causes of deforestation :

• Unplanned human activities.
• Creation of agricultural land by cutting down forests.
• For the timber and firewood, trees are felled and forests are cleared.
• Clearing forests for cattle ranching.
• Slash and burn agriculture or Jhum cultivation in the north-eastern parts of India.
• Severe deforestation is caused due to increasing human population and repeated cultivation that resulted into shortening of recovery phase.

6. Consequences of deforestation :

Enhanced carbon dioxide concentration.

• Carbon held in the biomass is lost with deforestation.
• Loss of biodiversity due to habitat destruction.
• Disturbance in the hydrologic cycle.
• Soil erosion.
• Desertification.

7. Reforestation : Restoring a forest that once existed is called reforestation.
There can be a natural reforestation or it can be due to human efforts by planting trees. However, when it is due to human efforts the natural biodiversity may be lost.

8. Environmental heroes : Reforestation undertaken by these two environmentalists.

• Saalumara Thimmakka. (Karnataka)
• Moirangthem Loiya (Manipur).

9. Case study of people’s participation in conservation of forests : Following examples show people’s participation in the conservation of forests :

(1) In 1731, Amrita Devi had sacrificed her life to save trees along with other people of Bishnoi’s community. It was the example of sacrificing lives for the cause of saving trees and environment.
Amrita Devi Bishnoi Wildlife Protection Award for individuals or communities from rural areas has been installed by the Government of India.

(2) Chipko Movement is people’s participation for the protection of trees. This happened in 1974 in Garhwal region of Himalayas. Chipko movement has now spread world-wide in which people hug the trees and save it from the axe of tree-cutters.

(3) Joint Forest Management (JFM) has been introduced by the Government of India in 1980s for working with the local communities for protection and management of the forests. It is an attempt to conserve forests in a sustainable matter.

Mission Harit Maharashtra-

• Government of Maharashtra has decided to plant 50 crore trees, district-wise in 4 years, starting from in the year 2016.
• National Forest Policy (NFP) aims at maintaining 33% forest cover in India. This decision of government is in tune with NFP
• Helpline number 1926 called ‘Hello Forest’ has been set up to provide information regarding plantation, protection and for mass awareness.
• Mobile application called ‘My Plants’ to record details of the plantation such as numbers, species and location.
• Japanese Miyawaki method of plantation has been adapted in districts like, Beed, Hingoli, Pune, Jalgaon, Aurangabad, etc.

Know your conservatonist;

• Seed mother of Maharashtra, Rahibai Popere, from Ahmednagar district, runs seed bank for 54 crops and 116 varieties.
• Crops include wild varieties of brinjal, guava, mango, spinach, methi, millets, pulses, hyacinth beans and peas.
• Farmers and students are also trained by her for seed selection, enhancement of soil fertility, pest management and control.
• She is on BBC list of ‘100 women, 2018, along with 3 more Indian women.

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 12th Science Biology Notes Chapter 8 Respiration and Circulation students can recall all the concepts quickly.

Maharashtra State Board 12th Biology Notes Chapter 8 Respiration and Circulation

Respiration-

• Respiration is a biochemical process of oxidation of organic compounds in an orderly manner for the liberation of chemical energy in the form of ATP
• C₆H₁₂O₆ + 6O₂ → 6CO₂ + 6H₂O + 38ATP

Organs of respiratory exchange-

1. Respiratory surface should possess the following features for efficient gaseous exchange.

• A large surface area.
• Thin, highly vascular and permeable to allow exchange of gases.
• Moist surfaces.

2. A terrestrial plant has stomata on leaves and young stems and lenticels on the stem surface for exchange of gases.

3. In animals, depending upon the complexity of organization and the surrounding medium, respiratory organs have become specialized and are usually associated with a transport system.

4. Respiratory organs In different organisms:

Human respiratory system-

Human respiratory system consists of nostrils, nasal chambers, pharynx, larynx, trachea, bronchi, bronchioles, lungs, aided by diaphragm and intercostal muscles.

1. Nostrils and nasal chambers :

(1) The nostrils are external openings of the nose. Oxygen rich air is taken into the body through the nostrils or external nares. Carbon dioxide and water vapour are released out of the body through the nostrils.

(2) The internal nares open into the pharynx. The space between the external and internal nares is known as nasal chamber. The nasal chamber is lined internally by mucous membrane and ciliated epithelium.

(3) The nasal chamber is divided into right and left parts by a cartilage called mesethmoid. Every nasal chamber is further divided into three regions, viz. vestibule, respiratory part and sensory part.

• Vestibule : The anteriormost part of the nasal chamber is vestibule. Hair present in this chamber prevent the dust particles from going inside.
• Respiratory part : It is the part which is richly supplied by capillaries. Air is made warm and moist in this region.
• Sensory part : The sensory epithelium lines this region. It is concerned with the detection of smell.

2. Pharynx :

• The pharynx is a short, vertical tube about 12 cm in length. The respiratory and food passages cross each other in the pharynx.
• The upper part of the pharynx is known as naso-pharynx. It conducts the air.
• The lower part is called laryngo-pharynx or oro-pharynx. It conducts food to the oesophagus.
• The tonsils are present in the pharynx. They are made of lymphatic tissue. They kill the bacteria that are trapped in mucus.

3. Larynx :

• The larynx produces sound. In males, it increases in size at puberty. This is termed as Adam’s apple.
• From the pharynx air enters the larynx. The opening through which it enters is called glottis.
• The glottis has a guarding flap called epiglottis.
• The epiglottis prevents the entry of food particles into the trachea.
• The vocal cords are seen along the side of the glottis. They are made of elastic tissue. They produce sound.
• Passage of air between the vocal cords and modulations created by tongue, teeth, lips and nasal cavity produce voice.

4. Trachea :

• The trachea or windpipe is about 10-12 cm long and 2.5 cm wide.
• It is situated in front of the oesophagus and runs downwards in the thorax.
• Fibrous muscular tissue supported by ‘C’ shaped cartilages form the walls of the trachea.
• 16 to 20 cartilage rings are present in the trachea.
• The trachea is lined internally by ciliated epithelium and mucous glands.
• Mucous and ciliary action remove the dust particles and push them upwards to the larynx. These particles are then gulped and taken into the oesophagus. Instant coughing can remove foreign particles that enter the trachea.

5. Bronchi and bronchioles :

• The trachea divides into two bronchi (singular- bronchus) at its distal end behind the sternum.
• The bronchus has complete ring of cartilage for support.
• The bronchi enter the lungs on either side.
• After entering the lungs each bronchus divides into secondary and tertiary bronchi. The tertiary bronchi divide further to form bronchioles.
• The bronchioles are minute and are without the cartilage rings in their walls.
• Each bronchiole ends into a bunch of alveoli which appear like a bunch of grapes. Each alveolus is balloon shaped.
• Many alveoli make the lung spongy and elastic.

6. Lungs :

• The lungs are principal respiratory organs located in the thoracic cavity.
• They are pinkish, soft, hollow, paired, elastic and distensible organs.
• The lung is enclosed in a pleural sac.
• The pleural sac has two membranes – an outer parietal and an inner visceral which enclose the pleural cavity.
• The pleural fluid which is present in the pleural cavity lubricates and prevents friction when pleural membranes slide on each other.
• The lungs are richly supplied with blood capillaries and hence are highly vascular organs.
• The left lung has two lobes while the right lung has three lobes.
• Each lobe has many bronchioles and alveolar sacs.
• The alveolar sacs are spherical and thin walled and contain about 20 alveoli.
• The alveoli are covered by a network of capillaries from pulmonary artery and pulmonary vein.
• Each alveolus has thin and elastic wall. It is about 0.1 mm in diameter.
• The alveolar wall is 0.0001 mm thick and is made of simple, non-ciliated, squamous epithelium. It has collagen and elastin fibres.
• Every lung has about 700 million alveoli which increase the surface area for the exchange of gases.
• The outermost covering of the lungs which is known as visceral pleura is made of smooth muscle fibres.
• The lobule in the lung consists of alveolar ducts, alveolar sacs and alveoli. In alveoli gaseous exchange takes place.

Mechanism of respiration –

1. The process of respiration includes breathing, external respiration, internal respiration and cellular respiration.

(A) Breathing :

• Breathing is the process by which the air comes in and goes out of the lungs.
• The rate of gaseous exchange is speeded up by breathing.
• Breathing is a part of respiration and the terms breathing and respiration are not synonymous.
• Inspiration and expiration together make breathing.

(i) Inspiration :

• Inspiration is an active process brought about by ribs, intercostal muscles, sternum and diaphragm.
• The intercostal muscles contract and pull the ribs outwards. This increases the space in the thoracic cavity. The lower part of sternum is simultaneously raised. The diaphragm contracts and flattens. This
  causes further increase in the volume of : thoracic cavity.
• Pressure in the lungs decreases and the volume | increases due to expansion of the lungs.
• Due to pressure difference the atmospheric * air rushes into the lungs through respiratory * passage as a result of which air is inspired * in.

(ii) Expiration :

• Expiration is the passive process.
• During expiration the intercostal muscles j relax and the ribs are pulled inwards.
• The diaphragm is relaxed and becomes ; dome-shaped.
• The volume of the thoracic cavity is reduced. :
• The pressure on the lungs is increased as a j result of which they get compressed.
• Air is thus expelled out of lungs through the j nares.

(iii) Respiratory cycle :

• Respiratory cycle is alternate inspiration and expiration process.
• In adult man there are 16 to 20 respiratory cycles per minute.
• The medulla oblongata in the brain controls the respiration.

(B) External respiration/exchange of gases at the alveolar level :

• Exchange of gases between the alveolar .air and the blood takes place through thin squamous epithelial layer of alveolus and similar layer of the capillary wall.
• Respiratory gases will always diffuse from an area of higher partial pressure to an area of lower partied pressure in these two regions.
• Due to difference in partial pressure, carbon dioxide diffuses from the capillaries into the alveolus whereas oxygen will diffuse from alveoli to the capillaries.
• Table : Pulmonary volumes and capacities :
  

(C) Internal respiration :

• Transport of O₂ : Only 3% of total oxygen is carried in a dissolved state by plasma while 97% of oxygen is carried in the form of oxyhaemoglobin from lungs to tissues.
• Oxygen dissociation curve : A sigmoid curve which shows oxygen-haemoglobin dissociation and the relationship between oxyhaemoglobin saturation and oxygen tension.
• Bohr effect : The shift of oxyhaemoglobin dissociation curve due to change in partial pressure of C02 in blood is called Bohr effect.
• Haldane effect : The effect caused by increase in hydrogen ions which results in decrease of pH of blood is called Haldane effect.

Transport of CO₂ :

• 7% of COa is transported in the form of carbonic acid by plasma.
• 70% of COa is transported from tissues to lungs in the form of sodium bicarbonate and potassium.
• Remaining 23% of COa is carried in the form of carbaminohaemoglobin.
• Hamburger’s phenomena or chloride shift : Movement of chloride ions to maintain the ionic balance between the RBCs and the plasma is called chloride shift.

(D) Cellular respiration : In this last step food is oxidized in the cell and ATP is produced and used to carry out vital processes.

2. Carbon monoxide poisoning :

• Haemoglobin has affinity for oxygen. But for carbon monoxide it has about 250 times more affinity than that of oxygen.
• With carbon monoxide it forms a stable compound called carboxyhaemoglobin.
• Due to such combination, the oxygen is not transported to the tissues. The tissues thus suffer from oxygen starvation. This leads to asphyxiation and in extreme cases death.
• Treatment of carbon monoxide poisoning is given by administering oxygen-carbon dioxide mixture to make high PO₂ level to dissociate the carbon monoxide from haemoglobin.
• Carbon monoxide poisoning occurs in closed rooms with open stoves, gas burners, automobile engines or any incomplete combustion.

Regulation of breathing-

• Normal breathing is an involuntary process controlled by inspiratory centres and expiratory centres in medulla, pneumotaxic centre in pons and apneustic centre located in medulla.
• The Hering-Breuer reflex controls the rate and depth of breathing and also prevents over inflation of lungs.
• Cerebral cortex has voluntary centres which prevent water or irritating gases from entering the lungs.

Modified respiratory movements-‘

Modified respiratory movements are used to express emotions and to clear air passages. They may be reflexes or voluntarily initiated movements such as yawning.

Common disorders of respiratory system-

1. Respiratory disorders:

2. Treatment of respiratory disorders is by taking suitable antibiotics, inhalants, vaporizers and cough medicines. Also quitting smoking, using preventive masks and staying away from polluted air is too remedy against these disorders.

3. Artificial ventilation : Method of induced breathing in a person who is unable to breathe is given artificial ventilation.

4. Ventilator : A machine supporting breathing when normal breathing fails.

Transportation in living organisms-
Circulation in animals-

1. Transportation by diffusion and active transport is suitable in extremely small organisms.

2. Intracellular transport by cyclosis is shown by almost all living organisms e.g. Paramoecium, Amoeba, root hair cells of many plants and WBCs in animals.

3. Extracellular transport : In this transport water or body fluid is circulated through body cavities as in sponges and coelenterates or moved around the viscera by contraction of body wall and muscles as in roundworms or parenchymal circulation, viz. flatworms.

4. Blood vascular system in higher animals from Annelida to chordate contains

• blood as a circulating fluid,
• heart as a pumping organ and
• the blood vessels through which blood circulates.

5. Types of blood vascular system :

(1) Open circulation :

• In this type, blood finally conies out of the blood vessels and is circulated through the body cavities (haemocoel).
• Blood flows at low pressure and there is direct exchange of materials between blood and cells or tissues of the body.
• Respiratory pigment is usually absent. When present, it is dissolved in plasma of the blood, e.g. Arthropods and Molluscs.

(2) Closed circulation :

• In this type of circulation, blood is circulated all over the body through the network of blood vessels.
• Blood does not come in direct contact with cells and body tissues and the exchange of materials between the blood and cell takes place through an intermediate fluid called lymph.
• Blood flows through blood vessels at high pressure and can be regulated. Respiratory pigment like haemoglobin is present for transportation of respiratory gases, e.g. All vertebrates, higher molluscs and annelids.
• Closed circulation can be of two main types : single circulation and double circulation.

(a) Single circulation : In fishes heart shows single circulation as blood passes only once through heart during one cardiac cycle.
(b) Double circulation :

• Human heart shows double circulation as blood passes twice through the heart during one cardiac cycle. The blood follows two routes, viz. pulmonary and systemic.
• Pulmonary circulation is the circulation between the heart and the lungs. The course of blood during pulmonary circulation is from the right ventricle (by pulmonary trunk) to the left atrium (by two pairs of pulmonary veins) of heart through lungs.
• Systemic circulation is the circulation between the heart and the body organs (except lungs). The course of blood during systemic circulation is from left ventricle (by systemic aorta) to all body organs and from the body back to right atrium (by vena cavae).

Learn This As Well:
Coronary circulation is circulation to the cardiac muscles of the heart. Coronary arteries supply oxygenated blood whereas coronary veins join to form coronary sinus and collect deoxygenated blood. This sinus opens into the right atrium.

Circulatory System in Human-

1. Circulatory system in human is made up of blood vascular system and lymphatic system.
2. Blood vascular system consists of blood, heart and blood vessels.
3. Blood composition and Coagulation :

• Study of blood is called haematology.
• The bright red, slightly alkaline main circulating, fluid in the human body is blood.
• Blood is a fluid connective tissue derived from mesoderm. It has pH about 7.4.
• There are about 5 litres of blood in the body which is about 8% of the total body weight.
• Composition of blood : There are two main components of blood, viz., plasma (55%) and blood corpuscles (45%).

(i) Plasma : Plasma is a straw coloured fluid part of blood, slightly alkaline, viscous fluid consisting of 90 – 92% water and 8 – 10% of solutes.

• Solutes are 7% proteins (serum albumin, serum globulin, heparin, fibrinogen and prothrombin).
• Other solutes are nutrients (glucose, amino acids, fatty acids and glycerol).
• Nitrogenous wastes such as urea, uric acid, ammonia and creatinine.
• Gases like oxygen, carbon dioxide and nitrogen.
• Regulatory substances like enzymes and hormones.
• Inorganic substances like bicarbonates, chlorides, phosphates and sulphates of sodium, potassium, calcium, magnesium, etc.

(ii) Blood corpuscles : Blood corpuscles are of three types, viz. erythrocytes (RBCs), leucocytes (WBCs) and thrombocytes (platelets).

Red blood corpuscles/erythrocytes-

• Circular, biconcave, enucleated cells of about 7 /im in diameter and 2.5 /mi in thickness.
• RBC count is about 5.1 to 5.8 million RBCs/ cu mm in male and 4.3 to 5.2 million/cu mm in female. The average life span of RBC is about 120 days.
• Erythropoiesis is formation of RBCs. It occurs in liver and spleen in foetus and in red bone marrow in adults.
• The old RBCs are destroyed in liver and spleen.
• Polycythemia is increase while erythrocytopenia is decrease in number of RBCs.
• RBCs contain respiratory pigment called haemoglobin which helps in transport of oxygen and carbon dioxide.
• The normal haemoglobin content in adult male is 14-17 gm/100 ml of blood and 13-15 gm/100 ml of blood in adult female.
• Less amount of haemoglobin leads to anaemia.
• RBCs transport oxygen from lungs to tissues and carbon dioxide from tissues to lungs. They maintain blood pH as haemoglobin acts as a buffer. They also maintain the viscosity of the blood.
• RBCs also contains an enzyme, carbonic anhydrase.
• The haematocrit is the ratio of the volume of RBCs to total blood volume of blood. Its value is different in men and women.

White blood corpuscles/Leucocytes-

• Leucocytes are colourless, nucleated, amoeboid and phagocytic cells.
• They show diapedesis, i.e. squeezing out of blood capillaries by amoeboid movement.
• The size is about 8 to 15 fxm.
• Total WBC count is 5000 to 11000 WBCs/ cu mm of blood.
• The average life span of WBCs is about 3 to 4 days.
• Leucopoiesis or formation of WBCs. It occurs in red bone marrow, spleen, lymph nodes, tonsils, thymus and Payer’s patches.
• Leucocytosis is increase while leucopenia is decrease in the number of WBCs.
• Leukaemia or blood cancer is a pathological increase in number of WBCs.
• The dead WBCs are destroyed by phagocytosis in blood, liver and lymph nodes.
• Leucocytes are of two types, viz., granulocytes and agranulocytes.
• Granulocytes are of three types, viz. neutrophils, eosinophils and basophils.
• Agranulocytes are of two types, viz. monocytes and lymphocytes.
• Characteristics of different types of leucocytes
  

Thrombocytes/Platelets-

• Thrombocytes are smallest, non-nucleated, round and biconvex. They are of about 2.5 to 5 m in diameter. Their count is about 2.5 – 4.5 lakhs/cu mm.
• Their life span is about 5 to 10 days.
• Megakaryocytes of bone marrow form thrombocytes.
• Thrombopoiesis is the formation of platelets.
• Thrombocytosis is the increase while thrombocytopenia is the decrease in platelet count.
• Thrombocytes help in coagulation of blood by releasing thromboplastin.
• Blood clotting/coagulation of blood : Active anticoagulants like heparin and antithrombin are present in the intact blood vessels. But upon the rupture of a blood vessel, bleeding starts. The fluid blood is converted into semisolid jelly by the process of blood coagulation or clotting.”

The clotting of blood is a complicated process in which many factors (12 clotting factors) present in plasma and tissues are involved.

The event that take place during blood clotting are as follows :

• Release of thromboplastin from extrinsic source in tissue and intrinsic source in plasma at injured site through a step-wise (cascade process) process.
• Formation of enzyme prothrombinase in the blood.
• Conversion of prothrombin into thrombin by prothrombinase.
• Conversion of fibrinogen into fibrin by thrombin.
• Formation of mesh by the fibrin fibres forming the clot.
• The normal clotting time is 2 to 8 minutes.

Heart-

1. Heart is a hollow, muscular, conical organ about the size of one’s fist with broad base and narrow apex tilted towards the left.
2. It is mesodermal in origin.
3. It is situated in middle of the thoracic cavity in a space called mediastinum, between the two lungs.
4. The heart is 12 cm in length, 9 cm in breadth and 250 to 300 grams in weight.
5. Pericardium : Double layered membrane, these layers are as follows :

• Fibrous pericardium : Outer, tough layer of inelastic fibrous connective tissue.
• Serous pericardium : This inner pericardium has two layers, outer parietal layer and inner visceral layer.
• Parietal layer forms the inner lining of fibrous pericardium.
• Visceral layer or epicardium is next to heart on the outer side.
• Pericardial fluid is present between the parietal and visceral layers of serous pericardium.

6. Heart wall :

• The heart wall has three layers, viz. outer epicardium, middle myocardium and inner endocardium.
• Epicardium has single layer of flat epithelial cells called mesothelium.
• Myocardium has cardiac muscle fibres responsible for movements of the heart.
• Endocardium has single layer of flat epithelial cells called endothelium.

7. External structure of heart :

• Human heart consists of two superior, small, thin walled receiving chambers called atria or auricles and two inferior, large, thick walled, distributing chambers called ventricles.
• Atrio-ventricular groove or coronary sulcus, a transverse groove which is present between the atria and the ventricles is seen externally.
• The interventricular sulcus is present between the right and left ventricles. Coronary arteries and coronary veins are present in the sulci. The coronary veins join to form coronary sinus which opens into the right atrium.
• The right atrium receives deoxygenated blood from all over the body through superior vena cava and inferior vena cava.
• Left atrium receives oxygenated blood from lungs through two pairs of pulmonary veins.
• From the right ventricle deoxygenated blood is sent to lungs through pulmonary trunk.
• From the left ventricle oxygenated blood is sent to entire body by systemic aorta.
• Ligamentum arteriosum connects the pulmonary trunk and systemic aorta. It represents ductus arteriosus of foetus.

8. Internal structure of heart :

• There are four chambers in the heart, viz., two atria and two ventricles which can be demarcated internally.
• Atria are thin walled upper receiving chambers separated from each other by interatrial septum.
• The right atrium receives deoxygenated blood from all over the body through superior vena cava, inferior vena cava and from the heart through coronary sinus.
• The opening of inferior vena cava is guarded by Eustachian valve while the opening of coronary sinus is guarded by Thebesian valve.
• The fossa ovalis is oval depression that is present on the right side of interatrial septum. It is the remnant of foramen ovale, an oval opening in the interatrial septum of the foetus.
• The left atrium receives oxygenated blood from the lungs through four openings of pulmonary veins.
• Right and left atria open into the right and left ventricles respectively through atrioventricular apertures. These are respectively guarded by tricuspid and bicuspid valves made up of connective tissue.
• The right atrioventricular valve has three flaps hence called tricuspid valve while left atrioventricular valve has two flaps hence called bicuspid valve or mitral valve.
• These valves are attached to papillary muscles of ventricles by chordae tendinae. The valves are prevented from turning back into the atria during the contraction of ventricles due to chordae tendinae.
• Ventricles are two thick walled lower, distributing chambers separated from each other by interventricular septum.
• Left ventricle has thick wall. The inner surface of the ventricle is thrown into a series of irregular muscular ridges called columnae carnae or trabeculae carnae.
• Pulmonary trunk or aorta arises from the right ventricle carrying deoxygenated blood to lungs for oxygenation. Systemic aorta arises from the left ventricle carrying oxygenated blood to all parts of the body.
• Pulmonary aorta and systemic aorta have three semilunar valves at the base which prevent the backward flow of blood during ventricular diastole.

9. Pumping action of heart : Heartbeat is the rhythmic contraction, i.e. rhythmic contraction (systole) and relaxation (diastole) of the heart. The rate of heartbeat is about 72 times per minute during which it pumps out about 5 litres of blood which equals cardiac output.

10. Conducting system of heart :

• The heartbeat in human beings originates in modified cardiac muscles called sinoatrial node (S.A. node). Therefore, the heart is said to be myogenic.
• The conducting system of heart consists of sinoatrial node (SAN), atrioventricular node (AVN), Bundle of His and Purkinje fibres.
• The heart shows auto-rhythmicity as the impulse for its rhythmic movement during beating is developed inside the heart.
• The autorhythmic fibres are developed during embryonic life. They act as pacemaker by setting the rhythm for the heart. They also form conducting system for conducting impulses throughout heart muscles.
• The impulse travels in the heart in the following manner : Sinoatrial node (Pacemaker) → Internodal pathway → Atrioventricular node → Bundle of His → Right and left bundle branches → Purkinje fibres.

Working mechanism of human heart-

1. Cardiac cycle : One atrial systole (0.1 second), one ventricular systole (0.3 second), followed by a joint diastole (0.4 second) is called a cardiac cycle. One cardiac cycle takes place in about 0.8 second and is also called a heartbeat.

(1) Atrial systole : During atrial systole, the deoxygenated blood from the right atrium enters the right ventricle through atrioventricular aperture whereas the oxygenated blood from left atrium enters the left ventricle through atrioventricular aperture. In normal conditions atrial systole lasts for 0.1 second and atrial diastole lasts for 0. 7 second.

(2) Ventricular systole : During ventricular systole, the deoxygenated blood from the right ventricle enters the pulmonary trunk and the oxygenated blood from the left ventricle enters the aorta. The backflow of blood into atria is prevented by the closure of cuspid valves of both atrioventricular apertures (lubb sound is produced) Ventricular systole lasts for 0.3 second and ventricular diastole lasts for 0.5 second.

(3) Joint diastole or complete diastole : Both atria and ventricles undergo relaxation. During ventricular diastole the backflow of blood from pulmonary trunk and systemic aorta into respective ventricles is prevented by closure of semilunar valves (dub sound is produced). The joint diastole lasts for 0.4 second.

2. Regulation of cardiac activity :

• Cardiovascular centre present in the medulla oblongata of brain regulates the working of the heart.
• Sympathetic nerves secrete adrenaline, which increases the rate of the heart.
• Parasympathetic nerves secrete acetylcholine, which decreases the rate of the heart.
• Conditions like hypoxia, acidosis, alkalosis decrease cardiac activity whereas hormones like epinephrine and nor epinephrine increase cardiac activity (chemical control).
• Elevated level of K+ and Na+ decreases cardiac activity.

Blood vessels-

1. Blood vessels are of three types, viz. arteries, veins and capillaries.

• Arteries : Blood vessels carrying blood away from the heart are called arteries. Arteries form arterioles which in turn divide and re¬divide to form capillaries.
• Veins : Blood vessels carrying blood to the heart are called veins. They have broad lumen and show low blood pressure.
• Capillaries : Capillaries are thinnest of blood vessels and formed by division and redivision of arteriole. Capillaries unite to form venules. Venules join to form veins.

2. A chart showing the differences between arteries, veins and blood capillaries :

Angiology is the study of blood vessels.

3. Heartbeat, pulse and cardiac output :

• Heartbeat is the rhythmic contraction and relaxation of the heart.
• One systole and one diastole make one heartbeat.
• Heart rate is number of beats per minute (72 times per minute).
• Stroke volume is amount of blood pumped out of the ventricles each time (About 70 ml of blood).
• Cardiac output is amount of blood pumped out of the ventricles per minute,
  i. e 72 x 70 ml = 5040 or about 5 litres of blood per minute.
• Tachycardia is faster heart rate (Over 100 beats per minute).
• Bradycardia is slower heart rate (Over 60 beats per minute).
• Pulse is a pressure wave travelling through the arteries after each ventricular systole.
• Pulse in the radial artery at the wrist is commonly measured.
• The pulse rate per minute indicates the heart rate. It is same as that of heart rate (72 per minute).
• Pulse rate changes with age, sex, posture, exercise and emotional state.

Blood pressure (B.P.)-

1. Blood pressure : Arterial blood pressure is the lateral pressure or force exerted by flowing blood on the wall of arteries.
2. Sphygmomanometer is the instrument used for measuring the blood pressure.
3. The units of blood pressure are mm Hg millimetres of mercury).
4. Blood pressure is of two types-systolic blood pressure and diastolic blood pressure.

• Systolic blood pressure : It is the maximum pressure of blood during ventricular systole. Normal systolic pressure is 120 mm Hg.
• Diastolic blood pressure : It is the minimum pressure of blood during ventricular diastole. Normal diastolic pressure is 80 mm Hg.
• The normal blood pressure is 120/80 mm Hg.
• Pulse pressure is the difference between systolic and diastolic pressure. Normal pulse pressure is 40 mm Hg.

5. Factors affecting arterial blood pressure :

• Cardiac output
• Peripheral resistance
• Blood volume
• Length and diameter of blood vessels
• Viscosity of blood
• Age
• Gender
• Venous return
• Sleep, emotions
• Exercise, anxiety

6. Hypertension :

• Hypertension means higher values of blood pressure (More than 140/90 mm Hg blood pressure values).
• Excessive high blood pressure of about 230/120 mm Hg may cause rupturing of blood vessels of eye (causing blindness), kidney (nephritis) and brain (stroke or paralysis).
• Factors such as arteriosclerosis, atherosclerosis, obesity, physical , or emotional stress, alcoholism, smoking, cholesterol rich diet, increased secretion of renin, epinephrine or aldosterone, etc. can cause blood pressure.

7. Coronary artery disease (CAD) :

• Atherosclerosis (narrowing of coronary arteries) can cause coronary artery disease.
• In CAD the heart muscle is damaged because of an inadequate amount of blood due to obstruction of its blood supply.
• Depending on the degree of obstruction symptoms may be mild chest pain (angina pectoris) or heart attack (myocardial infarction).

8. Atherosclerosis : Deposition of fatty substances in the lining of arteries, resulting in the formation of an atherosclerotic plaque. These depositions decrease the size of the arterial lumen.

9. Angina pectoris : Angina pectoris is the pain in the chest due to reduction in blood supply to cardiac muscle caused by narrowed and hardened coronary arteries.

10. Angiography : Angiography is X-ray imaging of the cardiac blood vessels to locate the position of blockages. Remedied procedures like angioplasty or bypass surgery are carried out depending upon the degree of blockage.

11. Heart Transplant : Heart transplant is replacement of severely damaged heart by normal heart from brain-dead or recently dead donor. This procedure is necessary in patients with end-stage heart failure and severe coronary arterial disease.

12. Silent heart attack : Heart attack that lacks the general symptoms of classic heart attack like extreme chest pain, hypertension, j shortness of breath, sweating and dizziness is known as silent heart attack or silent  myocardial infarction. Men are more affected J by silent heart attack than women.

Electrocardiogram-

•  Electrocardiogram or ECG is graphic record : of electrical variations produced by the heart during one heartbeat or cardiac cycle.
• Electrocardiogram or ECG machine is the instrument used to record action potentials generated by heart muscles.
• Einthoven in 1903 discovered this technique, hence he is known as the “Father of Electrocardiography”.
• A normal ECG consists of different types of waves such as P-wave, QR S-complex wave and T-wave.
• Waves of ECG and their significance :
  
• Abnormal functioning of heart such as in coronary artery diseases, heart block, angina pectoris, tachycardia, ischemic heart disease, myocardial infarction, cardiac arrest, etc. can be diagnosed by ECG.

Lymphatic system-

1. Lymph, lymphatic capillaries, lymphatic vessels and lymph nodes together constitute lymphatic system.

• Lymph is the tissue fluid that bathes the cells and is collected in lymphatic capillaries. Lymph is a fluid connective tissue just like blood but is without RBCs, platelets and some plasma proteins. It contains carbon dioxide and metabolic wastes.
• Lymphatic capillaries are thin walled vessels interwoven with the blood capillaries, present in all the tissue spaces. They are not connected with blood capillaries and are blind at one end. Lymph capillaries are wider than blood capillaries and are lined by endothelium of thin and flat cells.
• Lymphatic vessels are formed by the union of lymphatic capillaries. These are thin walled having numerous valves to prevent backflow. Thoracic or left lymphatic duct and right lymphatic duct are the main lymphatic vessels in the body.

2. Functions of lymphatic system :

• Draining off the excess tissue fluid from the extracellular spaces back into the blood.
• Transport of carbon dioxide and metabolic wastes from the tissue fluid. Transport of lymphocytes and antibodies from the lymphatic nodes to the blood.
• Transport of absorbed fats from the intestine to the blood.
• Destruction of invading microorganisms and foreign particles in the lymph nodes.