EPFO BOOSTER 2023 - Part 1 - 17221684

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OneClass.in (MISSIONCAPFHUB)
EPFO BOOSTER Part-1
INDEX
Sr. No. Topic Pg. No.
1. General Accounting Principles 4
2. PYQ on General Accounting Principles in 43

EPFO/APFC (2012-2021)
3. Basics of computer applications 47
4. PYQ on Basics of computer applications in 69

EPFO/APFC (2012-2021)
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1. GENERAL ACCOUNTING PRINCIPLE
Introduction to Accounting
Accounting: It is defined as the process of identifying, measuring, recording, summarising,
interpreting and communicating the required information relating to the economic events of an
organisation to the interested users of such information. It is used for the maintenance of a
systematic record of all financial transactions in book of accounts.
Book Keeping: It is the activities concerned with the systematic recording and classification of
financial data of an organization in an orderly manner. It is essentially a record-keeping function
done to assist in the process of accounting. It also involves preparing source documents for the
financial transactions and other business operations being carried out.
Luca Pacioli is referred to as the father of accounting and bookkeeping and he was the first person
to publish a work on the double-entry system of book-keeping on the continent. His book Summa de
Arithmetica, Geometria, Proportion at Proportionality (Review of Arithmetic and Geometric
proportions) (1494) is considered as the first book on double entry book keeping. He was also called
Luca di Borgo after his birthplace, Borgo, San Sepolcro in what is now Northern Italy in 1446.
K S. Aiyar (1859-1940) a pioneer of Indian Accountancy and of the Accountancy profession, was
first and last, a dedicated educationist. He is known as the father of India's Accountancy
Profession.
Objectives of accounting:
1. Maintain records of business;
2. Calculate profit or loss;
3. Depict the financial position; and
4. Make information available to various groups and users.
Role of Accounting:
1. Language of a business
2. Historical record
3. Current economic reality
4. Information system.
5. Service to users.
Users of accounting information:
1. Internal users- Owner, Employees, Management.
2. External users- Lenders, Creditors, Potential Investors (shareholders), Government (Tax
authorities, Regulatory authorities), Customers.

Qualitative characteristics of accounting:
1. Reliability: It should be neutral (unbiased), credible, verifiable, faithful & free from errors.
2. Understandability: Decision-makers must interpret accounting information in the same sense as
it is prepared & conveyed to them.
3. Relevance –Must be available in time & help in prediction and feedback.
4. Comparability –Users must be able to compare various aspects of an entity over different time
period and with other entities. To be comparable, accounting reports must belong to a common
period & use common unit of measurement & format of reporting.
Branches of accounting:
1. Financial accounting,
2. Cost accounting,
3. Management accounting,
4. Social accounting.
Different types of cost in accounting:
Original cost: The cost of an item at the time of purchase or creation. The original cost includes all
costs associated with the purchase of an asset and putting it to use, including commissions,
transportation, appraisals, and installation.
Opportunity cost: It is the profit lost when one alternative is selected over another.
Replacement cost: It is the price that an entity would pay to replace an existing asset at current
market prices with a similar asset.
Cash cost: It is the recognition of expenses as they are paid in cash.
Basic Terms:
1. Business Entity: A specific identifiable business enterprise. Ex; Big Bazaar.
2. Transaction: Exchange of some value between two or more entities. It can be a cash transaction
or a credit transaction.
3. Capital: Amount invested by the owner in the firm.
4. Sundry Creditors: Persons who have to be paid by an enterprise an amount for providing goods
and services on credit.
5. Sundry Debtors: Persons who are to pay for goods sold or services rendered or in respect of
contractual obligations. (=trade debtor/accounts receivable).
6. Drawings: Amount of money or the value of goods which the proprietor takes away from
business for his/her household or private use.
7. Assets: These are tangible objects or intangible rights owned by the enterprise.
8. Liabilities: Obligations or debts that an enterprise has to pay at some time in the future.

Accounting concept
The basic assumptions/rules and principles which work as the basis of recording of business
transactions and preparing accounts.
Basic Accounting Concepts:
1) Business Entity Concept:
It assumes that, for accounting purposes, the business enterprise and its owners are two separate
independent entities. For example, when the owner invests money in the business, it is recorded as
liability of the business to the owner.
2) Money Measurement Concept:
It states that only those transactions and happenings in an organisation which can be expressed in
terms of money are to be recorded in the book of accounts. Transactions which can’t be expressed in
monetary units for example appointment of manager, new competitor entering in the market
and rift between production and marketing departments, capability of its human resources are
not recorded.
3) Going Concern Concept:
It assumes that a business firm would continue to carry out its operations indefinitely, i.e. for a fairly
long period of time and would not be liquidated in the foreseeable future.
4) Accounting Period Concept:
In this, balance sheet and profit and loss account should be prepared at regular intervals. Life of an
enterprise is broken into smaller accounting periods (normally 1 year) so that its performance is
measured at specified period.
5) Cost Concept:
It states that all assets are recorded in the book of accounts at their purchase price, which includes
cost of acquisition, transportation, installation and making the asset ready to use. (Not at market
price).
6) Dual Aspect Concept:
Dual aspect is the foundation or basic principle of accounting. It assumes that every transaction has a
dual effect i.e. it affects two accounts in their respective opposite sides. Therefore, the transaction
should be recorded at two places. It means, both the aspects of the transaction must be recorded in
the books of accounts. For example, goods purchased for cash has two aspects which are (i) Giving
of cash (ii) Receiving of goods. These two aspects are to be recorded.
The duality principle is commonly expressed in terms of fundamental Accounting Equation, which
is as follows:
Assets = Liabilities + Capital [In other words, the equation states that the assets of a business are
always equal to the claims of owners and the outsiders. The claims also called equity of owners is
termed as Capital (owners’ equity) and that of outsiders, as Liabilities (creditor’s equity). The two-
fold effect of each transaction affects in such a manner that the equality of both sides of equation is
maintained.]

7) Realisation Concept:
It states that revenue from any business transaction should be included in the accounting records
only when it is realised. Revenue is said to have been realised when cash has been received or
right to receive cash on the sale of goods or services or both has been created. Revenue is realized
at the time when goods have been sold or service has been rendered. Revenue is considered to have
been realised when a transaction has been entered into and the obligation to receive the
amount has been established.
Revenue recognition concept: It states that one should record revenue when it has been earned and
not when the payment is collected. It is based on accounting period concept hence if any amount
which is not paid but the service is already taken must be recorded as an adjustment.
E.g. In case of gold mining, revenue is recognised in the accounting period in which the gold
is mined and not in the period in which it is sold.
8. Matching Concept:
It states that expenses incurred in an accounting period should be matched with revenues during
that period. It implies that all revenues earned during an accounting year, whether received/not
received during that year and all cost incurred, whether paid/not paid during the year should be taken
into account while ascertaining profit or loss for that year.
Accounting conventions: Common practices which are universally followed in recording and
presenting accounting information of the business entity.
1) Convention of Full Disclosure –
All material and relevant facts concerning financial performance of an enterprise must be fully
and completely disclosed in the financial statements. Full disclosure means that there should be full,
fair and adequate disclosure of accounting information.
2) Convention of Consistency –
It means that same accounting principles should be used for preparing financial statements year
after year.
(It does not mean that a particular method of accounting once adopted can never be changed.
Whenever a change in method is necessary, it should be disclosed by way of footnotes in the
financial statements of that year.)
There are three types of consistency namely:
a) Vertical consistency (Same organisation): It is to be found within the group of inter-related
financial statements of an organisation on the same date. It occurs when fixed assets have been
shown at cost price and in the interrelated income statement depreciation has also been charged
on the historical cost of the assets.
b) Horizontal consistency (Time basis): This consistency is to be found between financial
statements of one entity from period to period. Thus, it helps in comparing performance of the
business between two years i.e., current year with past year.

c) Dimensional consistency (Two organisations in the same trade): This consistency is to be found
in the statements of two different business entities of the same period. This type of consistency
assists in making comparison of the performance of one business entity with the other business
entity in the same trade and on the same date.
3) Convention of Materiality:
It states that, to make financial statements meaningful, only material fact i.e., important and
relevant information should be supplied to the users of accounting information.
(The materiality of a fact depends on its nature and the amount involved. Any fact would be
considered as material if it is reasonably believed that its knowledge would influence the decision of
informed user of financial statements.)
4) Conservation of Conservatism:
It is based on the principle that “Anticipate no profit, but provide for all possible losses”. It
requires that profits should not to be recorded until realised but all losses, even those which may
have a remote possibility, are to be provided for in the books of account.
Accounting Standards:
 The Institute of Chartered Accountant of India (ICAI) is a professional body of accounting in
our country. ICAI constituted the Accounting Standards Board (ASB) in April, 1977 for
developing accounting standards.
 Indian GAAP (Generally Accepted Accounting Principles) were issued by ICAI. GAAP are
rule-based. They are based on Historical-cost concept.
 Generally accepted accounting principles (GAAP) refer to a common set of accounting rules,
standards, and procedures issued by the Financial Accounting Standards Board (FASB).
Public companies in the U.S. must follow GAAP when their accountants compile their financial
statements. GAAP is guided by ten key tenets and is a rules-based set of standards.
 International Financial Reporting Standards (IFRS) are a set of accounting rules for the
financial statements of public companies that are intended to make them consistent, transparent,
and easily comparable around the world. IFRS are principle-based. They are based on Fair Value
Concept. IFRS currently has complete profiles for 167 jurisdictions, including those in the
European Union. The United States uses a different system, the generally accepted accounting
principles (GAAP). The IFRS system is sometimes confused with International Accounting
Standards (IAS), which are the older standards that IFRS replaced in 2001.
 International Accounting Standards Committee (IASC) was set up in 1973 in London. It was
replaced by International Accounting Standards Board (IASB) in 2001. It issues International
Accounting Standards.
 Indian Accounting Standards (Ind-AS) notified under Companies Act, 2013 have been
formulated keeping the Indian economic & legal environment in view and with a view to
converge with IFRS Standards, as issued by and copyright of which is held by the IFRS
Foundation. It is issued under the supervision of Accounting Standards Board (ASB) which
was constituted as a body in the year 1977. The Ind AS are named and numbered in the same

way as the International Financial Reporting Standards (IFRS). Ind-AS are principle-based.
India followed accounting standards from Indian Generally Acceptable Accounting Principle
(IGAAP) prior to adoption of the Ind-AS. Ind-AS prescribes that every company shall value its
financial assets (securities) at Fair Value whereas other assets can be valued at Historical cost or
Fair value. Ind-AS is applicable to companies having net worth more than Rs. 250 crores.

Basis of Accounting:
1) Cash Basis- In this, accounting entries are recorded only when cash is received or paid.
2) Accrual basis- Revenues and costs are recognised in the period in which they occur rather when
they are paid. Revenue and expense are taken into consideration for the purpose of income
determination on the basis of accounting period to which they relate.-Companies Act 1956
recognizes accrual basis of accounting.
Rules of Accounting –
 In its simplest form, an account looks like the English Language Letter ‘T’.
In a ‘T’ account, the left side is called debit (Dr.) and the right side is known as credit (Cr.).
Account Title
(Left Side) (Right Side)
Debit Credit
 All accounts are divided into five categories for the purpose of recording of the business
transactions:
(i) Assets, (ii) Liability, (iii) Capital, (iv) Expenses/Losses, and (v) Revenues/Gains.
 For recording changes in Assets/Expenses/Losses

a) Increase in Asset is debited, and decrease in Asset is credited.
b) Increase in Expenses/Losses is debited, and decrease in Expenses/ Losses is credited.
 For recording changes in Liabilities and Capital/Revenue/Gains

a) Increase in Liabilities is credited and decrease in Liabilities is debited.
b) Increase in Capital is credited and decrease in Capital is debited.
c) Increase in revenue/gains is credited and decrease in revenue/gain is debited.

Types of Accounts
Account: Record of transaction under a particular head.
Types:
A) Traditional Approach-
1. Personal Account – This account is related to Person. It can be classify as follow
a) Natural Persons Account:
Natural Persons are human beings. E.g. Mr. Satish Account, Capital A/c, Drawing account (It
is an accounting record maintained to track money and other assets withdrawn from a business by its
owners.)
b) Artificial Persons Account:
Artificial persons are not human beings but can act and work like humans. They have a separate
identity in the eyes of law and are capable to enter into agreements. It can be partnership firm,
company, body corporate, Association of person. E.g. Charitable trust, xyz company LTD.
c) Representatives Persons Account:
These accounts represent the accounts of natural or artificial persons. When the expenses become
outstanding or pre-paid and incomes become accrued or unearned, they fall under this category. For
example, Outstanding Salary A/c, Pre-paid Rent A/c, Accrued Interest A/c, Unearned
Brokerage A/c, etc.
Rules of personal account- Debit the receiver and Credit the giver.
2. Real Account:
This account is related to Asset, liability and Property. We do not close these accounts at the end of
the accounting year and appear in the Balance Sheet. Thus, we carry forward the balances of these
accounts to the next accounting year. Therefore, we can also say that these are permanent accounts.
We can further classify these into:
a) Tangible Real Account:
Accounts which have physical existence. In other words, such assets can be seen, felt or touched. Ex;
Cash A/c, Inventory A/C, Machinery A/c, Vehicle A/c, Building A/c, Furniture and Fixtures
A/c etc.
Machinery account: It shows debit balance. It is a real account because these accounts include all
the assets of the business whose value can be measured in terms of money.
b) Intangible Real Account:
These are the assets or possessions that do not have physical existence but can be measured in terms
of money. Ex; Goodwill, Trademarks, Patent, Copyright etc.
Rule of Real account- Debit What Comes In, Credit What Goes Out.

3. Nominal Account:
This accounts is related to income, expenses, losses or gains. These are temporary accounts and thus
we need to transfer their balances to Trading and Profit and Loss A/c at the end of the accounting
year. Therefore, these accounts have no balance to be carried forward next year as they are closed.
Ex; Branch A/C, Rent A/C, Wages A/c, Salary A/c.
Rule of Nominal Account- Debit all expenses/losses, Credit all incomes/gains.
[If a prefix/suffix (ex; outstanding, prepaid) is added to a nominal account, it becomes personal
account. Ex; Wages A/c is nominal account but outstanding wages a/c is representative personal
account.]
Personal Account Real Account Nominal Account
Debit The Receiver What comes in Expenses & losses
Credit The Giver What goes out Income & gain
Applicable to Persons, artificial persons All Assets All expense, losses,

(institution/company/bank, income & gains.
etc) & representative
persons.
1. Modern Approach-(American System)
Debit Credit
1)Capital Account Decrease Increase
2)Revenue Decrease Increase
2)Asset Increase Decrease
3)Liability Decrease Increase
4)Expense Increase Decrease
5)Drawings Increase Decrease

Accounting Equation:
Accounting equation signifies that the assets of a business are always equal to the total of its
liabilities and capital (owner’s equity).
The equation reads as follows:
A = L+C Where, A = Assets L = Liabilities C = Capital.
The above equation can also be presented in the following forms:

(i) A – L = C (ii) A – C = L
Since, the accounting equation depicts the fundamental relationship among the components of the
balance sheet, it is also called the Balance Sheet Equation.

Some Terms related to accounting:
Voucher: A Voucher is documentary evidence in support of a transaction.
Types of accounting vouchers:
Types of
Accounting
Vouchers
Cash- Non-cash
voucher Voucher
Credit Voucher Debit Voucher Transfer Voucher

(For Cash (For Cash (For non-cash
Receipts) Payments) transactions)
Journal: A book of accounts in which all day-to-day business transactions are recorded in a
chronological order i.e., in the order of their occurrence. It is the book in which transactions are
recorded for the first time. It is also known as ‘Book of Original Record’ or ‘Book of Primary
Entry’.
Journalising: Process of recording transactions in the journal.
Posting: Process of transferring journal entry to individual accounts.
Ledger: Principal book of accounting system. It contains different accounts where transactions
relating to that account are recorded.
Balancing of an account: It is the difference between the total of debits and total of credits of an
account.
Cash Book: A book in which all transactions relating to cash receipts and cash payments are
recorded.
Purchase Journal/Purchase book: is also a book of original entry. This book records only Credit
purchase of goods in which the firm deals.
Sales Journal/sales Book: All credit sales of merchandise are recorded in the sales journal.
Purchases Return Book: A book in which return of merchandise purchased is recorded.
Sales Return Book: A special book in which returns of merchandise sold on credit are recorded.
Journal Proper: A book maintained to record transactions, which do not find place in special
journals. (=Journal Residual).
Bank Reconciliation Statement: A statement prepared to reconcile the difference between the
balances as per the bank column of the cash book and pass book on any given date.
Trial balance: A trial balance is a statement showing the balances, or total of debits and credits,
of all the accounts in the ledger with a view to verify the arithmetical accuracy of posting into the
ledger accounts. It shows the final position of all accounts and helps in preparing the final
statements. It is a statement containing the various ledger balances of an entity on a particular date.

It may be noted that the trial balance is usually prepared with the balances of accounts. It is
normally prepared at the end of an accounting year.
The trial balance is prepared to fulfil the following objectives:

1. To ascertain the arithmetical accuracy of the ledger accounts - To ascertain whether all
debits and credit are properly recorded in the ledger or not and that all accounts have been
correctly balanced. As a summary of the ledger, it is a list of the accounts and their balances.
When the totals of all the debit balances and credit balances in the trial balance are equal, it is
assumed that the posting and balancing of accounts is arithmetically correct. However, the
tallying of the trial balance is not a conclusive proof of the accuracy of the accounts. It only
ensures that all debits and the corresponding credits have been properly recorded in the ledger.
2. To help in locating errors- When a trial balance does not tally (that is, the totals of debit and
credit columns are not equal), we know that at least one error has occurred. It may be noted that
the accounting accuracy is not ensured even if the totals of debit and credit balances are equal
because some errors do not affect equality of debits and credits. Sometime total of Debit and
Credit side of Trial Balance is not the same because there are sometimes good reason to differ.
3. To help in the preparation of the financial statements. (Profit & Loss account and Balance
Sheet) - Trial balance is considered as the connecting link between accounting records and
the preparation of financial statements. For preparing a financial statement, one need not refer
to the ledger. In fact, the availability of a tallied trial balance is the first step in the preparation
of financial statements. All revenue and expense accounts appearing in the trial balance are
transferred to the trading and profit and loss account and all liabilities, capital and assets
accounts are transferred to the balance sheet.
Theoretically spreading, a trial balance can be prepared in the following three ways:
(i) Totals Method
(ii) Balances Method
(iii) Totals-cum-balances Method
Classification of Errors:
A. On the basis of their nature
(a) Errors of omission- The errors of omission may be committed at the time of recording the
transaction in the books of original entry or while posting to the ledger. 2 types: (i) error of complete
omission (ii) error of partial omission
(b) Errors of commission - When the transaction has been recorded but an error is committed in the
process of recording, it is called an error of commission. (Wrong posting of transactions, wrong
totalling or wrong balancing of the accounts, wrong casting of the subsidiary books, or wrong
recording of amount in the books of original entry)

[When two or more errors are committed in such a way that the net effect of these errors on the
debits and credits of accounts is nil, such errors are called compensating errors.]
(c) Errors of principle - Accounting entries are recorded as per the generally accepted accounting
principles. If any of these principles are violated or ignored, errors resulting from such violation are
known as errors of principle.
B. On the basis of their impact on ledger accounts

(a) One sided error- Which affect only one side of account (either debit or credit)
(b) Two sided errors- Which affects two separate accounts, debit side of the one and credit side of
the other.
Suspense account: An account in which the difference in the trial balance is put till such time that
errors are located and rectified.

Financial Statements
Financial statements are the statements that are prepared at the end of the accounting period,
which is generally one year.
These include income statement i.e. Trading and Profit & Loss Account and Position statement
i.e., Balance Sheet.
Different types of Receipt and Expenditure:
Capital Expenditure refers to the expenditure incurred for acquiring fixed assets or assets which
increase the earning capacity of the business. The benefits of capital expenditure to the firm extend
to number of years.
E.g. Purchases of property, equipment, land, computers, furniture, and software.
Revenue expenditure is an expenditure incurred in the course of normal business transactions of a
concern and its benefits are availed of during the same accounting year.
E.g. Depreciation of fixed assets, Repair and Maintenance of the Assets, Employee Salaries,
Property Rents, Direct wages etc.
Deferred revenue expenditure-These are the expenses incurred during one accounting year but its
benefits are to be derived in multiple future accounting period. Preliminary expenses are those
expenses which are incurred before the incorporation and commencement of the business hence it
is deferred revenue expenditure.
E.g. Company incorporation expenses, logo expenses etc.
Revenue receipts are receipts which arise during the normal course of business.
E.g. Interest earned, Divided received, Discount received from the vendors etc
Capital receipts are income generated from investment & financing activities of business.
E.g. disinvestment, recovery of advances and loans, bonus share issues.
Income Statement consists of Trading and Profit and Loss Account.
Trading Account
It show Gross Profit/Gross Loss.
Only manufacturing and trading entities prepare trading account, service provider not prepare
trading account.
It gives details of total sales, total purchase and direct expense relating to purchase and sell.
Advantages of trading account:
1. Help to earn maximum profit or reduce the losses.
2. Help excise authority to assess the excise duties of business firm.
3. Management decides the price of product with help of it.

Trading account (For the year ended 31 March)
Particulars (Direct expense/Debit) Particulars (Direct income/credits)
To opening stocks. By sell
To purchase. By less by theft
To direct expenses By less by fire
To wages By closing stock
To Octroi
To oil, gas and water
To freight and carriage
To custom and insurance
To factory expenses
To royalty on production
To gross profit
Cost of goods sold = Opening stock + Net purchases + All direct expenses – Closing stock
Gross Profit = Net sales – Cost of goods sold
Gross loss = Cost of goods sold – Net sales
[Opening stock refers to the value of goods lying unsold at the beginning of the accounting year. It
is shown on debit side of Trading Account.
Closing Stock is the value of goods lying unsold at the end of the accounting year. It is shown on
credit side of Trading Account.
Direct expenses are the expenses that can be attributed directly to the purchase of goods or goods
manufactured.]
In Trading Account: on the debit side: Opening stock, net purchases and direct expenses and other
particulars listed above.
On the credit side - net sales and closing stock and other particulars listed above.

Profit and Loss Account:
It is prepared to find out Net Profit/Net Loss.
Gross Profit = Sales – (Purchases + Direct Expenses)
Net Profit = Gross Profit + other incomes – Indirect expenses.
It is prepare for visibility of income, earning, expenses and loss incurred in specific range of time.
It helps to take right business decision where should we do cost cutting, from where business
generate more profit.
All the items of revenue income and expenses whether cash or non-cash are consider in this
account.
Only revenue income and expenses related to the current year are debited or credited to this
account.
It start with gross profit at the credit side and if there is gross loss, it is shown on debit side.
Following items are not shown in this account:
1. Drawings: Drawings are not expenses of firm so not show in this account.
2. Income tax: In case of sole proprietor it is his personal expenses so debited from capital
account.
Profit and Loss Account (For the year ended 31 March)

Particulars (all revenue expenditure /Debit) Particulars(all revenue income/credit)
To gross loss
Management expenses:
To salary By gross profit
To office rent, rate and taxes Income:
To printing and stationary By discount received
To telephone charges By commission received
To insurance Non trading income:
To audit fees By banking interest
To legal charges By rent received
To electricity charges By dividend received
To maintenance charges By bad debt recovered
To repairs and renewals Abnormal gain:
To depreciation By profit on sale of machinery

Selling distribution expenses: By profit on sale of investment
To Salary By net loss
To advertisement
To godown
To selling commission
Financial expenses:
Bank charges
Interest on loan
Discount allowed
Abnormal losses:
To loss on sale on machinery
To loss on sale of investment
To loss on fire
Net profit

Balance Sheet/Position statement:
It is prepared to ascertain the financial position of a firm on a particular date.
It is a statement which stated the liabilities and assets of firm as at a certain date.
It is based on accounting equation i.e. Total asset = Total liabilities + Capital
Balance sheet is statement and not an account so there is no debit and credit side.
It prepared for particular day rather that entire period.
Preparation of balance sheet is possible after the preparation of the profit and loss account.
Legacy should be recorded as capital receipt because it is received for specific purpose and it
should be capitalized and taken into balance sheet.
Let’s discuss Assets and liability in detailed.
Assets: It is any resource that a business owns or controls. It's anything that could be sold for
money.
Types of Assets:
(a) Fixed/ Long term Assets - Assets that are purchased for permanent i.e., long term use and these
help the business to earn revenue. Ex; Land & Building, Plant & Machinery, Motor Vehicle, etc.
(b) Current Assets - Assets which are acquired by the business either for resale or for converting
them into cash. These are normally realised within a period of one year. Ex; cash in hand, cash at
bank, bill receivable, debtors, stock, prepaid expenses, advance, inventory, Bill/trade
receivable etc.
(c) Tangible Assets - Assets that can be seen, touched and have certain volume. Ex; Building,
Machinery, goods.
(d) Intangible Assets - Assets which can neither be seen nor touched nor have no volume are called
intangible assets. Ex; Patents, trademark, goodwill etc.
(e) Liquid Assets - Assets which are either in cash or can be easily converted into cash. Ex; cash,
stock, marketable securities etc.
(f) Wasting Assets - Assets which exhaust or reduce in value by their use. Ex; Mines, quarries
(g) Fictitious Assets - These are not the real assets. These are the items of such expenses and losses
which have not been written off in full. Ex; preliminary expenses, under writing commission, etc
Liability: Liabilities are the debts that a business owes to third-party creditors
Types of Liabilities:
a) Long-term Liabilities - Liabilities which are not payable during the current accounting year.
Generally, the funds raised through such means are used for purchase of fixed assets. Ex; loan on
mortgage, loan from financial institutions.
(b) Current Liabilities - liabilities which are payable during the current year. Ex; Bank overdraft,
trade creditors, bill/trade payable, outstanding expenses, advance taken etc.

(c) Owners’ funds - The amount owing to the proprietor or proprietors is called owners’ funds. As
per business entity concept this is a liability of the business. Apart from capital it also includes
undistributed profits and reserves. Amount of drawing by the proprietor is deducted from it.
(d) Provisions: It is the amount that is generally put aside from the profit in order to meet a probable
future expense or a reduction in the asset value although the exact amount is unknown.
E.g. Provision for bad and doubtful debts, Provisions for taxation.
Marshalling of Assets and Liabilities – Arranging items in specific order.
1) Liquidity Order - Assets & Liabilities are written in the order of their liquidity.(Liquidity means
convertibility of assets into cash).
Assets of highest liquidity is written first.
Short term liabilities are written first and then long-term liabilities and lastly the capital.
2) Permanency order–
Assets which are to be used permanently i.e., for a long time and not meant for resale are written
first.-Capital is written first, then the long-term liabilities and lastly the short-term liabilities.
There is no prescribed form of Balance sheet, for a proprietary and partnership firms. However,
Schedule III Part I of the Companies Act 2013 prescribes the format and the order in which the assets
and liabilities of a company should be shown.

Cash Flow statement
It is a summary of receipts and disbursements of cash for a particular period of time. It also
explains reasons for the changes in cash position of the firm. It complements balance sheet and
Income statement. It is mandatory part of company’s financial report.
Inflow and Outflow: Transactions which increase the cash position of the entity are called as
inflows of cash and those which decrease the cash position as outflows of cash.
As per AS-3 (revised) issued by the Accounting Standards Board
(a) Cash fund: It includes
(i) Cash in hand
(ii) Demand deposits with banks, and
(iii) Cash equivalents.
(b) Cash equivalents are short-term, highly liquid investments, readily convertible into cash and
which are subject to insignificant risk of changes in values.
The statement of cash flow shows 3 main categories of cash inflows and cash outflows:
(a) Cash from operating activities are the principal revenue generating activities of the enterprise.
(b) Cash from investing activities include the acquisition and disposal of long-term assets and other
investments not included in cash equivalents.
(c) Cash from financing activities are activities that result in change in the size and composition of
the owner’s capital (including Preference share capital in the case of a company) and borrowings of
the enterprise.
Operating Activities:
Cash inflow Cash Outflow
Cash sale Cash purchase

Cash received from debtors Payment to creditors
Cash received from commission & fees Cash operating expenses
Royalty & other revenues Payment of wages
Income tax

 Investing Activities:
Sale of fixed assets Purchase of fixed assets

Sale of investment Purchase of investment
Interest received
Dividend received
 Financing Activities:
Issue of shares Cash repayments of amounts borrowed

Issue of debentures in cash Interest paid on loans/debentures
Proceeds from long-term, Dividends paid on equity and preference
short-term borrowings share capital
 Only listed companies are required to prepare and present Cash flow statement. The Accounting
period for the Cash Flow Statement is the same for which Profit and Loss Account and Balance
Sheet are prepared.
 There are 2 methods of calculating cash flow from operating activities namely Direct and
Indirect method. SEBI (Securities Exchange Board of India) Guidelines recommend for only
direct method.

Some Terms:
Preliminary expenses – The expenses incurred when a company is formed & before start of any
business operations.
Outstanding expenses - When expenses of an accounting period remain unpaid at the end of an
accounting period, they are termed as outstanding expenses.
Prepaid Expenses- There are several items of expense which are paid in advance in the normal
course of business operations.
Accrued income – Income earned during the current accounting year but have not been actually
received by the end of the same year
Income Received in Advance- Sometimes, a certain income is received but the whole amount of it
does not belong to the current period. The portion of the income which belongs to the next
accounting period is termed as income received in advance or an Unearned Income.
Bad debts refer to the amount that the firm has not been able to realise from its debtors.
Amortisation: Amortisation refers to writing-off the cost of intangible assets like patents, copyright,
trademarks, franchises, goodwill which have utility for a specified period of time.
Depreciation: Depreciation is the decline in the value of an asset an account of wear and tear or
passage of time. It is decline in the book value of fixed assets. Depreciation is charged on all fixed
assets except land. It is a non-cash expense. It does not involve any cash outflow. It is the process of
writing-off the capital expenditure already incurred.Depreciation is revenue expenditure.
Depreciable cost of an asset = Asset cost - net residual value. (Net residual value is the
estimated net realisable value (or sale value) of the asset at the end of its useful life.)
Objectives for providing depreciation: Correct income measurement, True position statement, Funds
for replacement, Ascertainment of true cost of production.
Methods of Calculating Depreciation Amount:
1) Straight Line Method – (= fixed instalment method)
This method is based on the assumption of equal usage of the asset over its entire useful life.
According to this method, a fixed and an equal amount is charged as depreciation in every
accounting period during the lifetime of an asset.
Cost of asset - Estimated net residential value
Depreciation =
Estimated useful life of the asset
2) Written Down Value Method –

Under this method, depreciation is charged on the book value of the asset. Since book value keeps on
reducing by the annual charge of depreciation, it is also known as ‘reducing balance method’. This
method involves the application of a pre-determined proportion/percentage of the book value of the
asset at the beginning of every accounting period, so as to calculate the amount of depreciation. The
amount of depreciation reduces year after year.

Asset disposal account is designed to provide a complete and clear view of all the transactions
involved in the sale of an asset under one account head. The concerned variables are the original cost
of the asset, depreciation accumulated on the asset up to date, sale price of the asset, value of the
parts of the asset retained for use, if any and the resultant profit or loss on disposal.
Provisions: -
There are certain expenses/losses which are related to the current accounting period but amount of
which is not known with certainty because they are not yet incurred.
Examples of provisions are: Provision for depreciation; Provision for bad and doubtful debts;
Provision for taxation; Provision for discount on debtors; and Provision for repairs and
renewals.
In the balance sheet, the amount of provision may be shown either:
By way of deduction from the concerned asset on the assets side. For example, provision for
doubtful debts is shown as deduction from the amount of sundry debtors and provision for
depreciation as a deduction from the concerned fixed assets;
On the liabilities side of the balance sheet along with current liabilities, for example provision for
taxes and provision for repairs and renewals.
Reserves: -
A part of the profit may be set aside and retained in the business to provide for certain future
needs like growth and expansion or to meet future contingencies.
Examples of reserves are: General reserve; Workmen compensation fund; Investment
fluctuation fund; • Capital reserve; Dividend equalisation reserve; Reserve for redemption of
debenture etc.
Secret reserve is a reserve which does not appear in the balance sheet. It may also help to reduce
the disclosed profits and also the tax liability.
It can be created by – Charging higher depreciation, Undervaluation of inventories/stock, charging
capital expenditure to profit and loss account, making excessive provision for doubtful debts,
showing contingent liabilities as actual liabilities.

Not-for Profit Organisations
Its sole aim is to provide service either free of cost or at nominal cost, and not to earn profit. The
main sources of income of such organisations are:
(i) Subscriptions from members,
(ii) Donations (general).
(iii) Legacies (general).
(iv) Grant-in-aid,
(v) Income from investments, etc.
The type of financial statements that are generally prepared by Not-for Profit Organisations
(NPOs) are:
1. Receipts and Payments Account –
Summary of cash transactions based on the cash-book. (Cash book is prepared on daily basis and
Receipts& Payment account is prepared at the end of accounting year).
It serves the purpose of trial balance and becomes the basis of preparing financial statements i.e.,
Income and Expenditure Account and Balance sheet for the organisation.
Very small Not-for-Profit Organisations (NPOs) prepare only Receipts and Payments Account
All cash receipts and payments are recorded in this account whether these belong to current year
or next year or previous year.
All receipts and payments are recorded in this account whether these are of revenue nature or
capital nature. All receipts are recorded on its debit side while all payments are shown on the credit
side.
Receipts (Debit side) Payments (Credit Side)
Subscription Purchase of fixed assets
Entrance/admission fee Payment of honorarium (revenue payment)
Life membership fees Purchase of consumable items
Endowment fund (capital receipts)
Donations
Legacy (capital receipt)
Sale of old newspapers/periodicals
(Revenue receipts)
2. Income and Expenditure Account-

1. It is the summary of incomes and expenditures of the organisation of a particular year and is
prepared at the end of the year. This account is similar to the Profit and Loss Account of the
Business Organisations.

In this account revenue expenditure and revenue income of the year for which Income and
Expenditure A/c is prepared are taken. (Only revenue nature not capital and only of that year not of
previous or next year). Debit side shows expenses & losses. Credit side shows income & gains-
Revenue Income: Subscription, Admission fees, Donations, Sale of old newspapers, periodicals&
sports material, etc. Interest Receipts, Grant-in-Aid.-Revenue expenses: 1. Salaries, wages, rent,
stationery, postage, telephone charges, electricity charges, 2. Honorarium, 3. Depreciation, 4.
Expenses on tournament, fair, etc. 5. Other items.
The income and expenditure account is prepared by non-trading concerns at the end of the
accounting period matching revenue receipts with revenue expenses to determine surplus or
deficit. It is a nominal account that states that all the expenses are debited, and all the incomes
are credited.
3. Balance Sheet
Every NPO prepares Balance Sheet at the end of the year. It also has the asset side and the liability
side.
Donations –
It is a sort of gift in cash or property received from some person or organisation. It appears on the
receipts side of the Receipts and Payments Account.
(i) Specific Donations: Donation received is to be utilised to achieve specified purpose.
-Such donation is to be capitalised and shown on the liabilities side of the Balance Sheet.
(ii) General Donations: Such donations are to be utilised to promote the general purpose of the
organisation. These are treated as revenue receipts as it is a regular source of income hence, it is
taken to the income side of the Income and Expenditure Account of the current year.
Legacies –
It is the amount received by organisations as per the will of a deceased person who may or may not
specify the use of the amount.
Legacies, use of which is specified are specific legacy and is shown in the balance sheet as liability.
If the use is not specified, it is considered as revenue nature and credited (i.e., income side) to
income and expenditure account.
Payment of honorarium–
This is an amount paid to persons who are not the employees of the organisation but take part
in the management of the organisation. Remuneration paid to them is called honorarium.

Partnership
According to the Indian Partnership, Act 1932, “Partnership is relation between persons who
have agreed to share profits of a business carried on by all or any of them acting for all”.
Partnership Deed - The written form of the agreement is the basis of a document of partnership. It
contains terms and conditions regarding the conduct of business, rights, duties & obligations of
partners.
In the absence of the partnership deed - Provisions of the Partnership Act becomes applicable
(i) Distribution of Profit - Partners are entitled to share profits equally.
(ii) Interest on Capital - Interest on capital is not allowed.
(iii) Interest on Drawings - No interest on drawing of the partners is to be charged.
(iv) Interest on partner’s loan - A Partner is allowed interest @ 6% per annum on the amount of
loan given to the firm by him/her.
(v) Salary and commission to partner - A partner is not entitled to any salary or commission or any
other remuneration for managing the business.
Apart from the above, the Indian Partnership Act specifies that subject to contract between the
partners:
(i) If a partner derives any profit for him/herself from any transaction of the firm or from the use of
the property or business connection of the firm or the firm name, he/she shall account for the profit
and pay it to the firm.
(ii) If a partner carries on any business of the same nature as and competing with that of the firm,
he/she shall account for and pay to the firm, all profit made by him/her in that business.
Maintenance of Capital Accounts of Partners –All transactions relating to partners of the firm are
recorded in the books of the firm through their capital accounts.
1) Fixed Capital account – 2 accounts: a) Capital account b) Current account.
In fixed a/c method, generally initial capital contributions by partners are credited to partners’ capital
accounts and all subsequent transactions & events are dealt with through current accounts.
2) Fluctuating Capital account – No current account is maintained. All such transactions & events
are passed through capital accounts.
Profit and Loss Appropriation Account – It is merely an extension of the Profit and Loss Account
of the firm. The profit of the firm has to be distributed amongst the partners in their respective profit-
sharing ratio. But before its distribution it needs to be adjusted. All Adjustments like partner’s salary,
partner’s commission, interest on capital, interest on drawings etc. are made in this account.
Admission of a Partner –
According to the Partnership Act 1932, a person can be admitted into partnership only with the
consent of all the existing partners unless otherwise agreed upon.
On the admission of a new partner, the following adjustments become necessary: (i) Adjustment in
profit sharing ratio; (ii) Adjustment of Goodwill; (iii) Adjustment for revaluation of assets and

reassessment of liabilities; (iv) Distribution of accumulated profits and reserves; and (v) Adjustment
of partners’ capitals.
Sacrificing Ratio: The ratio in which the old partners agree to sacrifice their share of profit in favour
of the incoming partner is called sacrificing ratio.
Sacrificing Ratio = Existing Ratio – New Ratio
Goodwill: It is the value of the reputation of a firm in respect of the profits expected in future over
and above the normal profits. It is intangible asset.
Methods of valuation of Goodwill:
(i) Average Profit Method:
Value of goodwill = Average Profit × Number of years purchased
(ii) Super Profit Method:
Normal profit = Capital employed × normal rate of return/100
Super Profit = Average Profit–Normal Profit
Goodwill = Super Profit × No of years’ purchase
(iii) Capitalisation Method:
a) Capitalisation of Average profit:
Capital employed = Total assets – outsider liabilities
Capitalised value of profit = Average Profit × 100/ Normal rate of profit
Goodwill = Capitalised value of profits – Capital employed
b) Capitalisation of Super profit:
Goodwill = Super profit × 100/normal rate of profit
Retirement of Partner
When one or more partners leaves the firm and the remaining partners continue to do the business of
the firm, it is known as retirement of a partner.
A partner retires either: (i) with the consent of all partners, or (ii) as per terms of the agreement; or
(iii) at his or her own will.
The terms and conditions of retirement of a partner are normally provided in the partnership
deed. If not, they are agreed upon by the partners at the time of retirement.
Disposal of amount due to retiring partner –
The outgoing partner’s account is settled as per the terms of partnership deed i.e., in lumpsum
immediately or in various instalments with or without interest as agreed or partly in cash
immediately and partly in instalment at the agreed intervals. In the absence of any agreement,

Section 37 of the Indian Partnership Act, 1932 is applicable, which states that the outgoing partner
has an option to receive either interest @ 6% p.a. till the date of payment or such share of profits
which has been earned with his/her money (i.e., based on capital ratio).
Gaining Ratio–The ratio in which the continuing partners have acquired the share from the
retiring/deceased partner is called the gaining ratio.
Gaining Ratio = New Ratio – Existing Ratio
In case of death of a partner his claim is transferred to his executors/legal representative.
Dissolution of Partnership–
The dissolution of partnership may take place in any of the following ways:
(1) Change in existing profit-sharing ratio among partners; (2) Admission of a new partner (3)
Retirement of a partner; (4) Death of a partner; (5) Insolvency of a partner; (6) Completion of the
venture, if partnership is formed for that; and (7) Expiry of the period of partnership, if partnership is
for a specific period of time
Dissolution of Firm –
Dissolution of a firm takes place in any of the following ways:
1. Dissolution by Agreement: A firm is dissolved: (a) with the consent of all the partners or (b) in
accordance with a contract between the partners.
2. Compulsory Dissolution: A firm is dissolved compulsorily in the following cases: (a) when all
the partners or all but one partner, become insolvent, rendering them incompetent to sign a contract;
(b) when the business of the firm becomes illegal; or (c) when some event has taken place which
makes it unlawful for the partners to carry on the business of the firm in partnership.
3. On the happening of certain contingencies: Subject to contract between the partners, a firm is
dissolved: (a) if constituted for a fixed term, by the expiry of that term; (b) if constituted to carry out
one or more ventures, by the completion thereof; (c) by the death of a partner; (d) by the adjudication
of a partner as an insolvent.
4. Dissolution by Notice: In case of partnership at will, the firm may be dissolved if any one of the
partners gives a notice in writing to the other partners, signifying his intention of seekingdissolution
of the firm.
5. Dissolution by Court: At the suit of a partner, the court may order a partnership firm to be
dissolved on any of the following grounds: (a) when a partner becomes insane; (b) when a partner
becomes permanently incapable of performing his duties as a partner; (c) when a partner is guilty of
misconduct which is likely to adversely affect the business of the firm; (d) when a partner
persistently commits breach of partnership agreement; (e) when a partner has transferred the whole
of his interest in the firm to a third party; (f) when the business of the firm cannot be carried on
except at a loss; or (g) when, on any ground, the court regards dissolution to be just and equitable.
According to Section 39 of the partnership Act 1932, the dissolution of partnership between all the
partners of a firm is called the dissolution of the firm.
In case of dissolution of a firm, the firm ceases to conduct business and has to settle its accounts.

For this purpose, it disposes off all its assets for satisfying all the claims against it. In this context,
subject to agreement among the partners, the following rules as provided in Section 48 of the
Partnership Act 1932 shall apply.
(a)Treatment of Losses:
Losses, including deficiencies of capital, shall be paid: (i) first out of profits, (ii) next out of capital
of partners, and (iii) lastly, if necessary, by the partners individually in their profit-sharing ratio.
(b)Application of Assets:
The assets of the firm, including any sum contributed by the partners to make up deficiencies of
capital, shall be applied in the following manner and order: (i) In paying the debts of the firm to the
third parties; (ii) In paying each partner proportionately what is due to him/her from the firm for
advances as distinguished from capital (i.e. partner’ loan); (iii) In paying to each partner
proportionately what is due to him on account of capital; and (iv) the residue, if any, shall be divided
among the partners in their profit sharing ratio.
Realisation Account: It is prepared to record the transactions relating to sale and realisation of
assets and settlement of creditors. The balance in this account is termed as profit or loss on
realisation which is transferred to partners’ capital accounts in the profit-sharing ratio.

Consignment Account
Accounts dealing with a situation when one person/firm sends good to another person/firm.
Principal= Consignor- Party which sends the goods.
Agent= Consignee- Party to whom goods are sent.
Consignee receives a commission calculated on basis of gross sale.
Generally, consignee is not responsible for any bad debt that may arise. If consignee is to be made
responsible for bad debts, he is to be paid a commission called del-credere commission. It is
calculated on total sales, not mere on credit sales until & unless agreed. (It is the additional
commission given to increase the sale & to encourage consignee to make credit sales.)
Over-riding Commission – Extra commission given to consignee to promote sales at higher price
than specified or to encourage consignee to put hard work in introducing new product in market.)
Account sales – Periodical summary statement sent by consignee to consignor. It contains- sales
made, expenses incurred on behalf of consignor, commission earned, unsold inventories, advance
payment, balance payment due or remitted.
Valuation of Inventories – The principal is that inventories should be valued at cost or net
realizable value whichever is lower. In case of Consignment, cost means not only the cost of goods
but also all expenses incurred till the goods reach premises of the consignee.
Normal Loss – Unavoidable Loss. It would be spread over entire consignment while valuing
inventories. No entry is recorded for normal loss & same is considered as expense which is
considered for valuation of inventory.
Abnormal Loss – Any accidental or unnecessary loss. Amount o such loss should be credited to
Consignment account and debited to Profit & Loss account. [If any amount is received from insurers,
then debit to P&L a/c will not include that amount. Such amount is debited to Bank account.]
Consigned goods returned by consignee to consignor are values at price at which it was consigned to
consignee. Expenses incurred by consignee to send those goods back to consignor (i.e., secondary
freight) are not taken into consideration while valuing it.

Company Accounts
As per Companies Act 1956, a company is formed and registered under the Companies Act or an
existing company registered under any other Act.
Characteristics of a Company:
 Artificial legal person: A company is an artificial person as it is created by law. It has almost all
the rights and powers of a natural person. It can enter into contract. It can sue in its own name
and can be sued.
 Incorporated body: A company must be registered under Companies Act. By virtue of this, it is
vested with corporate personality. It has an identity of its own.
 The capital of the company is divided into shares. A share is an indivisible unit of capital.
 Transferability of shares: The shares of the company are easily transferable. The shares can be
bought and sold in the stock market.
 Perpetual existence: A company has an independent and separate existence distinct from its
shareholders.
 Limited Liability: The liability of the shareholders of a company is limited to the extent of face
value of shares held by them. No shareholder can be called upon to pay more than the face value
of the shares held by them. At the most the shareholders may be asked to pay the unpaid value of
shares.
 Representative Management: The number of shareholders is so large and scattered that they
cannot manage the affairs of the company collectively. Therefore, they elect some persons
among themselves to manage and administer the company. These elected representatives of
shareholders are individually called the ‘directors’ of the company and collectively the Board of
Directors.
 Common seal: A common seal is the official signature of the company. Any document bearing
the common seal of the company is legally binding on the company.
Types of companies –
1. On the basis of formation:
(a) Statutory Company-A company formed by a Special Act of parliament or state legislature.
(b) Registered Company-A company formed and registered under the Companies Act, 1956 or
earlier Companies Acts.
2. On the basis of liability:
(a) Company limited by shares- The liability of the member of such company is limited to the face
value of its shares.
(b)Company limited by guarantee- The liability of each member of such company is limited to the
extent of guarantee undertaken by the member.

(c)Unlimited Company- The Company not having any limit on the liability of its members, is called
an unlimited company. Liability in such a case extends to the personal property of its shareholders.
Such companies do not use the word ‘limited’ at the end of their name.
(d)Company under section 25- A company created under section-25 is to promote art, culture and
societal aims.
3. On the basis of ownership:
(a) Private Company- Minimum members-2 , Maximum members-200
It restricts the right of members to transfer its shares
Prohibits any invitation to the public to subscribe to its shares, debentures.
Earlier, Companies Act, 2013 mandated that all private companies have minimum paid up value of
the company is 1 lakh rupees. But now (as per Companies Amendment Act 2015), there is no
requirement of paid-up capital.
Shares of private company are not listed on Stock-exchange.
(b) Public Company-Minimum members-7, No limit on maximum members.
It can invite public for subscription to its shares.
Its shares are freely transferable.
Minimum paid up capital – Earlier - 5 lakhs rupees, Now- No minimum requirement.
(c) Government Company- A Government Company is one in which not less than 51% of its paid-
up capital is held by Central Government/State Government/partly by Central Government & partly
by State Government.
(d) Foreign company- A foreign company is one which is incorporated outside India but has a place
of business in India.
(e) Holding company and Subsidiary company-
A holding company is a company which controls another company (called subsidiary company)
either by acquiring more than half of the equity shares of another company or by controlling the
composition of Board of Directors of another company or by controlling a holding company which
controls another company.
(f) Listed company and unlisted company- A company is required to file an application with stock
exchange for listing of its securities on a stock exchange. When it qualifies for the admission and
continuance of the said securities upon the list of the stock exchange, it is known as listed company.
A company whose securities do not appear on the list of the stock exchange is called unlisted
company.
Kinds of shares –
A. Preference shares: A preference share is one which carries following preferential rights over
other shares such as
1. Payment of dividend.
2. Repayment of capital at the time of winding up of the company.
3. Rate of dividend on these shares is fixed.
4. Shareholders can vote only in special circumstances.
5. Shares can be redeemed as per terms of issue.

Various types:
a) Cumulative preference share- It carries right to a fixed amount of dividend or dividend at fixed
rate even out of future profits if current year’s profits are insufficient.
b) Non-cumulative preference share- Holder of such share is not entitled to arrears of dividend in
future.
c) Participating preference share- Holder of such share has right to participate in surplus profit, if
any.
d) Non-participating preference share
e) Redeemable preference share – Shares that a company may issue on condition that the company
will repay after fixed period or earlier at company’s discretion.
f) Non-redeemable preference share
g) Convertible preference share.- It carries right to get them converted into equity shares
h) Non-convertible preference share
[Generally, P.S. are non-cumulative, non-participating, non-convertible, and redeemable in nature.]
B. Equity shares: All shares which are not preference shares are equity shares.
1. Rate of dividend on these shares is not fixed and depends upon the decision of the Board of
directors.
2. Dividend on these shares is paid after payment of dividend made to preference shareholders.
3. On winding up of the company equity shareholders get refund of capital only after preference
shareholders have been paid off.
4. Shareholders have voting rights in all matters.
5. Shares cannot be redeemed during the life of the company.
6. Equity shareholders have the right to elect directors of the company.
7. Equity shares are the permanent source of capital.
Capital: The capital means the assets and cash in a business.

Types:
1. Nominal/Authorised/Registered capital - It refers to the maximum amount of share capital
which a company is authorised to issue as per its Memorandum of Association.
[Authorised Capital = Issues Capital + Unissued Capital]
2. Issued capital: Issued capital is that part of the authorised capital which the company offers to
public that may include vendors, for subscription or purchase. A company may issue its entire
authorised capital or may issue it in parts from time to time as per the needs of the company.
3. Subscribed capital: It is that part of issued capital which is taken up or subscribed by those who
are offered for subscription. Company may receive application for equal to (full subscription),

more than (over subscription) or less than (under subscription) shares issued.The portion of
nominal value of the issued share capital which is actually paid (or subscribed) by the
shareholders forms part of the subscribed capital.
4. Called up capital: It is that part of the issued/subscribed capital which is called up by company
to pay on the allotted shares and is to be paid by the shareholders.
[Called up capital = Paid up capital + Call-in-arrears (unpaid capital) – Calls in advance.]
5. Uncalled capital: It is that portion of the issued/subscribed capital that is not called up by the
company on the shares allotted.
6. Paid up capital: It is the portion of called up capital which is paid by the shareholders, to
calculate the paid-up capital, the amount of instalments in arrears is deducted from the called-up
capital.
7. Unpaid capital: That part of the called-up capital which is called but is not paid by the
shareholders is called unpaid capital. i.e., calls-in-arrears.
8. Reserve capital: Company may keep some part of its share capital uncalled and kept in reserve
to be called only in case of need at the time of its winding up. For this, a special resolution will
have to be passed by the company. Thus, it is that portion of the uncalled capital which a
company has decided to call only in case of liquidation of the company.
Issues of shares –
Share money can be collected in lump sum or in instalment. The first instalment is termed as Share
Application money and second instalment is known as Share Allotment money. In case share
money is collected in more than two instalments this is call money.
Issue of shares at premium: If a company issues its shares at a price more than its face value, the
shares are said to have been issued at Premium. The money received as premium is transferred to
Securities Premium A/c. According to Companies Act, the amount of premium can be utilised for: (i)
Issuing fully-paid bonus shares; (ii) Writing off preliminary expenses, discount on issue of shares,
underwriting commission or expenses on issue; (iii) Paying premium on redemption of Preference
shares or Debentures; (iv) for purchase of own shares/ other securities.
Issues of shares at discount: When the issue price of share is less than the face value, shares are
said to have been issued at discount.
Section 79 of Companies Act 1956 has laid down certain conditions subject to which a company can
issue its shares at a discount. -(i) At least 1 year must have elapsed from the date of commencement
of business; (ii) Such shares are of the same class as had already been issued; (iii) The company has
sanctioned such issue by passing a resolution in its general meeting and the approval of the court is
obtained. (iv) Discount should not be more than 10% of the face value of the share and if the
company wants to give discount more than 10%, it will have to obtain the sanction of the Central
Government.
Section 53 of Companies Act 2013, Company can’t issue shares at a discount except in case of
issue of sweat equity shares (i.e., shares issued to employees & directors).

Forfeiture of shares –
If a shareholder fails to pay the due amount of allotment or any call on shares issued by the company,
the Board of directors may decide to cancel his/her membership of the company. With the
cancellation, the defaulting shareholder also loses the amount paid by him/her on such shares.
The result of forfeiture of shares is:
1) Cancellation of membership of the shareholder.
2) Reduction of issued share Capital of the company.
The Board of Directors has to give at least 14 days’ notice to the defaulting members calling upon
them to pay outstanding amount with or without interest as the case may be before the specified date.
Reissue of shares- (=issue of forfeited shares.):

Reissue of shares means sale of shares which were issued earlier but had been forfeited for non-
payment of called up amount. The amount of shares reissued is generally called in one instalment.
The balance amount of share forfeited account is a capital gain of the company and is transferred to
Capital Reserve A/c.
Debenture –
When a company intends to raise the loan amount from the public it issues debentures. A Debenture
is a unit of loan amount. A debenture is a document issued under the seal of the company. It is an
acknowledgment of the loan received by the company equal to the nominal value of the debenture. It
bears the date of redemption and rate and mode of payment of interest. A debenture holder is the
creditor of the company.
As per Companies Act, “Debenture includes debenture stock, bond and any other securities of the
company whether constituting a charge on the company’s assets or not”
Types of debentures –
1. From security point of view:
(i) Secured or Mortgage debentures: These are the debentures that are secured by a charge on the
assets of the company. The holders of secured debentures have the right to recover their principal
amount with the unpaid amount of interest on such debentures out of the assets mortgaged by the
company. In India, debentures must be secured.
It can be of two types:
(a) First mortgage debentures: The holders of such debentures have a first claim on the assets
charged.
(b) Second mortgage debentures: The holders of such debentures have a second claim on the assets
charged.

(ii) Unsecured or simple debentures: Debentures which do not carry any security with regard to the
principal amount or unpaid interest are called unsecured debentures.
2. On the basis of redemption:
(i) Redeemable debentures: Debentures which are issued for a fixed period. The principal amount of
such debentures is paid off to the debenture holders on the expiry of such period. These can be
redeemed by annual drawings or by purchasing from the open market.
(ii) Non-redeemable debentures: Debentures which are not redeemed in the life time of the
company. Such debentures are paid back only when the company goes into liquidation.
3. On the basis of Records:
(i) Registered debentures: These are the debentures that are registered with the company. The
amount of such debentures is payable only to those debenture holders whose name appears in the
register of the company. They are not easily transferable.
(ii) Bearer debentures: These are the debentures which are not recorded in a register of the company.
Such debentures are transferrable merely by delivery. Holder of these debentures is entitled to get the
interest irrespective of any identity.
4. On the basis of convertibility:
(i) Convertible debentures: Debentures that can be converted into shares of the company on the
expiry of pre-decided period. The term and conditions of conversion are generally announced at the
time of issue of debentures.
(ii) Non-convertible debentures: The debenture holders of such debentures cannot convert their
debentures into shares of the company.
5. On the basis of priority:
(i) First debentures: These debentures are redeemed before other debentures.
(ii) Second debentures: These debentures are redeemed after the redemption of first debentures
Issue of Debentures:
By issuing debentures means issue of a certificate by the company under its seal which is an
acknowledgment of debt taken by the company. The procedure of issue of debentures by a company
is similar to that of the issue of shares. A Prospectus is issued, applications are invited, and letters of
allotment are issued. Issue of Debenture takes various forms which are as under:
1. Debentures issued for cash
2. Debentures issued for consideration other than cash
3. Debentures issued as collateral security.
Debentures may be issued (i) at par, (ii) at premium, and (iii) at discount.
The premium on debentures is credited to Securities Premium A/c.
Debenture interest is payable before the payment of any dividend on shares.

Joint-Ventures
Temporary partnership who have agreed to jointly carry out a venture. The business relationship
between co-venturers comes to an end as soon as the venture is completed.
JV are quite common in construction business, consignment, sale & purchase property,
underwriting of shares & debentures, etc.
No specific firm name is used for JV business.
Co-venturers share profit & loss in agreed ratio. In absence of any agreement, profit & loss are to
be shared equally.
Co-venturers are free to continue with their own business unless agreed otherwise.
Accounts of JV can be kept in any one of the following 4 ways:
1) In books of one co-venturer
2) In books of all co-venturers
3) Memorandum JV account – In this method, each co-venturer will record only those transactions
relating to joint venture which are directly concerned with him/her. Such account will not disclose
profit or loss. Thus, additional account called Memorandum JV A/c will be prepared.
4) Separate set of books – Joint Bank A/c, JV A/c, Personal account of each co-venturer are
prepared in this method.

Accounting Ratios
A) Liquidity Ratios- Liquidity ratios assess capacity of the firm to repay its short-term liabilities.
(i) Current ratio- It is a ratio between current assets and current liabilities of a firm for a particular
period.
(ii) Quick ratio (=Acid test ratio=Liquid ratio) = Liquid or quick assets/Current liabilities where,
liquid assets = current assets – (stock + prepaid expenses)
[Quick liabilities = Current liabilities – (bank overdraft + cash credits)]
(iii)Absolute cash ratio = (Cash+Bank Balance+Marketable securities) / Current liabilities.
B) Activity ratios/Turnover ratios-Activity ratios measure the efficiency or effectiveness with
which a firm manages its resources.
(i) Stock turnover ratio: It measures the efficiency with which the stock is managed.
Stock turnover ratio= cost of goods/average stock or inventory
Where, average stock = (opening stock + closing stock)/2
(ii) Debtors’ turnover ratio: It is calculated to indicate the efficiency of the company to collect its
debts.
Debtors’ turnover ratio = Net credit sales/Average account receivables
(iii) Creditors turnover ratio: It indicates the efficiency with which suppliers are paid.
Creditors turnover ratio = Net credit purchases/Average trade creditors
(iv) Working capital turnover ratio = Working capital turnover ratio indicates the speed at which
the working capital is utilised for business operations
Working capital turnover ratio=Total Sales/Working Capital
Where, Working capital=current assets–current liabilities
C) Profitability Ratio:
(i) Gross Profit Ratio = (Gross Profit/Net sales)x100
Net sales = Total sales – (sales returns + excise duty)
Gross profit = Net sales – Cost of goods sold
(ii) Net profit ratio = (Net Profit/Net Sales)x100
(iii) Operating profit ratio – Operating profit is an indicator of operational efficiencies.
Operating profit ratio = (Operating profit/Net sales) ×100
Operating Profit = Gross Profit – (Administration expenses + selling expenses)
(iv) Return on investment ratio (ROI) - ROI is the basic profitability ratio. This ratio is also known
as Return on capital employed ratio.

ROI = (net profit before interest, tax and dividend/capital employed) x100
where, Capital employed = Equity share capital + preference share capital + Reserve and surplus +
long term liabilities – fictitious assets – Non trading investment
or Capital employed = (Fixed asset – depreciation) + (Current Asset – Current liabilities)
or Capital employed = (Fixed Assets – Depreciation) + (Working capital)
D) Leverage Ratio:
Leverage or capital structure ratios are calculated to test the long-term financial position of a firm.
Generally, capital gearing ratio is mainly calculated to analyse the leverage or capital structure of the
firm.
Capital gearing ratio = (Equity share capital + reserve and surplus) / (Preference share capital +
Long-term bearing fixed interest)

EPFO EO/AO & APFC Previous Years Questions (2004-2021) Analysis.
(*All Answers are based on UPSC Official Answers key & marked in Red)
PYQ on General Accounting Principles

Q.1. Which one of the following statements 4. Is the total of Debit and Credit side of Trial
about Trial Balance is correct? (EPFO Balance the same? (EPFO EO/AO 2020)
EO/AO 2020)
a. No, there are some times good reason
a. It is a book containing different accounts of why they differ.
an entity.
b. Yes, always.
b. It is a statement containing balances of
c. Yes, except where the Trial Balance is
debtors of an entity.
extracted at the year end.
c. It is a statement containing balances of
debtors and creditors of an entity. d. No, because it is not a Balance Sheet.
d. It is a statement containing the various

ledger balances of an entity on a particular 5. Which one of the following is the first book
date. in which the transactions of a business unit
are recorded? (EPFO EO/AO 2020)
2. Wages paid for installation of machinery a. Balance Sheet

is debited to which one of the following b. Cash Book
accounts? (EPFO EO/AO 2020)
c. Ledger
a. Wages Account
d. Journal
b. Machinery Account
c. Installation Account
6. Which one of the following denotes Gross
d. Profit and Loss Account Profit? (EPFO EO/AO 2020)
(a) Cost of goods sold + Opening stock

3. When are current liabilities payable? (b) Sales less Cost of goods sold
(EPFO EO/AO 2020)
(c) Sales less Purchases
a. Within a year
(d) Net profit less Expenses of the period
b. After one year but within five years
c. Within five years
d. Subject to a contingency

7. What is the underlying accounting concept 10. Which one of the following statements is
that supports no anticipation of profits but correct about Income and Expenditure
provision for all possible losses? (EPFO Account? (EPFO EO/AO 2020)
EO/AO 2020)
(a) It is a Real Account.
a. Matching
(b) It is a Personal Account.
b. Materiality
(c) It is a Nominal Account.
c. Consistency
(d) It is a Representative Personal Account.
d. Conservatism
11. In case of gold, revenue is recognized in

8. Which one of the following accounting the accounting period in which the gold is
concepts is applied by an entity, when events (EPFO EO/AO 2016)
such as new competitor entering in the market
and rift between production and marketing a. Delivered
departments are not disclosed in the books of b. Sold
accounts? (EPFO EO/AO 2020)
c. Mined
(a) Matching
d. Identified to be mined
(b) Money Measurement
(c) Revenue Recognition

12. As per the traditional approach, the
(d) Cost expense to be matched with revenue is based
on (EPFO EO/AO 2016)
9. Which one of the following concerns (a) Original cost

prepares Receipts and Payments Account? (b) Opportunity cost
(EPFO EO/AO 2020)
(c) Replacement cost
(a) Trading concerns
(d) Cash cost
(b) Non-trading concerns
(c) Manufacturing concerns

13. Preliminary expenses are the examples of
(d) Companies registered under Companies (EPFO EO/AO 2016)
(a) Capital expenditure
(b) Capital gain
(c) Deferred revenue expenditure

(d) Revenue expenditure/expense 17. Income and Expenditure Account is
(EPFO EO/AO 2016)
(a) Real Account

14. Depreciation of fixed assets is an example
of (EPFO EO/AO 2016) (b) Personal Account
(a) Deferred revenue expenditure (c) Nominal Account
(b) Capital expenditure (d) Capital Account
(c) Capital gain
(d) Revenue expenditure/expense 18. Legacies are generally (EPFO EO/AO

2016)
(a) Capitalized and taken to Balance Sheet

15. In the context of accounting, the term
IFRS stands for (EPFO EO/AO 2016) (b) Treated as income
(a) International Financial Reporting (c) Treated as expenditure

Standards
(d) Capitalized and taken to Suspense Account
(b) Indian Financial Reporting Standards
(c) Indian Financial Reporting System

19. The abnormal loss on consignment is
(d) International Financial Reporting System credited to (EPFO EO/AO 2016)
(a) Profit and loss account

16. From the information given below,
calculate the sum insurable: (EPFO EO/AO (b) Consignee’s Account
2016) (c) Consignment Account
Date of fire- 01-03-2016 (d) Income and Expenditure Account
Turnover from 01.03.2015 to 29.02.2016—
88,00,000
20. When goods are purchased for the Joint
Agreed GP ratio – 20% Venture, the amount is debited to (EPFO
Special circumstances clause provided for the EO/AO 2016)
increase of turnover by 10% (a) Purchase Account
(a) 19, 36,000 (b) Joint Venture Account
(b) 48, 40,000 (c) Venturer’s Capital Account
(c) 10, 32,000 d. Profit and loss account
(d) 24, 20,000

21. Consider the following information: (b) Personal Account
(EPFO EO/AO 2016)
(c) Nominal Account
Rate of gross profit -25% on cost of goods
sold (d) Liability Account
Sales— 20,00,000
Which one of the following is the amount of 23. The cost of electric power should be
apportioned over different departments
gross profit?
according to (EPFO EO/AO 2016)
(a) 5,00,000
(a) Horsepower of motors
(b) 6,25,000
(b) Number of light points
(c) 3,75,000
(c) Horsepower multiplied by machine
(d) 4,00,000 hours
(d) Machine hours

22. Branch Account under Debtors System is
(EPFO EO/AO 2016)
(a) Real Account

Basics of computer applications
History of Computers:
Scientist Invented/developed- About
Blaise Pascal Pascalene (1964AD) 1st Mechanical calculator
Charles Babbage Difference Engine (1822) 1st person to conceive automatic

calculator.
Analytical Engine (1837)
Father of Computer Science
Ada Lovelace 1st computer programmer
(Lady Ada Augusta)
Herman Hollerith Electromechanical tabulating machine for punched cards
Howard Aiken Mark-1 (1st electro-mechanical Automatic sequence-controlled

computer) calculator
Alan Turing Turing Machine (1936) -model of general-purpose computer

Father of Computer Science
John Vincent Atanasoff-Berry computer 1st automatic electronic digital computer
Atanasoff& Clifford (but it was unprogrammable)
(ABC)
E. Berry
J. Presper Eskert & ENIAC (Electronic Numerical 1st programmable electronic digital
John Mauchly Integrator & Calculator) 1946 computer
John Van Newman EDVAC (Electronic Discrete Used binary numbers & stored-program
Variable Computer) 1949 for first time
- EDSAC (Electronic Delay 2nd electronic digital stored-program

Storage Automatic Calculator) computer
- UNIVAC (Universal Automatic 1st commercially available computer

Computer)
Douglas Engelbert Computer Mouse (1964)
- Intel 4004 (1971) 4-bit central processing unit (CPU)

1st Micro-processor

Generations of Computer:
Generations Electronic Storage unit / Programmi Operating Examples
component memory ng speed is
device measured
language
in-
First Vacuum Tube Magnetic Machine Milli- EDSAC,
drums language seconds EDVAC,
(1940s-1950s)
UNIVAC
Second Transistors Primary- Assembly Micro- IBM-

Magnetic cores language seconds 1401,IBM-
(1950s-1960s)
1620,IBM -
Secondary-
7094, CDC-
Magnetic
1604, CDC-
tapes/disks
3600.
Third Integrated Primary- Large FORTRAN, Nano- IBM-360
Circuit Magnetic cores seconds series,
(1960s-1970s) BASIC,
Secondary- PASCAL IBM-370
Magnetic
CDC-1700
tapes/disks
Fourth Very large Primary- Python, C, Pico-seconds Apple
scale Semiconductor C++, Java,
(1970s-1980s) IBM-4341
s (RAM, DBASE
Integrated
ROM) STAR-1000
circuits
Secondary-
(Microprocess
Magnetic disks
or)
Fifth Ultra-Large- Biochips All higher Femto- Robots &

scale languages seconds Supercompute
(1980s-
Integration rs
present) [Can also
Technology
understand
natural
(human)
language]
*(Timeline given is rough)

Types of Computers:
Based on operations –
1) Analog computers – Thermometer, Speedometer, Analogue Clock, Flight Simulators, Tide
Predictors, Electricity meter etc.
2) Digital computers- Calculator, Digital Clock, Smart Phones, ATM, Consumer Electronic
Equipment’s etc
3) Hybrid computers- ECG machine, Ultrasound Machine etc
Based on configurations (size & capacity) –

1) Microcomputer / Personal Computer (PC)
2) Minicomputer/ Mid-range computer
3) Mainframe computer
4) Super computer (aka Number crunchier) - PARAM Siddhi-AI is a high-performance
computing-artificial intelligence (HPC-AI) and by far the fastest supercomputer developed in India.
5) Quantum computer: The Ministry of Electronics and Information Technology (MeitY),
Government of India launched the country’s first ‘Quantum Computer Simulator (QSim)
Toolkit’.
Based on utility –
1) General purpose computer- Desktop computers and laptops.
2) Special purpose computer- traffic-light control systems, weather-forecasting simulators.
Basic Functions/operations of a computer system:

1. Inputting.
2. Processing.
3. Outputting.
4. Storing.
5. Controlling.

Hardware:
It is Physical and tangible components of computer.
Ex. Motherboard, CPU, Input devices, Output devices, Memory devices.
1. Motherboard (=System Board): Main printed circuit board that carries CPU chip, ROM, RAM,
BIOS chip, etc. It is the backbone of computer. It serves as platform to connect all components of
computer (viz; CPU, sound card, video card, Graphics card, optical drives, hard drives, memory,
other ports, etc.)
2. CPU (Central Processing Unit): It is brain of the computer. It has 3 main components:
a) Arithmetic & Logic Unit (ALU) – performs all mathematical & logical operations.
b) Control Unit (CU) – Reads & decodes program instructions and transform them into control
signals that activate other parts of computer.
c) Registers – Storage locations that hold instructions/data while CPU is using them. (In contrast,
Memory unit holds data & instructions before and after CPU processes these.)
3. Input Devices: Devices that permit users to supply information to the computer.
Keyboard, Mouse, Track ball, Joy stick, Scanner, Touch Screen, Web camera, Microphone, Light
pen, MICR (Magnetic Ink Character Recognition), OMR (Optical mark recognition), OCR (Optical
Character Recognition), Barcode reader, Digitizer etc.
4. Output Devices: Permits computer to convey processed information to outside world.
Monitor (Visual Display Unit), Printers, Plotters, Speakers, Digital Projectors, etc.
Monitors: It is an output device that displays information in pictorial or textual form.

(i) Cathode-Ray Tube (CRT) - The CRT display is made up of small picture elements called
pixels. (Smaller the pixels, the better the image clarity/resolution. CRT tube creates an image on the
screen using a beam of electrons.
(ii) Flat- Panel Display -2 types:
a) Emissive displays- Converts electrical energy into light. Ex; LED
b) Non-emissive displays- Use optical effects to convert sunlight or light from some other source
into graphics patterns. Ex; LCD
Liquid Crystal Display (LCD) Monitor - LCD monitors use compact fluorescent tubes to
illuminate and brighten the image on the screen and produce good image quality, resolution and
contrast levels.
Light Emitting Diode (LED) Monitor - LED monitors use new backlighting technology to improve
picture quality. The LED monitor is more lifelike and accurate due to the improved contrast ratios
and colour saturation over LCD.

Organic Light Emitting Diode (OLED) Monitor – This type of monitor made up of some organic
material (containing carbon, like wood, plastic or polymers) that is used to convert the electric
current into light. They are directly used to produce the correct colour and there is no need for
backlight which saves power and space.
Printers: It is a device that accepts text and graphic output from a computer and transfers the
information to paper.
1) Impact Printers - The impact printers print the characters by striking them on the ribbon which is
then pressed on the paper. Ex; Dot-Matrix Printers, Line Printers, Daisy wheel printer, Drum printer,
Chain printer, Band printer.
Dot-Matrix Printers – It prints characters as a combination of dots. They have a matrix of pins on
the print head of the printer which form the character.
Line Printers - A line printer can print one line of text at a time. (= bar printer).
2) Non-Impact Printers - Non-impact printers form characters and images without direct physical
contact between printing mechanism and the paper. These printers print a complete page at a time
(=Page printers). Ex; Laser Printers, Inkjet Printers etc.
Laser Printers - A laser printer uses a non-impact photocopier technology. (Dry ink is used). It
gives high-quality output. The resolution of laser printers is measured in dpi (dots-per-inch).
Inkjet Printers - Inkjet printers work by spraying ink on a sheet of paper. (Wet ink is used).
3) Other Types:
Solid Ink Printer - It is a type of colour printer. It works by melting the solid ink that applies the
images to the paper. It is non-toxic and convenient to handle.
LED Printer - This printer uses a light emitting diode instead of a laser. It starts by creating a line-
by-line image of the page.
Plotter: It is a computer hardware device much like a printer that is used for printing vector
graphics. Instead of toner, plotters use a pen, pencil, marker, or another writing tool to draw
multiple, continuous lines on paper rather than multiple dots, like a traditional printer. Plotters
produce a hard copy of schematics and other similar applications. Though once widely used for
computer-aided design, these devices were more or less phased out by wide-format printers.
Memory Devices
Stores all instructions and data for CPU.
Receive data, hold it and deliver according to instruction from Control Unit.
Two types –
1. Primary Memory: (= Working/main memory of computer)

Two types – a) ROM & b) RAM
a) ROM (Read Only Memory) –
Non-volatile memory (retains its information even after power is turned off)
Cannot be altered.
Information stored on ROM at the time of its manufacture.
It stores such instructions that are required to start a computer.
Types:
1. Masked ROM (MROM) - The very first ROMs were hard-wired devices that contained a pre-
programmed set of data or instructions. These kinds of ROMs are inexpensive.
2. Programmable Read Only Memory (PROM) - PROM can be modified only once by a user. The
user can buy a blank PROM and enter the desired contents using a PROM programmer.It can be
programmed only once and is not erasable.
3. Erasable and Programmable Read Only Memory (EPROM) - The EPROM can be erased by
exposing it to ultra-violet light for up to 40 minutes.
4. Electrically Erasable and Programmable Read Only Memory (EEPROM) - The EEPROM is
programmed and erased electrically. It can be erased and reprogrammed about ten thousand times.
Both erasing and programming take about 4 to 10 milliseconds.
b) RAM (Random Access Memory) –

Temporary in nature (i.e., Data is lost when computer is switched off). Thus, called as volatile
memory.
Read/write memory.
CPU can change contents of RAM at any time.
Types:
Dynamic Random-Access Memory (DRAM) - Off-Chip Memory. Capacitors are used in it.
Periodic refresh is required to retain the data. It is slower than static RAM.
Static Random-Access Memory (SRAM) - On-Chip Memory. Transistors are used in it. It is faster
and less volatile than DRAM but requires more power and is more expensive. No refresh is needed.
Retains data as long as power is supplied.
2. Secondary memory(= External memory)

Stores data for long-term.
Permanent, Non-volatile memory.

It cannot be processed directly by the CPU. It must first be copied into primary
Storage.
Cheaper than primary memory.
Operates at slower rate than primary memory.
Types-
a) Fixed- Hard disk drive, floppy disk, Compact disk (CD) drive, Digital Video
Display (DVD) drive
b) Removable- USB drive (pen drive), Blue ray disk
TYPES EXAMPLES
Semiconductor Memory RAM, ROM
Optical Memory CD-ROM, CD-R, CD-RW, DVD, HVD, Blue ray disk
Magnetic Memory Hard disk drive (HDD), Floppy disk drive (FDD)
Flash Memory Pen drive, Memory card
Memory Units – Bit is the smallest memory unit.

4 Bits = 1 Nibble
1024PB = 1 Exabyte (EB)
2 Nibble = 8 Bits = 1 Byte
1024 EB = 1 Zetta byte (ZB)
1024 Byte = 1 Kilobyte (KB)
1024 ZB = 1 Yotta byte (YB)
1024KB = 1 Megabyte (MB)
1024 YB = 1 Bronto byte
1024MB = 1 Gigabyte (GB)
1024 1 Geop Byte
1024GB = 1 Terabyte (TB) Brontobyte =
(Highest memory
1024TB = 1 Petabyte (PB) unit)

FLIP FLOP:
It is a type of circuit with two states (i.e., on or off, 1 or 0). These circuits are often used to store
state information. The first flip-flop was built by William Eccles and F.W. Jordan in 1918 and
called the Eccles-Jordan trigger circuit. The common term "trigger circuit" or "multivibrator"
describes the earlier flip-flops, which were two-state circuits.
Types of Flip-Flops
1. S-R Flip Flop.
2. J-K Flip Flop.
3. T Flip Flop.
4. D Flip Flop.
Registers:
Registers are a type of computer memory used to quickly accept, store, and transfer data and
instructions that are being used immediately by the CPU.
Types:
1. MAR Register: Memory address register is used to retrieve instructions and data from memory,
and to aid in their execution.
2. MDR: Memory data register is used to hold data that will be stored or fetched from the computer
memory, also known as random-access memory (RAM).
3. MBR: Memory buffer register’s primary role is to store various sorts of computer instructions and
data for transfer between computer memory.
4. PC: Programme counter register used to identify the current place of the programme sequence.
5. Accumulator: Used for storing logic or intermediate outcomes.
6. Index Register: Used to change the address of operands during programme execution.
Software:
Software is set of programs which are designed to perform specific function.
2 Types of Software –
1) System Software-
It is a type of computer program that is designed to run computer’s hardware and application
software.
Four Types-
a) Operating System –
Interface between user, computer hardware & application software.

After boot program, OS manages all other programs in computer.
Ex; - Ubuntu, Linux, Unix, Windows (-1, 3.1, 1995, 2000, XP, Vista,7, 8, 8.1, 10), MAC OS, DOS,
etc.
b) Utility Programs – Manage, maintain &control computer resources. (=service programs)

Ex; Antivirus software, backup software, disk clean, etc.
c) Device drivers – Enables interaction with hardware devices.
d) Language translators –
Translates high-level language program into an equivalent machine language program.
It also detects and reports the error during translation.
Types:
Assembler – It converts assembly language into machine language.
Compiler – It converts the program in a high-level language into low-level language. It translates all
at once.
C, C++ use compilers.
Interpreter – It converts the programs in a high-level language to low-level language. It translates

line by line. It gives better error diagnostics than a compiler. Python, BASIC, and Ruby use
interpreter.
2) Application Software- End-user programs.

a) Basic / General Purpose Applications- Ex; Microsoft Office.
b) Special Purpose Applications- Ex; audio/video editors, accounting software, air traffic control
software, etc.

Data Communication:
Transmission of digital data from one device to another.
Transmission modes/Communication channels:
1) Simplex- Unidirectional, only one device can transmit. Ex; TV, Fire alarm system.
2) Half Duplex- Bi-directional, both devices can transmit but not at same time.
Ex; Walkie-talkie.
3) Full Duplex- Bi-directional, Both devices can transmit simultaneously. Ex; Telephone network.
Transmission media:
1) Guided/Bounded Media:-
a) Twisted pair cable- Used in Digital Subscriber Line, telephone lines, local area networks
b) Coaxial cable- Used in amateur radio or low-loss cable television.
c) Fiber Optics- Used in telecommunication services, such as internet, television and telephones.
2) Unguided Media: -
a) Microwave transmission- Mobile phones, satellite communication
b) Radio wave transmission- Radio, TV
C) Infrared transmission- TV remote control
Data conversion process:

5 basic operations for converting raw input data into useful information-
1. Inputting: Process of entering data and instructions into a computer system.
2. Storing: Saving data and instructions to make them readily for initial or additional processing as
and when required available
3. Processing: Performing arithmetic operations (add, subtract, multiply, divide, etc.) or logical
operations (comparisons like equal to less than, greater than, etc.) on data to convert them into useful
information.
4. Outputting: Process of producing useful information or results for a user, such as printed reports
or visual displays.
5. Controlling: Directing the manner and sequence in which the above operations are performed.

Web Browser:
A software application used to access information on the World Wide Web is called a Web Browser.
Types:
1. WorldWideWeb: First web browser created by Tim Berners Lee in 1990, later named Nexus.
2. Mosaic: launched in 1993
3. Netscape Navigator: 1994
4. Internet Explorer: launched in 1995 by Microsoft
5. Firefox: It was introduced in 2002 and was developed by Mozilla Foundation
6. Google Chrome: launched in 2008 by Google
7. Opera
8. Apple Safari
9. Kingpin browser
10. Tor browser

Network:
It is a system of interconnected computers.
It allows computers to communicate with many other computers
ARPANET (Advanced Research Project Agency Network) is world’s 1st operational computer
network. It was created by USA in response to Soviet union’s launching of Sputnik satellite in 1957.
Types:
LAN MAN WAN
Local Area Network Metropolitan Area Network Wide Area Network
Connects computers within limited Covers geographical area larger Computer network that extends
geographic area such as office than LAN but smaller than WAN. over large geographical area
building, school, residence etc. such as state, country, continent.
Ex; city, town.
High bandwidth Moderate bandwidth Low bandwidth
High data transfer speed and rate Moderate speed Low data transfer speed & rate
Lower set up cost Moderate set up cost Higher set up cost
Other types: -
 Personal Area Network (PAN) –Connects electronic devices around an individual person. It
can cover a network range of 30 feet (approx. 10 m). It can be constructed by using cables or it
may be wireless. Ex; USB, Printer, Keyboard, Bluetooth, Wireless mouse, etc.
 Campus Area Network (CAN) - Computer network of interconnected local area networks. It is
larger than a LAN but smaller than MAN or WAN. It can also stand for Corporate Area
Network.
 Storage Area Network (SAN) - SAN is a high-speed special-purpose network. It supports data
storage, retrieval, and sharing of data, multiple disk arrays, data migration from one storage
device to another and uses Fibre Channel interconnection technology.
Network Topology: Arrangement of network-
1) Physical Topology- Geometric layout of connected networks.
Types: BUS Topology, Ring topology, Star Topology, Tree topology (Expanded star topology),
Mesh topology, Hybrid topology, etc.
2) Logical/signal Topography-Denotes how signals transmitted from node to node across system
Types: Broadcast topology-No need of instructions. Ex. Broadcast transmission.
Token Passing- Electronic token is passed to each node. When a token is received by the node, the
node can send data on the network. Ex; Token Ring and Fibre Distributed Data Interface (FDDI).

Some Terms:
 Server- Main computer that manages resources to another computer to a network.
 Nodes- Connection point where either data transmission ends or redistribution starts.
 Protocol- Set of guidelines for exchanging data over a computer network.
 Terminal- A computer equipment at the end of link.
 Dumb terminal-Display & input devices which doesn’t process data & input. Ex; Keyboard,
Monitor.
 Intelligent terminal- Able to process data & input. Ex; CPU.
NETWORKING HARDWARE:
Plug and Play (PnP):
Part of Windows that enables a computer system to adapt to hardware changes with minimal
intervention by the user. A user can add and remove devices without having to do manual
configuration, and without knowledge of computer hardware.
Plug and play (PnP) device or computer bus is one with a specification that facilitates the
recognition of a hardware component in a system without the need for physical device configuration
or user intervention in resolving resource conflicts.
Bluetooth:
Bluetooth is a short-range wireless technology standard that is used for exchanging data between
fixed and mobile devices over short distances and building personal area networks (PANs). In
the most widely used mode, transmission power is limited to 2.5 milliwatts, giving it a very short
range of up to 10 metres (33 ft). It employs UHF radio waves in the ISM bands, from 2.402 GHz to
2.48 GHz. It is mainly used as an alternative to wire connections, to exchange files between nearby
portable devices and connect cell phones and music players with wireless headphones.
The development of the "short-link" radio technology, later named Bluetooth, was initiated in 1989
by Nils Rydbeck, CTO at Ericsson Mobile in Lund, Sweden.

Internet:
It is the global computer network providing a variety of information and communication facilities,
consisting of interconnected networks using standardized communication protocols (TCP/ IP).
In computer networks, reference models give conceptual framework that standardizes
communication between networks. There are 2 popular reference models.
1) OSI Model – (Open System Interconnection Model)

It is an intangible and logical arrangement that describes network communication between two
systems by using different layer protocols.
The OSI model developed by the International Standards Organization (ISO).
Gives guidelines on how communication should be done.
It has 7 layers to transmit data from one to another.
APPLICATION
PRESENTATION
SESSION
TRANSPORT
NETWORK
DATA LINK
PHYSICAL
Layers of OSI MODEL
2)TCP/IP Model (Transmission Control Protocol/Internet Protocol)

It is a tangible, client-server model.
TCP divides data in data packets for sending & receiving data. Rules for reassembling data &
damage-free delivery are also specified.
IP puts destination on such packets.
(IP Address- XXX.XXX.XXX.XXX – 8 bits in each octet. Total 32 bits of information in an IP
address.)
It can be used for communication over Internet as well as for private networks.
Unlike the OSI model which comprises seven layers, the TCP/IP model is structured with four
different layers. These four layers are:

1. Network Access Layer: This is the bottom-most layer of the TCP/IP model architecture. It is a
combination of the Data Link and Physical Layer of the OSI model.
2. Internet Layer: Three different protocols- (IP) Internet Protocol, (ARP) Address Resolution
Protocol, (ICMP) Internet Control Message Protocol.
3. Host to Host Layer: Two main protocols – (TCP) Another integral part and (UDP) User
Datagram Protocol.
4. Application Layer: Multiple protocols are present in this layer like (HTTP) Hypertext
Transfer Protocol, (NTP) Network Time Protocol, (TELNET) Telecommunication Network,
(FTP) File Transfer Protocol etc.
Hardware for Internet:

Modem (Modulator-Demodulator) - It is a hardware component that allows a computer to connect to
the Internet. It converts analog signal to digital signal & vice versa.
Hub – Connection point where data from many directions converge & then forwarded.
Bridge – Bridge is a network device that connects two or more networks that uses the same protocol.
Gateway - A gateway is a network node that connects two dissimilar networks using different
protocols together.
Router – It is a hardware device which is responsible for routing traffic from one to another
network. It is designed to receive, convert and move packets to another network.
Software for Internet:

HTTP –Hypertext Transfer Protocol
FTP – File Transfer Protocol
SMTP – Simple Mail Transfer Protocol
HTML – Hypertext Markup Language
SGML – Standard General Markup Language
URL – Uniform Resource Locator
IMAP – Internet Message Access Protocol

Email:
Electronic mail (email or e-mail) is a method of transmitting and receiving messages using electronic
devices. Popular webmail providers are Yahoo!, Microsoft's Outlook.com (previously Hotmail), and
Google's Gmail. In 1971 Ray Tomlinson invented and developed electronic mail by creating ARPANET's
networked email system.
Email spam known as junk email is unsolicited messages sent in bulk by email (spamming).
Cloud computing:
Cloud computing is the on-demand availability of computer system resources, especially data storage (cloud
storage) and computing power, without direct active management by the user.
Cloud computing works by enabling client devices to access data and cloud applications over the internet
from remote physical servers, databases and computers.
Cellular technology evolution:

Computer Hacking:
Botnet – Botnet is a set of networks connected computers/devices that are used for malicious
purposes. Each computer in a botnet is called Bot. It is also known as Zombie.
Various malwares: -
Adware - Software designed to display advertisements on the computer screens.
Spyware- Software that is installed with or without your permission. It collects user’s information,
browsing habits, etc. Ex; CoolWebSearch, Gator, Zlob
Worms- Self-replicating software program which affects the functions of software and hardware
programs. Ex; ILOVEYOU, MSBlast, Stuxnet, Code Red
Ransomware - Malware program that infects and takes control of a system. It infects a computer with the
intention of extorting money from its owner. Ex; WannaCry, Locky, Petya
Trojanhorse –Malware that presents itself as legitimate software but take control your computer. It may
perform actions on a computer that is genuine but will install malware actions. Ex; CryptoLocker
Malware - Malicious software designed to cause damage to a computer, server or network.

Phishing – E-mail fraud method that trick the email recipient into believing that the message is
received from real companies to harvest the recipient’s personal & financial details.
Smurfing - It is a type of denial-of-service attack that relies on flooding a network with a large
volume of traffic through the manipulation of IP addresses in that network.
Spoofing – Technique used to gain unauthorised access to computers, whereby intruder sends
message to computer indicating that message is coming from trusted host.
Types of Hackers –
Ethical Hacker (White hat): Security hacker who gains access to systems with view to fix the
identified weaknesses.
Cracker (Black hat): Hacker who gains unauthorised access to computer system to steal data,
transfer fund, violate privacy right, etc.
Grey Hat: (Between White & Black hat)Who breaks into computer system without authority with
a view to identify weaknesses.
Phreaker: People who specialize in attacks on telephone system.
Recent malwares – EventBot, ShadowPad, Shopper, Pegasus, BlackRock Android malware, etc.
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Terms
Cold Boot – (Cold start/ Hard Boot/ Dead start)- Process of starting computer from shutdown or
powerless state and setting it to normal conditions.
Warm Boot – (=Soft Boot) Restarting a computer.
Cache Memory – Very high-speed semiconductor memory which can speed up CPU. It acts as
buffer between CPU & main memory. EX; Registers.
Clock Speed – Speed of CPU [Computer is composed of tiny devices that can put on & off to
indicate 1 or 0. At any moment several such devices change their state. CPU uses internal clock to
synchronize these changes. With every tick f this clock all switches that need to change their
positions do so in perfect harmony. Larger the number of ticks per second, faster the speed.
Measured in megahertz & gigahertz.]
Toggle Keys – Key that is used to change the input mode of the keys. Ex; Caps Lock, Num lock,
Scroll Lock.
Modifier Keys - It is a special key (key combination) that temporarily modifies the normal action of
another key when pressed together. Ex; Shift, Alt, Ctrl, Fn.
Versions of IP address – IPv4 (32 bits). It is written in decimal and separated by periods(.).
IPv6 (128 bits). It is written in Hexadecimal and separated by colons(:).
Carbon copy (CC) in email indicates those who receive copy of message addressed primarily to
another. List of CCed recipients is visible to all other recipient of message.
Blind Carbon Copy (BCC) – It allows sender to hide person entered in BCC field from other
recipients.
1st Super Computer in the world - Cray CDC 6600
1st Super Computer of India - PARAM Shivay
Fastest Super Computer in India –PARAM Siddhi-AI
Fathers of Internet- Vinton Cerf & Bob Kahn
Disk Mirroring:
Replication of logical disk volumes onto separate physical hard disks in real time to ensure
continuous availability. It is most commonly used in RAID 1. A mirrored volume is a complete
logical representation of separate volume copies.

Computer languages
A computer language is a group of instructions that are used to create computer programs.
Types of Computer Languages
1. Low Level Language:

A Low-level computer language includes only 1’s and 0’s. This language was used in first and
second generation computers.
A. Machine language: It is considered to be the oldest computer language. It is developed by only
using binary numbers i.e., 0 and 1. Ex. 1010100
B. Assembly Language: It has evolved with the advancements in the machine language. Assembly
language uses symbols, which are popularly known as mnemonics in computer terminology to write
the instructions. EX. LOAD r2, a; CLR
2. High Level Language:
High Level computer languages are the advanced development languages in the evolution of
computer languages. It uses words and commands along with symbols and numbers. Ex JAVA
Important Terms Used in Computer Languages
Syntax: Syntax is the structured arrangement of statements.
Compiler: It also translates the program from high level language to machine language. It is very
fast because it converts the whole program into machine language.
Loader: It loads the code which is translated by translator into the main memory and makes it ready
to execute.
Debug: Debugging is the process of finding and removing errors from a code.
Language processor/Translator: It convert program into a machine language so translator do this
work.
Assembler: An Assembler is a computer program designed in such a way that it converts mnemonics
to 0’s and 1’s.

Statement: A statement is telling a computer on how to do a desired action using words or
instructions.
Binary numbers: Binary numbers are a way of expressing data. The numbers 1 and 0 are called
binary numbers.
Linker: It is used to combine all the object files and convert them into a final executable program.
In computing, a linker or link editor is a computer system program that takes one or more
object files (generated by a compiler or an assembler) and combines them into a single executable
file, library file, or another "object" file.
linker also takes care of arranging the objects in a program's address space.
Interpreter: It converts high level language program into machine language. It is very slow because
it convert program line by line.
FORTRAN: it is known as formula translation. It is used for scientific application.
COBOL (Common Business Oriented Language): used for record keeping and data management in
business organizations.
BASIC (Beginner’s All Purpose Symbolic Instruction Code): first language designed for non-
professional programmers. PASCAL:itis developed as a teaching tool for programming concepts.
Simula: It was the first object-oriented programming language. Java, Python, C++, Visual Basic
.NET and Ruby are the most popular Object Oriented Programming languages.

File formats:
Following are the various types of Audio file formats:
MIDI: Musical Instrument Digital Interface.
MPEG: Moving Picture Experts Group
WAV: Waveform Audio File Format
RF64: BWF-compatible multichannel audio file format
Ogg Vorbis
Video file formats: Following are the various types of Video file formats:
MP4.
MOV.
WMV.
AVI.
AVCHD.
FLV, F4V, and SWF.
MKV.
WEBM or HTML5
E –WASTE:
E-waste or electronic waste is created when an electronic product is discarded after the end of its
useful life.
E-waste is electronic products that are unwanted, not working, and nearing or at the end of their
“useful life.” Computers, televisions, VCRs, stereos, copiers, and fax machines are everyday
electronic products.
Most electronics contain some form of toxic materials, including beryllium, cadmium, mercury, and
lead, which pose serious environmental risks to our soil, water, air, and wildlife.

Acronym/Abbreviation/ Shortcut Keys:
JPEG – Join Photographic Expert Group
GIF – Graphic Interchangeable Format KEY Description
GPRS – General Packet Radio Service Ctrl + A Select All
DHTML - Dynamics Hyper Text Mark-up Language Ctrl + B BOLD
HTTPS - Hyper Text Transfer Protocol Secure Ctrl + C COPY
DVDR - Digital Versatile Disk Recordable Ctrl + I ITALICS
BIOS - Basic Input Output System Ctrl + K HYPERLINK
BIS - Business Information System Ctrl + S SAVE
USB – Universal Serial Bus Ctrl + U UNDERLINE

WWW - World Wide Web Ctrl + W Close File
OMR-Optical Mark Reader Ctrl + X CUT
HTML- Hypertext Markup Language Ctrl + Y Redo
SQL- Structured Query Language Ctrl + Z Undo
DBMS- Database Management System F1 HELP
PNG-Portable Network Graphics F2 Edit/Rename
COBOL- Common Business Oriented Language F4 Properties
SMTP- Simple Mail Transfer Protocol F5 GO TO
WORM- Write Once, Read Many F7 Spell Check
PROM- Programmable read-only memory F12 Save As
ALU- Arithmetic Logic Unit
DOS- Disk Operating System
NIC- Network Interface Card
UDP- User Datagram Protocol
DNS- Domain Name System
WIFI- Wireless Fidelity
PDF- Portable Document Format
CAD- Computer Aided Design
SMPS- Switched Mode Power Supply
WAP- Wireless application protocol

PYQ on Basics of computer applications

1. Which one of the following basic (b) 1024 MB
operations for converting raw input data into
useful information is not performed by all (c) 1024 TB
computers? (EPFO EO/AO 2020) (d) 1024 PB
(a) Inputting
(b) Storing 5. Which one of the following is not a

language translator? (EPFO EO/AO 2020)
(c) Switching
(d) Outputting (a) Assembler
(b) Linker
2. Which one of the following memories is (c) Interpreter

extremely fast and acts as a high-speed (d) Compiler
buffer between the CPU and the main
memory? (EPFO EO/AO 2020)
(a) RAM 6. Which one of the following statements is

correct? (EPFO EO/AO 2020)
(b) ROM
A device driver of output devices
(c) Flash Memory
(a) Interprets input provided by users into
(d) Cache Memory computer usable form.
(b) Interprets computer output into user

3. Which one of the following is not a web understandable form.
browser? (EPFO EO/AO 2020) (c) Translates user inputs into output device.
(a) Internet Explorer (d) Facilitates user to communicate with
(b) Firefox output device.
(c) Fedora
7. Which one of the following registers is
(d) Google Chrome
used to keep track of the next instruction to be
executed? (EPFO EO/AO 2020)
4. Which one of the following represents 1 GB (a) Memory address register

of information? (EPFO EO/AO 2020)
(b) Memory buffer register
(a) 1024 KB

(c) Program counter (c) Wireless Adaption Protocol
(d) Memory data register (d) Wireless Application Protocol
8. Which one of the following is not an audio 12. Bluetooth technology allows (EPFO
file format? (EPFO EO/AO 2020) EO/AO 2016)
a. MIDI a. Sending of files within the range of 10 km
b. WAV (b) Sending an e-mail
c. SWF (c) Wireless connection between various

devices/equipment’s over short distances
d. MPEG
(d) Downloading of movies from Internet
9. Which one of the following denotes a 13. Which one among the following is not a
sequential electronic circuit that is used to basic function of a computer? (EPFO
store I-bit of information? (EPFO EO/AO EO/AO 2016)
2020)
(a) Accept and process data
(a) Register
(b) Store data
(b) Transistor
(c) Scan text
(c) Flip-flop
(d) Accept input
(d) Capacitor
14. Which one of the following is hardware?

10. CD-ROM is a (EPFO EO/AO 2016) (EPFO EO/AO 2016)
(a) Secondary memory (a) Power point
(b) Magnetic memory
(b) Control unit
(c) Memory register (c) Printer driver
(d) Semiconductor memory (d) Operating system
11. WAP stands for (EPFO EO/AO 2016) 15. The devices that work with computer
(a) Wireless Addition Protocol systems as soon as they are connected are
described as: (EPFO APFC 2015)
(b) Wireless Automation Protocol
(a) Hot Swapping

(b) Bay Swap 19. A collection of programs that controls how
the computer system runs and processes
(c) Plug-N-Play information is called as: (EPFO APFC 2015)
(d) USB Swapping (a) Compiler
(b) Operating System

16. Which one of the following software (c) Linker
applications would be the most appropriate
for performing numerical and statistical (d) Assembler
calculations? (EPFO APFC 2015)
(a) Database
Q20. SMPS is the acronym for (EPFO APFC
(b) Spreadsheet 2015)
(c) Graphics package (a) Store Mode Power Supply
(d) Document processor (b) Single Mode Power Supply
(c) Switched Mode Power Supply
17. LAN, WAN and MAN are computer (d) Start Mode Power Supply
networks covering different areas. Their first
alphabets L, W and M respectively stand for
(EPFO APFC 2015) Q21. USB is the acronym for (EPFO APFC
(a) Local, World and Middle 2015)
(b) Long, Wireless and Metropolitan (a) Uniform Service Broadcasting
(b) Unique Solution Bus

(c) Local, Wide and Metropolitan
(d) Least, Wireless and Maximum (c) Universal Serial Bus
(d) Universal Service Broadcasting
18. The method of communication in which

transmission can take place in both directions, Q22. The 'Cloud Computing technology
but happens only in one direction at a time, is refers to (EPFO APFC 2015)
called (EPFO APFC 2015)
(a) A set of algorithms that solves problems
(a) Duplex using fuzzy logic
(b) Half Duplex (b) Many computers that are interconnected
(c) Full Duplex through wireless networks and satellites
(d) Simplex (c) A distributed computer architecture

that provides software, infrastructure and

platforms just as required by 25. The word FTP stands for: (APFC 2012)
applications/users
(a) File Transit Provision
(d) A futuristic technology that will use clouds
to perform computing (b) File Translate Protocol
(c) File Transfer Provision
Q23. SPAM in a system (e-mail) is: (EPFO (d) File Transfer Protocol
APFC 2015)
(a) A message distributed indiscriminately
(b) A search engine 26. RAM stands for: (APFC 2012)
(c) An activity of the user (a) Random Access Memory
(d) A command initiated by the sender (b) Read Access Memory
(c) Random Attribute Memory
(d) Random Applicable Memory
24. Consider the following statements

27. Which of the following is also known as
Cellular technology evolves in stages called brain of computer? (APFC 2012)
Generation (G), where
(a) Monitor
1. A Generation represents the number of
subscribers, higher Generation has more (b) Arithmetic Logic Unit (ALU)
subscribers. (c) Control Unit
2. 2G technology has two standards CDMA (d) Central Processing Unit (CPU)
and GSM.
3. 2G technology has CDMA standard and 3G

has GSM standard. 28. A technique in which data is written to two
duplicate disks simultaneously, is called as
Which of the above statements is/are correct? (APFC 2012)
(a) 1 and 3 only a. Mirroring
(b) 1 only b. Multiplexing
(d) 3 only c. Duplicating
(d) 2 only d. Copying

29. The term 'e-Waste' refers to : (APFC 2012)
(a) The files that are deleted and enter the 'Waste-bin' folder in a computer
(b) The temporary files, folders, links etc. that are rarely used in a computer.
(c) The electronic products such as mobiles, PCs etc. that are disposed off after their useful life.
(d) A portal that offers services for collecting household waste.
30. CAD stands for: (APFC 2012)
(a) Computer Aided Design
(b) Computer Application in design
c. coded algorithm in design
d. design
EPFO/APFC 2023 Booster Part 2 releasing soon. You can get it on our website or Official app.

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1. General Accounting Principles 4

2. PYQ on General Accounting Principles in 43

3. Basics of computer applications 47

4. PYQ on Basics of computer applications in 69

Copyright © by OneClass.in (MissionCAPFHub)

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 For recording changes in Assets/Expenses/Losses

 For recording changes in Liabilities and Capital/Revenue/Gains

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Personal Account Real Account Nominal Account

Debit The Receiver What comes in Expenses & losses

Credit The Giver What goes out Income & gain

Applicable to Persons, artificial persons All Assets All expense, losses,

1. Modern Approach-(American System)

1)Capital Account Decrease Increase

2)Revenue Decrease Increase

2)Asset Increase Decrease

3)Liability Decrease Increase

4)Expense Increase Decrease

5)Drawings Increase Decrease

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The above equation can also be presented in the following forms:

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Credit Voucher Debit Voucher Transfer Voucher

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The trial balance is prepared to fulfil the following objectives:

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B. On the basis of their impact on ledger accounts

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Profit and Loss Account (For the year ended 31 March)

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Cash sale Cash purchase

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Sale of fixed assets Purchase of fixed assets

Issue of shares Cash repayments of amounts borrowed

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2) Written Down Value Method –

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2. Income and Expenditure Account-

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Capital: The capital means the assets and cash in a business.