If you wish to score well in accounts, you should be thorough with formulas for accounting. Accountancy is one of those subjects in which a student can fetch full marks.
It is a concept-based mathematical subject that requires some basic understanding. If a student can memorize some basic formulas, the chances of scoring well in their board exams enhance.
With the help of online home tuition, a student can get better at these formulas. Tutors at Ziyyara build a learning atmosphere for the students and make them practice practical questions every day. Since practice makes a person perfect, the students get better at accountancy by practicing regularly.
Let us tell you about class 12 important accounts formulas that can help you yield higher marks in exams.
Basic Accounting Formulas
Accounting formulas help a great deal in assessing the functional outcomes of different types of businesses.
An accountancy student should know these formulas by heart to be able to properly assess a business. Online home tuition helps you memorize these formulas so that these formulas don't slip your mind during your exam.
Some class 12 accounts formulas that will help the students in exams and long run include:
There are a few accounting ratios that an accountancy student should know.
Three liquidity ratios you can learn with the help of online tuition are
● Current Ratio = Current Assets/ Current Liabilities
● Quick Ratio = Liquid Assets/ Current Liabilities
● Absolute Quick Ratio = Absolute Liquid Assets/ Current Liabilities
The profitability ratios play a crucial part in assessing the profitability of any enterprise. The profitability ratios tell you how the enterprise uses its assets to generate income. These ratios are important accounts formula for class 12 because they tell how effectively an organization uses its equities and assets.
These ratios include
● Gross Profit Ratio = Gross Profit/ Net Sales X 100
● Net Profit Ratio = Net Profit/ Net Sales X 100
● Operating Cost Ratio = Operating Cost/ Net Sales X 100
● Operating Profit Ratio = Operating Profit/ Net Sales X 100
● Return on Investment Ratio (ROI) = Net Profit After Interest And Taxes/ Shareholders Funds or Investments X 100
● Price Earnings Ratio = Market Price Per Share Equity Share/ Earning Per Share X 100
● Earning Per Equity Share = Net Profit after Tax & Preference Dividend / Number of Equity Shares
● Return on Capital Employed Ratio = Net Profit after Taxes/ Gross Capital Employed X 100
● Dividend Yield Ratio = Dividend Per Share/ Market Value Per Share X 100
● Dividend Payout Ratio = Dividend Per Equity Share/Earning Per Equity Share X 100
● Net Profit to Net Worth Ratio = Net Profit after Taxes / Shareholders Net Worth X 100
Our online tuition in India can teach you all these formulas effectively. Our tutors can help you learn these formulas in such a way that they stay with you throughout your life.
Working Capital Ratios
Working Capital ratio formulas are one of the most basic accounts formula. These ratios have a similar purpose that the liquidity ratios do. These ratios help us analyze whether a business can pay its debts from its assets. Online home tuition can help you learn these formulas with much ease.
● Inventory Ratio = Net Sales / Inventory
● Debt Collection Ratio = Receivables x Months or days in a year / Net Credit Sales for the year.
● Average Payment Period = Average Trade Creditors / Net Credit Purchases X 100
● Debtors Turnover Ratio = Total Sales / Account Receivables
● Creditors Turnover Ratio = Net Credit Purchases / Average Accounts Payable
● Working Capital Turnover Ratio = Net Sales / Working Capital
● Capital Turnover Ratio = Cost of Sales / Capital Employed
● Fixed Assets Turnover Ratio = Cost of goods Sold / Total Fixed Assets
Capital Structure Ratios
These ratios are crucial accounts formulas because they help you know how well the company uses the capital. It also tells whether the company has more debt or equity capital. As a result, you can assess the company's debt obligations with these ratios.
● Debt Service Ratio = Net profit Before Interest & Taxes / Fixed Interest Charges
● Proprietary Ratio = Shareholders Fund/ Total Assets
● Debt Equity Ratio = Total Long Term Debts / Shareholders Fund
● Capital Gearing ratio = Equity Share Capital / Fixed Interest Bearing Funds
If you have trouble using these formulas, our tutors for online tuition can help you. Only learning these formulas is not enough, a student should understand the terminologies associated with these formulas. Our tutors help you do just that. They explain to you all the basics so that you do not encounter any problems while solving these numericals.
Besides accounting ratios, partnership is also one of the main chapters for class 12 students. Partnership formulas are important accounts formula for class 12. This chapter has a high weightage in your board exams, and thoroughly knowing the formulas will help you immensely.
With online tuition in India, you can learn partnership accounting and the related formulas. Some basic accounts formulas in partnership accounting are:
● Sacrificing Ratio = Old share in profit – New share in profit
● Gaining Ratio = New Ratio- Old Ratio
● Gaining Ratio = New share in profit – Old share in profit
● death of a partner, dissolution of Partnership Firm, or retirement.
● Calculation of Share of profit of the deceased partner
● (a) On the basis of sales Sales for the period *rate/100 * Deceased Partner’s Ratio.
● (b) On the basis of time Deceased Partner’s Share= Last year's profit/Average Profits x period /12/365 x Deceased Partner’s Ratio.
In addition to this, you can get our tutors' help with online home tuition to help you with the goodwill valuation. Many students find it challenging to calculate the value of goodwill in partnership accounting. However, it is crucial to know it since it is one of the important class 12 accounts formulas.
Goodwill Valuation Formulas
● Average Profit Method Goodwill = Average Profit x Number of years' purchases.
● Weighted Average Profit Goodwill = Weighted average x number of years’ purchase
● Super Profit Method Goodwill = Super profits x number of years’ purchase.
● Capitalization Method Goodwill = Super Profits × 100/ Normal Rate of Return
Knowing the concepts associated with these formulas for accounting, you will be able to solve almost all the accountancy numerical. Most of the questions you will see in your exam involve these formulas.
In online tuition classes, our tutors make you practice the questions involving these formulas. With their help, you get a stronghold in accounts, and you can score well in your board exams.
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