B.Com. (Accountancy) Semester 3 Notes 2026

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1. Accounting and Auditing - I Management Accounting - I

   Official Notes munotes.in

   Accounting and Auditing - I Management Accounting - I

   B.COM. (ACCOUNTANCY) · SEMESTER 3

   Strictly as per the University of Mumbai NEP 2020 syllabus set by the Board of Studies in Accountancy, circular item 8.3 (N), with Module IV read off the notified text of AS 3, Cash Flow Statements

   For SYBCom students of the University of Mumbai taking Accountancy as their Major, a degree now awarded as B.Com. (Commerce and Management) and examined as Bachelor of Commerce

   munotes.in SY BCom Accountancy

   Accounting and Auditing - I Management Accounting - I

   Copyright © 2026 munotes.in. All rights reserved.

   Written and first published by munotes.in, 2026.

   This book is free for individual students to read at munotes.in. No part of it may be reproduced, distributed, stored, translated or used for institutional or classroom purposes in any form without a prior written licence from munotes.in.

   Licensing and permissions: contact@munotes.in

   The text of statutes and of judgments reproduced in this book is in the public domain under section 52(1)(q) of the Copyright Act 1957. The commentary, arrangement, examples and questions are the original work of munotes.in.

   munotes.in is an independent study resource for MU students. It is not affiliated with, endorsed by, or officially connected to the University of Mumbai. Course names and university references describe the students and syllabus the material relates to.

   Contents

   Module I Introduction to Management Accounting

   1. What Management Accounting Is 1
   2. The Scope of Management Accounting 3
   3. The Functions of Management Accounting 5
   4. The Decision Making Process 7
   5. Financial Accounting Compared with Management Accounting 9
   6. What Analysis and Interpretation Mean 11
   7. The Vertical Form of the Balance Sheet 13
   8. The Vertical Form of the Revenue Statement 16
   9. How the Two Statements Relate to Each Other 19
   10. The Three Tools of Analysis, in Outline 22
   11. Practice Questions: Introduction and the Vertical Form 24

   Module II Tools of analysis of Financial Statements

   1. Why Financial Statements Are Analysed 28
   2. The Advantages and the Limitations of Analysis 31
   3. Trend Analysis: the Method 33
   4. Choosing the Base Year 36
   5. Trend Analysis, Worked 39
   6. The Trend Balance Sheet 41
   7. The Comparative Income Statement 44

   Contents continued

   Module II continued Tools of analysis of Financial Statements

   1. The Comparative Balance Sheet 48
   2. The Common Size Income Statement 51
   3. The Common Size Balance Sheet 54
   4. Which Tool Answers Which Question 57
   5. Reading a Real Annual Report 60
   6. Practice Questions: Tools of Analysis 63

   Module III Ratio Analysis and Interpretation

   1. What a Ratio Is, and How Ratios Are Classified 67
   2. The Advantages and the Limitations of Ratio Analysis 70
   3. The Du Pont Chart 72
   4. Current Ratio and Liquid Ratio 75
   5. Stock Working Capital Ratio 78
   6. Proprietary Ratio 80
   7. Debt Equity Ratio and Capital Gearing Ratio 82
   8. Gross Profit Ratio 85
   9. Expenses Ratio and Operating Ratio 88
   10. Net Profit Ratio and Net Operating Profit Ratio 90
   11. Stock Turnover Ratio 92
   12. Return on Capital Employed 94

   Contents continued

   Module III continued Ratio Analysis and Interpretation

   1. Return on Proprietor's Fund and Return on Equity Capital 97
   2. Dividend Payout Ratio 100
   3. Debt Service Ratio 103
   4. Debtors Turnover and Creditors Turnover 105
   5. A Complete Ratio Analysis, Worked 108
   6. Practice Questions: Ratio Analysis and Du Pont Analysis 112

   Module IV Cash Flow Analysis (AS 3)

   1. What a Cash Flow Statement Is 117
   2. Objectives and Significance of the Cash Flow Statement 120
   3. Advantages and Limitations of the Cash Flow Statement 123
   4. Cash and Cash Equivalents 125
   5. Scope and Applicability of AS 3 128
   6. Classification of Cash Flows 131
   7. Operating Activities 134
   8. Investing and Financing Activities 137
   9. Interest, Dividends and Taxes on Income 140
   10. Foreign Currency Cash Flows, Extraordinary Items and Non-cash Transactions 143
   11. Acquisitions and Disposals, and the Other Disclosures 146

   Contents continued

   Module IV continued Cash Flow Analysis (AS 3)

   1. Reporting on a Net Basis, and the Financial Enterprise 149
   2. The Indirect Method, Step by Step 152
   3. A Complete Cash Flow Statement, Worked 156
   4. Practice Questions: Cash Flow Analysis 159

   Page 1 onwards

   162 pages in this book. The cover and the contents are above. Everything from page one is in the pass.

   Notes

   2026 Edition, as per the latest syllabus. 162 pages.

   Every chapter in the notes: 57 chapters across 4 modules

   Module I Introduction to Management Accounting 11 chapters

   1. 1 What Management Accounting Is pages 1–2
   2. 2 The Scope of Management Accounting pages 3–4
   3. 3 The Functions of Management Accounting pages 5–6
   4. 4 The Decision Making Process pages 7–8
   5. 5 Financial Accounting Compared with Management Accounting pages 9–10
   6. 6 What Analysis and Interpretation Mean pages 11–12
   7. 7 The Vertical Form of the Balance Sheet pages 13–15
   8. 8 The Vertical Form of the Revenue Statement pages 16–18
   9. 9 How the Two Statements Relate to Each Other pages 19–21
   10. 10 The Three Tools of Analysis, in Outline pages 22–23
   11. 11 Practice Questions: Introduction and the Vertical Form pages 24–27

   Module II Tools of analysis of Financial Statements 13 chapters

   1. 12 Why Financial Statements Are Analysed pages 28–30
   2. 13 The Advantages and the Limitations of Analysis pages 31–32
   3. 14 Trend Analysis: the Method pages 33–35
   4. 15 Choosing the Base Year pages 36–38
   5. 16 Trend Analysis, Worked pages 39–40
   6. 17 The Trend Balance Sheet pages 41–43
   7. 18 The Comparative Income Statement pages 44–47
   8. 19 The Comparative Balance Sheet pages 48–50
   9. 20 The Common Size Income Statement pages 51–53
   10. 21 The Common Size Balance Sheet pages 54–56
   11. 22 Which Tool Answers Which Question pages 57–59
   12. 23 Reading a Real Annual Report pages 60–62
   13. 24 Practice Questions: Tools of Analysis pages 63–66

   Module III Ratio Analysis and Interpretation 18 chapters

   1. 25 What a Ratio Is, and How Ratios Are Classified pages 67–69
   2. 26 The Advantages and the Limitations of Ratio Analysis pages 70–71
   3. 27 The Du Pont Chart pages 72–74
   4. 28 Current Ratio and Liquid Ratio pages 75–77
   5. 29 Stock Working Capital Ratio pages 78–79
   6. 30 Proprietary Ratio pages 80–81
   7. 31 Debt Equity Ratio and Capital Gearing Ratio pages 82–84
   8. 32 Gross Profit Ratio pages 85–87
   9. 33 Expenses Ratio and Operating Ratio pages 88–89
   10. 34 Net Profit Ratio and Net Operating Profit Ratio pages 90–91
   11. 35 Stock Turnover Ratio pages 92–93
   12. 36 Return on Capital Employed pages 94–96
   13. 37 Return on Proprietor's Fund and Return on Equity Capital pages 97–99
   14. 38 Dividend Payout Ratio pages 100–102
   15. 39 Debt Service Ratio pages 103–104
   16. 40 Debtors Turnover and Creditors Turnover pages 105–107
   17. 41 A Complete Ratio Analysis, Worked pages 108–111
   18. 42 Practice Questions: Ratio Analysis and Du Pont Analysis pages 112–116

   Module IV Cash Flow Analysis (AS 3) 15 chapters

   1. 43 What a Cash Flow Statement Is pages 117–119
   2. 44 Objectives and Significance of the Cash Flow Statement pages 120–122
   3. 45 Advantages and Limitations of the Cash Flow Statement pages 123–124
   4. 46 Cash and Cash Equivalents pages 125–127
   5. 47 Scope and Applicability of AS 3 pages 128–130
   6. 48 Classification of Cash Flows pages 131–133
   7. 49 Operating Activities pages 134–136
   8. 50 Investing and Financing Activities pages 137–139
   9. 51 Interest, Dividends and Taxes on Income pages 140–142
   10. 52 Foreign Currency Cash Flows, Extraordinary Items and Non-cash Transactions pages 143–145
   11. 53 Acquisitions and Disposals, and the Other Disclosures pages 146–148
   12. 54 Reporting on a Net Basis, and the Financial Enterprise pages 149–151
   13. 55 The Indirect Method, Step by Step pages 152–155
   14. 56 A Complete Cash Flow Statement, Worked pages 156–158
   15. 57 Practice Questions: Cash Flow Analysis pages 159–162

2. Accountancy and Financial Management - III

   Official Notes munotes.in

   Accountancy and Financial Management - III

   B.COM. (ACCOUNTANCY) · SEMESTER 3

   Strictly as per the University of Mumbai NEP 2020 syllabus set by the Board of Studies in Accountancy, circular item 8.3 (N), with every company law proposition cited to the Companies Act, 2013 and Schedule III

   For SYBCom students of the University of Mumbai taking Accountancy as their Major, a degree now awarded as B.Com. (Commerce and Management) and examined as Bachelor of Commerce

   munotes.in SY BCom Accountancy

   Accountancy and Financial Management - III

   Copyright © 2026 munotes.in. All rights reserved.

   Written and first published by munotes.in, 2026.

   This book is free for individual students to read at munotes.in. No part of it may be reproduced, distributed, stored, translated or used for institutional or classroom purposes in any form without a prior written licence from munotes.in.

   Licensing and permissions: contact@munotes.in

   The text of statutes and of judgments reproduced in this book is in the public domain under section 52(1)(q) of the Copyright Act 1957. The commentary, arrangement, examples and questions are the original work of munotes.in.

   munotes.in is an independent study resource for MU students. It is not affiliated with, endorsed by, or officially connected to the University of Mumbai. Course names and university references describe the students and syllabus the material relates to.

   Contents

   Module I Amalgamation of Firms

   1. What Amalgamation of Firms Is, and Why It Happens 1
   2. The Two Types: Merger and Purchase 4
   3. What AS 14 Does, and Does Not, Govern 8
   4. Purchase Consideration: the Methods of Computing It 11
   5. Purchase Consideration, Worked Both Ways 15
   6. The Pooling of Interest Method 17
   7. The Purchase Method 20
   8. Pooling and Purchase Compared, on One Set of Figures 23
   9. The Realisation Account of the Old Firms 25
   10. Partners' Capital Accounts, and the Closing Entries 28
   11. Opening the Books of the New Firm 31
   12. Goodwill Arising on Amalgamation 34
   13. The Balance Sheet of the New Firm 37
   14. Adjustment of the Partners' Capitals in the New Firm 40
   15. A Complete Amalgamation, Worked 43
   16. Practice Questions: Amalgamation of Firms 46

   Module II Conversion / Sale of a Partnership Firm into a Ltd. Company

   1. Why a Firm Converts, and What Changes 51
   2. The Realisation Method, and Why MU Allows Only It 54

   Contents continued

   Module II continued Conversion / Sale of a Partnership Firm into a Ltd. Company

   1. Calculating the Purchase Consideration on Conversion 57
   2. The Realisation Account on Conversion 60
   3. Assets and Liabilities Not Taken Over 63
   4. Discharge of the Consideration in Shares, Debentures and Cash 66
   5. Partners' Capital Accounts on Conversion 69
   6. Opening the Books of the New Company 72
   7. The Balance Sheet of the New Company 75
   8. A Complete Conversion, Worked 78
   9. Practice Questions: Conversion of a Firm 80

   Module III Ascertainment and Treatment of Profit Prior to Incorporation

   1. What Profit Prior to Incorporation Is, and Why It Is Capital 84
   2. The Two Periods, and the Time Ratio 87
   3. The Sales Ratio, and When It Applies 90
   4. The Basis of Apportionment, Item by Item 93
   5. Items That Belong Wholly to One Period 96
   6. The Columnar Statement of Profit and Loss 99
   7. A Complete Computation, Worked 102
   8. Treatment of the Pre-incorporation and Post-incorporation Result 104

   Contents continued

   Module III continued Ascertainment and Treatment of Profit Prior to Incorporation

   1. Practice Questions: Profit Prior to Incorporation 107

   Module IV Introduction to Company Accounts

   1. What a Company Is 111
   2. Types of Company 114
   3. Books of Account: Section 128 117
   4. The Statutory Books and Registers of a Public Company 120
   5. Financial Statements: Section 129 125
   6. Reopening, Revision, and Periodical Results 128
   7. Accounting Standards, and the Board's Report 131
   8. Circulation and Filing of the Financial Statements 135
   9. Schedule III: the Shape of It 138
   10. Current and Non-current: the Classification That Drives the Format 142
   11. The Balance Sheet, Part I of Schedule III 145
   12. The Statement of Profit and Loss, Part II of Schedule III 150
   13. The Notes to Accounts 154
   14. Final Accounts of a Company, Worked 158
   15. Practice Questions: Company Accounts 163

   Page 1 onwards

   168 pages in this book. The cover and the contents are above. Everything from page one is in the pass.

   Notes

   2026 Edition, as per the latest syllabus. 168 pages.

   Every chapter in the notes: 51 chapters across 4 modules

   Module I Amalgamation of Firms 16 chapters

   1. 1 What Amalgamation of Firms Is, and Why It Happens pages 1–3
   2. 2 The Two Types: Merger and Purchase pages 4–7
   3. 3 What AS 14 Does, and Does Not, Govern pages 8–10
   4. 4 Purchase Consideration: the Methods of Computing It pages 11–14
   5. 5 Purchase Consideration, Worked Both Ways pages 15–16
   6. 6 The Pooling of Interest Method pages 17–19
   7. 7 The Purchase Method pages 20–22
   8. 8 Pooling and Purchase Compared, on One Set of Figures pages 23–24
   9. 9 The Realisation Account of the Old Firms pages 25–27
   10. 10 Partners' Capital Accounts, and the Closing Entries pages 28–30
   11. 11 Opening the Books of the New Firm pages 31–33
   12. 12 Goodwill Arising on Amalgamation pages 34–36
   13. 13 The Balance Sheet of the New Firm pages 37–39
   14. 14 Adjustment of the Partners' Capitals in the New Firm pages 40–42
   15. 15 A Complete Amalgamation, Worked pages 43–45
   16. 16 Practice Questions: Amalgamation of Firms pages 46–50

   Module II Conversion / Sale of a Partnership Firm into a Ltd. Company 11 chapters

   1. 17 Why a Firm Converts, and What Changes pages 51–53
   2. 18 The Realisation Method, and Why MU Allows Only It pages 54–56
   3. 19 Calculating the Purchase Consideration on Conversion pages 57–59
   4. 20 The Realisation Account on Conversion pages 60–62
   5. 21 Assets and Liabilities Not Taken Over pages 63–65
   6. 22 Discharge of the Consideration in Shares, Debentures and Cash pages 66–68
   7. 23 Partners' Capital Accounts on Conversion pages 69–71
   8. 24 Opening the Books of the New Company pages 72–74
   9. 25 The Balance Sheet of the New Company pages 75–77
   10. 26 A Complete Conversion, Worked pages 78–79
   11. 27 Practice Questions: Conversion of a Firm pages 80–83

   Module III Ascertainment and Treatment of Profit Prior to Incorporation 9 chapters

   1. 28 What Profit Prior to Incorporation Is, and Why It Is Capital pages 84–86
   2. 29 The Two Periods, and the Time Ratio pages 87–89
   3. 30 The Sales Ratio, and When It Applies pages 90–92
   4. 31 The Basis of Apportionment, Item by Item pages 93–95
   5. 32 Items That Belong Wholly to One Period pages 96–98
   6. 33 The Columnar Statement of Profit and Loss pages 99–101
   7. 34 A Complete Computation, Worked pages 102–103
   8. 35 Treatment of the Pre-incorporation and Post-incorporation Result pages 104–106
   9. 36 Practice Questions: Profit Prior to Incorporation pages 107–110

   Module IV Introduction to Company Accounts 15 chapters

   1. 37 What a Company Is pages 111–113
   2. 38 Types of Company pages 114–116
   3. 39 Books of Account: Section 128 pages 117–119
   4. 40 The Statutory Books and Registers of a Public Company pages 120–124
   5. 41 Financial Statements: Section 129 pages 125–127
   6. 42 Reopening, Revision, and Periodical Results pages 128–130
   7. 43 Accounting Standards, and the Board's Report pages 131–134
   8. 44 Circulation and Filing of the Financial Statements pages 135–137
   9. 45 Schedule III: the Shape of It pages 138–141
   10. 46 Current and Non-current: the Classification That Drives the Format pages 142–144
   11. 47 The Balance Sheet, Part I of Schedule III pages 145–149
   12. 48 The Statement of Profit and Loss, Part II of Schedule III pages 150–153
   13. 49 The Notes to Accounts pages 154–157
   14. 50 Final Accounts of a Company, Worked pages 158–162
   15. 51 Practice Questions: Company Accounts pages 163–168

3. Vocational Skills in Accounting - V

   Official Notes munotes.in

   Vocational Skills in Accounting - V

   B.COM. (ACCOUNTANCY) · SEMESTER 3

   Strictly as per the University of Mumbai NEP 2020 syllabus set by the Board of Studies in Accountancy, circular item 7.10 (N), with every statutory proposition cited to Chapter X of the Companies Act, 2013

   For SYBCom students of the University of Mumbai taking Accountancy as their Major, a degree now awarded as B.Com. (Commerce and Management) and examined as Bachelor of Commerce

   munotes.in SY BCom Accountancy

   Vocational Skills in Accounting - V

   Copyright © 2026 munotes.in. All rights reserved.

   Written and first published by munotes.in, 2026.

   This book is free for individual students to read at munotes.in. No part of it may be reproduced, distributed, stored, translated or used for institutional or classroom purposes in any form without a prior written licence from munotes.in.

   Licensing and permissions: contact@munotes.in

   The text of statutes and of judgments reproduced in this book is in the public domain under section 52(1)(q) of the Copyright Act 1957. The commentary, arrangement, examples and questions are the original work of munotes.in.

   munotes.in is an independent study resource for MU students. It is not affiliated with, endorsed by, or officially connected to the University of Mumbai. Course names and university references describe the students and syllabus the material relates to.

   Contents

   Module I Introduction to Auditing

   1. What Auditing Is 1
   2. Financial Statements and the Users of the Information 4
   3. The Objectives of Auditing 7
   4. The Inherent Limitations of an Audit 10
   5. Accounting Compared with Auditing 12
   6. Investigation Compared with Auditing 14
   7. Errors: Definitions, Reasons and Types 16
   8. Frauds: Definitions, Circumstances and Types 19
   9. The Risk of Fraud and Error in an Audit 22
   10. The Auditor's Duties and Responsibilities in the Case of Fraud 25
   11. The Principles of Audit 28
   12. Materiality 31
   13. True and Fair View 33
   14. Types of Audit by When the Work Is Done 36
   15. Types of Audit by Scope and by Compulsion 39
   16. Practice Questions: Introduction to Auditing 42

   Module II Audit Planning, Procedures and Documentation

   1. Audit Planning: Meaning and Objectives 46
   2. The Factors to Be Considered in Planning 48

   Contents continued

   Module II continued Audit Planning, Procedures and Documentation

   1. The Sources of Obtaining Information 51
   2. Discussion with the Client 54
   3. The Overall Audit Approach 56
   4. The Audit Programme: Meaning and Factors 58
   5. Advantages and Disadvantages of an Audit Programme 61
   6. Methods of Work, and Instructions Before Commencing 63
   7. Audit Working Papers: Meaning and Importance 65
   8. The Form, Contents and Features of Working Papers 67
   9. The Permanent and the Temporary Audit File 69
   10. Ownership, Custody, and Access by Other Parties 72
   11. The Auditor's Lien on Working Papers and on the Client's Books 74
   12. Practice Questions: Planning, Programme and Working Papers 77

   Module Appendix Appendix: the Companies Act 2013 on audit and auditors

   1. The Statutory Frame: Chapter X of the Companies Act 2013 82
   2. Appointment, Removal and Resignation of the Auditor 84
   3. Who May Be an Auditor, and What He Is Paid 87
   4. The Powers and Duties of the Auditor 90
   5. Services the Auditor May Not Render, Signing, Attendance and Punishment 93

   Contents continued

   Module Appendix continued Appendix: the Companies Act 2013 on audit and auditors

   1. The Cost Audit 96

   Page 1 onwards

   98 pages in this book. The cover and the contents are above. Everything from page one is in the pass.

   Notes

   2026 Edition, as per the latest syllabus. 98 pages.

   Every chapter in the notes: 36 chapters across 3 modules

   Module I Introduction to Auditing 16 chapters

   1. 1 What Auditing Is pages 1–3
   2. 2 Financial Statements and the Users of the Information pages 4–6
   3. 3 The Objectives of Auditing pages 7–9
   4. 4 The Inherent Limitations of an Audit pages 10–11
   5. 5 Accounting Compared with Auditing pages 12–13
   6. 6 Investigation Compared with Auditing pages 14–15
   7. 7 Errors: Definitions, Reasons and Types pages 16–18
   8. 8 Frauds: Definitions, Circumstances and Types pages 19–21
   9. 9 The Risk of Fraud and Error in an Audit pages 22–24
   10. 10 The Auditor's Duties and Responsibilities in the Case of Fraud pages 25–27
   11. 11 The Principles of Audit pages 28–30
   12. 12 Materiality pages 31–32
   13. 13 True and Fair View pages 33–35
   14. 14 Types of Audit by When the Work Is Done pages 36–38
   15. 15 Types of Audit by Scope and by Compulsion pages 39–41
   16. 16 Practice Questions: Introduction to Auditing pages 42–45

   Module II Audit Planning, Procedures and Documentation 14 chapters

   1. 17 Audit Planning: Meaning and Objectives pages 46–47
   2. 18 The Factors to Be Considered in Planning pages 48–50
   3. 19 The Sources of Obtaining Information pages 51–53
   4. 20 Discussion with the Client pages 54–55
   5. 21 The Overall Audit Approach pages 56–57
   6. 22 The Audit Programme: Meaning and Factors pages 58–60
   7. 23 Advantages and Disadvantages of an Audit Programme pages 61–62
   8. 24 Methods of Work, and Instructions Before Commencing pages 63–64
   9. 25 Audit Working Papers: Meaning and Importance pages 65–66
   10. 26 The Form, Contents and Features of Working Papers pages 67–68
   11. 27 The Permanent and the Temporary Audit File pages 69–71
   12. 28 Ownership, Custody, and Access by Other Parties pages 72–73
   13. 29 The Auditor's Lien on Working Papers and on the Client's Books pages 74–76
   14. 30 Practice Questions: Planning, Programme and Working Papers pages 77–81

   Module Appendix Appendix: the Companies Act 2013 on audit and auditors 6 chapters

   1. 31 The Statutory Frame: Chapter X of the Companies Act 2013 pages 82–83
   2. 32 Appointment, Removal and Resignation of the Auditor pages 84–86
   3. 33 Who May Be an Auditor, and What He Is Paid pages 87–89
   4. 34 The Powers and Duties of the Auditor pages 90–92
   5. 35 Services the Auditor May Not Render, Signing, Attendance and Punishment pages 93–95
   6. 36 The Cost Audit pages 96–98

Questions