Accounting — Formula Sheet
P1 · CA Foundation · Free and exam-ready
Partnership Accounts
Full cheatsheet →Sacrificing ratio (new partner)
Sacrificing ratio = Old ratio − New ratio
Used when goodwill premium is brought in on admission.
Gaining ratio (retirement)
Gaining ratio = New ratio − Old ratio
Interest on capital
Interest on capital = Capital × Rate × (Months in firm ÷ 12)
Interest on drawings (product method)
Interest on drawings = ΣProducts × Rate × (1 ÷ 12)
Product of each drawing = amount × months till year-end.
Goodwill (Simple average profit method)
Goodwill = Average profit × Number of years' purchase
Goodwill (Super profit method)
Super profit = Actual avg profit − (Normal rate × Capital employed); Goodwill = Super profit × Years of purchase
Goodwill (Capitalisation method)
Goodwill = Capitalised value of average profits − Net tangible assets
Depreciation & Amortisation
Full cheatsheet →SLM — annual depreciation
Dep = (Cost − Scrap) ÷ Useful life
WDV — annual depreciation
Dep (yr n) = Opening WDV × Rate%
Rate under WDV for given life
R = 1 − (Scrap/Cost)^(1/n) — gives the % that amortises to scrap in n years
Rarely asked in Foundation but useful to sanity-check rates.
Book value after n years (SLM)
BV = Cost − (Annual dep × n)
Company Accounts
Full cheatsheet →Reissue minimum price
Reissue price + Forfeited Shares A/c amount ≥ Face value
If reissue is at less than face value, forfeited amount must cover the shortfall.
Capital reserve on reissue
Capital Reserve = Forfeited Shares A/c balance − discount allowed on reissue
Discount on debentures — annual write-off (SLM)
Annual write-off = Total discount / Years to redemption