ICAN CA Foundation cheat sheet

Accounting equation: Assets = Liabilities + Capital; every transaction preserves this equality, so debits always equal credits in amount.

Golden rules: debit the receiver/credit the giver (personal accounts); debit what comes in/credit what goes out (real accounts); debit expenses and losses/credit incomes and gains (nominal accounts).

Depreciation straight line = (Cost − Residual value) ÷ Useful life; written down value = fixed % applied to the opening book value each year.

Bank reconciliation: balance per cash book + credits made by bank not yet in cash book − debits made by bank not yet in cash book = balance per pass book (adjust for errors separately).

Suspense account is opened only for the difference in the trial balance; one-sided errors affect it, two-sided errors do not.

Errors of principle (e.g., capital expenditure posted to revenue) do not disturb the trial balance but do distort profit.

Bill of exchange: on dishonour, the drawer debits the drawee with the bill amount plus noting charges; noting charges are recovered from the acceptor.

Consignment: consignor credits the consignee with sale proceeds; unsold stock is valued at cost plus proportionate consignor expenses, never at invoice price plus loading.

Simple interest = P × r × t; compound interest = P(1 + r)^n − P, with r and n expressed in the same period.

Annuity present value = A × [1 − (1 + i)^(−n)] ÷ i; perpetuity value = A ÷ i.

Mean of grouped data = Σfx ÷ Σf; median class is where cumulative frequency first reaches N÷2; mode = L + [(f1 − f0) ÷ (2f1 − f0 − f2)] × h.

Coefficient of variation = (standard deviation ÷ mean) × 100; the series with the smaller CV is more consistent.

Correlation coefficient r lies between −1 and +1; r = 0 means no linear relationship, not necessarily independence.

Regression: bxy = r × (σx ÷ σy); the two regression lines intersect at the mean point (x̄, ȳ).

Permutation nPr = n! ÷ (n − r)!; combination nCr = n! ÷ [r!(n − r)!]; nC0 = nCn = 1.

Probability: P(A ∪ B) = P(A) + P(B) − P(A ∩ B); for independent events P(A ∩ B) = P(A) × P(B).

Law of demand: price and quantity demanded move inversely, other things equal; a movement along the curve is caused by price, a shift by income, tastes, or prices of related goods.

Price elasticity = (% change in quantity) ÷ (% change in price); demand is elastic when |e| > 1, unitary when |e| = 1, inelastic when |e| < 1.

Law of variable proportions: total product rises at an increasing rate, then at a diminishing rate, peaks, and falls; marginal product cuts average product at its maximum.

Perfect competition: firm is a price taker, P = MR = AR, and equilibrium is where MC = MR with MC rising.

Monopoly equilibrium: MR = MC, with MR below AR because the firm faces a downward-sloping demand curve.

Break-even quantity = Fixed cost ÷ (Selling price − Variable cost per unit); margin of safety = Actual sales − Break-even sales.

Functions of management (Fayol): planning, organising, commanding, coordinating, controlling; POSDCORB is a related administrative mnemonic.

Span of control: a narrow span gives tall structures with more levels; a wide span gives flat structures with fewer levels.

Indian Contract Act, 1872: a valid contract needs offer, acceptance, lawful consideration, capacity, free consent, lawful object, and must not be expressly void.

Section 25: an agreement without consideration is void, except natural love and affection between near relatives, past voluntary services, time-barred debt, and agency.

A minor's agreement is void ab initio; a minor can still be a beneficiary and can enforce a contract for necessaries.

Voidable contract: consent caused by coercion, undue influence, fraud, misrepresentation, or mistake - the aggrieved party may rescind.

Sale of Goods Act, 1930: a condition is essential to the main purpose of the contract; a warranty is collateral, and breach of warranty gives damages only.

Negotiable Instruments Act, 1881: a cheque is a bill of exchange drawn on a banker payable on demand; crossing restricts payment to a bank.

Partnership Act, 1932: a partner's implied authority does not extend to opening a bank account in the firm's name, compromising claims, or admitting liability in a suit.

Ethics: conflict of interest exists when a personal interest could improperly influence professional judgement; disclosure and recusal are the standard responses.