Accountancy formula sheet

56 formulas from Class 11, Class 12 and B.Com accountancy on one page, grouped by topic. Each group links to the page where the formula is worked out on real figures.

How to use a formula sheet

A formula is the last line of an idea, not a substitute for it. Learn each one from its worked example first, so that you know what every term means and where its figure comes from; then use this page for quick revision in the days before an examination. A good test: cover the right-hand column, and write each formula from memory. Mark the ones you miss and repeat only those the next day.

Three cautions. First, names differ between books: "revenue from operations" and "net sales" are the same thing in ratio questions, as are "trade receivables" and "debtors plus bills receivable". Second, when a question does not give opening figures, use the closing figure in place of an average and say so in a note. Third, always state the unit of your answer: a ratio as 2 : 1, a turnover as "times", a profitability ratio as a percentage.

Basics

Item	Formula
Accounting equation	Assets = Liabilities + Capital
Closing capital	Opening capital + Additional capital + Profit − Drawings
Cost of goods sold	Opening stock + Net purchases + Direct expenses − Closing stock
Gross profit	Net sales − Cost of goods sold
Net profit	Gross profit + Other incomes − Indirect expenses
Working capital	Current assets − Current liabilities

See the worked example

Depreciation

Item	Formula
Straight line, yearly amount	(Cost − Scrap value) ÷ Useful life
Straight line, rate	Yearly depreciation ÷ Cost × 100
Written down value, yearly amount	Book value at start of year × Rate ÷ 100
Profit or loss on sale	Sale price − Book value on the date of sale

See the worked example

Bills of exchange

Item	Formula
Due date	Date of bill + Term + 3 days of grace
Discount on a bill	Amount of bill × Rate ÷ 100 × Unexpired months ÷ 12

See the worked example

Incomplete records

Item	Formula
Profit (statement of affairs method)	Closing capital + Drawings − Additional capital − Opening capital
Credit sales	Cash received from debtors + Discount allowed + Bad debts + Sales return + Closing debtors − Opening debtors
Credit purchases	Cash paid to creditors + Discount received + Purchases return + Closing creditors − Opening creditors

See the worked example

Partnership

Item	Formula
Interest on capital	Capital × Rate ÷ 100 × Months ÷ 12
Interest on drawings, fixed monthly amounts	Total drawings × Rate ÷ 100 × Average period ÷ 12 (6.5, 6 or 5.5 months)
Sacrificing share	Old share − New share
Gaining share	New share − Old share
Deceased partner's profit, time basis	Previous year's (or average) profit × Months to death ÷ 12 × His share

See the worked example

Goodwill

Item	Formula
Average profit method	Average profit × Years' purchase
Normal profit	Capital employed × Normal rate of return ÷ 100
Super profit	Average profit − Normal profit
Super profit method	Super profit × Years' purchase
Capitalisation of average profit	(Average profit × 100 ÷ Normal rate) − Capital employed
Capitalisation of super profit	Super profit × 100 ÷ Normal rate

See the worked example

Not-for-profit organisations

Item	Formula
Subscription income	Received this year − For previous year − Advance for next year + Outstanding for this year + Received last year for this year
Consumables used	Opening stock + Purchases − Closing stock

See the worked example

Liquidity ratios

Item	Formula
Current ratio	Current assets ÷ Current liabilities
Quick ratio	(Current assets − Inventories − Prepaid expenses) ÷ Current liabilities

See the worked example

Solvency ratios

Item	Formula
Debt to equity ratio	Long-term debt ÷ Shareholders' funds
Total assets to debt ratio	Total assets ÷ Long-term debt
Proprietary ratio	Shareholders' funds ÷ Total assets
Interest coverage ratio	Profit before interest and tax ÷ Interest on long-term debt

See the worked example

Activity ratios

Item	Formula
Inventory turnover ratio	Cost of revenue from operations ÷ Average inventory
Trade receivables turnover ratio	Net credit revenue from operations ÷ Average trade receivables
Average collection period	365 (or 12 months) ÷ Trade receivables turnover ratio
Trade payables turnover ratio	Net credit purchases ÷ Average trade payables
Working capital turnover ratio	Revenue from operations ÷ Working capital

See the worked example

Profitability ratios

Item	Formula
Gross profit ratio	Gross profit ÷ Revenue from operations × 100
Operating ratio	(Cost of revenue from operations + Operating expenses) ÷ Revenue from operations × 100
Operating profit ratio	Operating profit ÷ Revenue from operations × 100
Net profit ratio	Net profit after tax ÷ Revenue from operations × 100
Return on investment	Profit before interest and tax ÷ Capital employed × 100

See the worked example

Comparative and common-size statements

Item	Formula
Absolute change	Current year figure − Previous year figure
Percentage change	Absolute change ÷ Previous year figure × 100
Common-size percentage	Item ÷ Revenue from operations (or balance sheet total) × 100

See the worked example

Cash flow statement

Item	Formula
Net profit before tax	Increase in surplus + Dividend paid + Transfer to reserves + Provision for tax made
Fixed assets purchased	Closing balance + Depreciation + Book value of assets sold − Opening balance
Closing cash	Opening cash and cash equivalents + Net cash from operating, investing and financing activities

See the worked example

Cost sheet and hire purchase

Item	Formula
Prime cost	Direct materials + Direct labour + Direct expenses
Works cost	Prime cost + Factory overheads + Opening work in progress − Closing work in progress
Cost of production	Works cost + Office and administration overheads
Cost of sales	Cost of goods sold + Selling and distribution overheads
Profit on sales from profit on cost	A profit of 1/n on cost = 1/(n + 1) on sales
Interest under hire purchase	Hire purchase price − Cash price

See the worked example

Printing

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For study, and independent. These pages explain accountancy as it is generally taught in Class 11, Class 12 and B.Com courses in India, in our own words with our own examples, reviewed in November 2026. This site is not connected with NCERT, CBSE, ICAI or any board or university. Syllabuses change: follow your own board's or university's current syllabus and textbook. Nothing here is professional accounting, tax or legal advice.