The Commerce and accounting paper consists of two papers, paper 1 and paper 2. The subject carries a total of 500 marks, with each paper allotted for 250 marks.
UPSC Commerce & Accountancy Optional Paper – I
Accounting and Finance
Accounting, Taxation & Auditing
1. Financial Accounting:
Accounting as a Financial Information System; Impact of Behavioral Sciences. Accounting Standards e.g., Accounting for Depreciation, Inventories, Research and Development Costs, Long-term Construction Contracts, Revenue Recognition, Fixed Assets, Contingencies, Foreign Exchange Transactions, Investments and Government Grants, Cash Flow Statement, Earnings per Share.
Accounting for Share Capital Transactions including Bonus Shares, Right Shares, Employees Stock Option and Buy- Back of Securities.
Preparation and Presentation of Company Final Accounts. Amalgamation, Absorption and Reconstruction of Companies.
2. Cost Accounting:
Nature and Functions of Cost Accounting. Installation of Cost Accounting System. Cost Concepts related to Income Measurement, Profit Planning, Cost Control and Decision Making.
Methods of Costing: Job Costing, Process Costing, Activity Based Costing. Volume – cost – Profit Relationship as a tool of Profit Planning.
Incremental Analysis/ Differential Costing as a Tool of Pricing Decisions, Product Decisions, Make or Buy Decisions, Shut-Down Decisions etc.
Techniques of Cost Control and Cost Reduction: Budgeting as a Tool of Planning and Control. Standard Costing and Variance Analysis.
Responsibility Accounting and Divisional Performance Measurement.
Income Tax: Definitions; Basis of Charge; Incomes which do not form Part of Total Income. Simple problems of Computation of Income (of Individuals only) under Various Heads, i.e., Salaries, Income from House Property, Profits and Gains from Business or Profession, Capital Gains, Income from other sources, Income of other Persons included in Assessee’s Total Income.
Set – Off and Carry Forward of Loss.
Deductions from Gross Total Income. Salient Features/Provisions Related to VAT and Services Tax.
Company Audit: Audit related to Divisible Profits, Dividends, Special investigations, Tax audit. Audit of Banking, Insurance, Non-Profit Organizations and Charitable Societies/Trusts/Organizations.
Financial Management, Financial Institutions and Markets 1. Financial Management:
Finance Function: Nature, Scope and Objectives of Financial Management: Risk and Return Relationship. Tools of Financial Analysis: Ratio Analysis, Funds-Flow and Cash-Flow Statement.
Capital Budgeting Decisions: Process, Procedures and Appraisal Methods. Risk and Uncertainty Analysis and Methods.
Cost of capital: Concept, Computation of Specific Costs and Weighted Average Cost of Capital. CAPM as a Tool of Determining Cost of Equity Capital.
Financing Decisions: Theories of Capital Structure – Net Income (NI) Approach, Net Operating Income (NOI) Approach, MM Approach and Traditional Approach. Designing of Capital structure: Types of Leverages (Operating, Financial and Combined), EBIT- EPS Analysis, and other Factors.
Dividend Decisions and Valuation of Firm: Walter’s Model, MM Thesis, Gordan’s Model Lintner’s Model. Factors Affecting Dividend Policy.
Working Capital Management: Planning of Working Capital. Determinants of Working Capital. Components of Working Capital Cash, Inventory and Receivables.
Corporate Restructuring with focus on Mergers and Acquisitions (Financial aspects only).
2. Financial Markets and Institutions:
Indian Financial System: An Overview Money Markets: Participants, Structure and Instruments. Commercial Banks. Reforms in Banking sector. Monetary and Credit Policy of RBI. RBI as a Regulator.
Capital Market: Primary and Secondary Market. Financial Market Instruments and Innovative Debt Instruments; SEBI as a Regulator.
Financial Services: Mutual Funds, Venture Capital, Credit Rating Agencies, Insurance and IRDA.
Aspirants planning to take UPSC Exam 2020 may refer to the linked article.
UPSC Commerce & Accountancy Optional Paper – II
Organisation Theory and Behaviour, Human Resource Management and Industrial Relations Organisation Theory and Behaviour
1. Organisation Theory:
Nature and Concept of Organisation; External Environment of Organizations -Technological, Social, Political, Economical and Legal; Organizational Goals – Primary and Secondary goals, Single and Multiple Goals; Management by Objectives.
Evolution of Organisation Theory: Classical, Neo-classical and Systems Approach.
Modern Concepts of Organisation Theory: Organisational Design, Organisational Structure and Organisational Culture.
Organisational Design–Basic Challenges; Differentiation and Integration Process; Centralization and Decentralization Process; Standardization / Formalization and Mutual Adjustment. Coordinating Formal and Informal Organizations. Mechanistic and Organic Structures.
Designing Organizational structures–Authority and Control; Line and Staff Functions, Specialization and Coordination.
Types of Organization Structure –Functional. Matrix Structure, Project Structure. Nature and Basis of Power, Sources of Power, Power Structure and Politics. Impact of Information Technology on Organizational Design and Structure.
Managing Organizational Culture.
2. Organisation Behaviour:
Meaning and Concept; Individual in organizations: Personality, Theories, and Determinants; Perception – Meaning and Process.
Motivation: Concepts, Theories and Applications. Leadership-Theories and Styles. Quality of Work Life (QWL): Meaning and its impact on Performance, Ways of its Enhancement. Quality Circles (QC) – Meaning and their Importance. Management of Conflicts in Organizations. Transactional Analysis, Organizational Effectiveness, Management of Change.
Human Resources Management and Industrial Relations 1. Human Resources Management (HRM) :
Meaning, Nature and Scope of HRM, Human Resource Planning, Job Analysis, Job Description, Job Specification, Recruitment Process, Selection Process, Orientation and Placement, Training and Development Process, Performance Appraisal and 360° Feed Back, Salary and Wage Administration, Job Evaluation, Employee Welfare, Promotions, Transfers and Separations.
2. Industrial Relations (IR):
Meaning, Nature, Importance and Scope of IR, Formation of Trade Unions, Trade Union Legislation, Trade Union Movement in India. Recognition of Trade Unions, Problems of Trade Unions in India. Impact of Liberalization on Trade Union Movement.
Nature of Industrial Disputes : Strikes and Lockouts , Causes of Disputes, Prevention and Settlement of Disputes.
Worker’s Participation in Management: Philosophy, Rationale, Present Day Status and Future Prospects. Adjudication and Collective Bargaining.
Industrial Relations in Public Enterprises, Absenteeism and Labour Turnover in Indian Industries and their Causes and Remedies.
ILO and its Functions.
Also, Check Other Optional Subject’s Syllabus
Preparation tips for Commerce Optional in UPSC Mains
If you look at the syllabus that the UPSC CSE has put up and that of most college degrees, it’s surprising to note that most of the topics are similar. True to that point, if you’ve mastered majority of the topics from your graduation in commerce, then there’s no looking back for you. You can simply go ahead and choose commerce as the subject in the mains exam.
Having said that, you should also realise that commerce as a subject is a very scoring asset, provided you are thorough with the basic fundamentals of the language. Most of the portions of the subject are heavily focussed on being static and there’s not too much of changes from time to time. If you’re a CA by profession, then there’s extra good news for you as you’ve mastered most of the topics of study from the syllabus.
You can expect minimum of 150 marks allotted for numerical problems, so if solving maths questions is your forte, then you’re at a higher advantage there. One area where you need to put more focus on is the theoretical or purely subjective type of questions.
Here, the examiners expect you to be unique in your approach and do not want you to repeat the same data or patterns presented in your study materials. Again you have to remember that competition for the subject is stiff and you have to really strive hard to get through new questions.
Examiners always try to set different levels of competent questions from the context and make sure you are forced to think out of the box. So, the key here is to settle with good understanding of concepts and then think of applying them at different places according to suitability criteria.
Though the subject appears dry at the outset, kindly note that it is lengthy at the same time. Even when answering the paper, most aspirants find it to be too consuming and lack of time may cause you to leave the paper unfinished. One major problem with commerce is the broad range of topics on offer to study.
Different books offer different key concepts and you’ll find them all important at the same time. Chances are, you may also find one topic explained in different ways, presenting different points, applicable in different contexts. The solution for this big problem is integration of all the important points for consideration.
Maintain good notes to help you with the same. Under each significant topic, write down the entire key points that you found important from different sources. This way, you have a clean and easy-to-refer repository of the topics plus all the important points under each one of them.
Though you may find a heap of points under each topic, you have to select them according to their usability and adaptability to the context. For example, you may have studied a certain topic under the subject economics that may have appeared in your question paper.
The same topic may also find a mention under the subject statistics too. So when writing your answer you have to see the context in which it is best written. Your decision of choosing the right subjective elements as per the context of the question will present the best answer possible.
The above discussed area is one place where commerce can be one tricky subject. You can either score good marks or lose marks writing wrong points to explain a topic in a mismatched context. To train yourself well in this regard, practise as many mock tests as possible. Don’t forget to cross check your answers with the mock test series answers.
Also try to refer previous year question papers. See the difference in the type of questions. See how a certain topic is asked in different contexts. Identify the variety in questions asked and solve them accordingly.
Paper 1 contains practical questions in the paper. You have to present answers in the most straight forward way possible. Do not beat around the bush. That’s of no use in this paper. Write what is required and asked. Practise good answering techniques. Presentation of answers is important.
Wherever you can quote a real time scenario to support an answer, do it. Theory being the major part of paper 1 certainly requires lot of patience and practise while preparing and answering. If you brushed through previous year question papers, you’ll find questions related to current affairs being asked nowadays.
That’s not a rarity anymore. That’s one of the areas where more importance is being allotted to. This is to avoid stagnant formation of the subject and make it more flowing with the times. Keep abreast with the latest developments in trade and commerce areas, business news and economic affairs.
International trade and commerce plus international business news should also be prioritised on your list without fail. IF you’ve mastered your CA syllabus back during your studies, then paper 1 should appear a breeze and not you many not find much difficulty with it.
Paper 2 appears slightly different from paper 1. Here again, you have important context and topical definitions being asked and you have to be careful in your presentation. Adding to that, you may also need extra efforts in presenting views from expert thinkers or economists’ views to be presented in your answers.
Try to connect and interlink definitions of the same topic from different related areas. Identify best corporate practices and make a note of them. Start with basic reading, develop clarity amongst different topics, and go to advanced level of preparation with suggestive extra tools to answers.
This must include examples, anecdotes, facts, diagrams, relevant and suitable quotations, etc. Fabricating all these elements and knitting them together into a good answer is in your hands. For this purpose, you need to put together a lot of helpful sources from where you can get information and finally place them in appropriate places and design your answer beautifully.
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