NCERT Solutions Class 11 Accountancy Chapter 2 Theory Base Of Accounting – Here are all the NCERT solutions for Class 11 Accountancy Chapter 2. This solution contains questions, answers, images, explanations of the complete chapter 2 titled Theory Base Of Accounting of Accountancy taught in Class 11. If you are a student of Class 11 who is using NCERT Textbook to study Accountancy, then you must come across chapter 2 Theory Base Of Accounting. After you have studied lesson, you must be looking for answers of its questions. Here you can get complete NCERT Solutions for Class 11 Accountancy Chapter 2 Theory Base Of Accounting in one place.
NCERT Solutions Class 11 Accountancy Chapter 2 Theory Base Of Accounting
Here on AglaSem Schools, you can access to NCERT Book Solutions in free pdf for Accountancy for Class 11 so that you can refer them as and when required. The NCERT Solutions to the questions after every unit of NCERT textbooks aimed at helping students solving difficult questions.
For a better understanding of this chapter, you should also see summary of Chapter 2 Theory Base Of Accounting , Accountancy, Class 11.
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Theory Base Of Accounting
NCERT Solutions Class 11 Accountancy chapter 2 Theory Base Of Accounting
Class 11, Accountancy chapter 2, Theory Base Of Accounting solutions are given below in PDF format. You can view them online or download PDF file for future use.
Theory Base Of Accounting
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Question & Answer
Q.1: Why is it necessary for accountants to assume that business entity will remain a going concern?
Ans : It is necessary for accountants to assume that business entity will remain a going concern because
- It helps in recording fixed assets at their original cost and depreciation is charged on these assets without reference to their market value. For example: if a machinery is purchased which would last for next 5 years, the cost of this machinery will be spread over the next 5 years for calculating the net profit or loss of each year. The full cost machinery would not be treated as an expense in the year of its purchase itself.
- It is also because of this concept that outside parties enter into long-term contracts with the enterprise, give loans and purchase the debentures and shares of enterprise.
Q.2: When should revenue be recognised? Are there exceptions to the general rule?
Ans : Revenue is recognised only when it is realised i.e., when a legal right to receive it arises. Thus credit sales are treated as revenue on the day sales are made and not when cash is received from the buyers. Similarly, rent for the month of March even if received in April month will be treated as revenue of the financial year ending 31st March. There are two exceptions to this rule:
- In case of sales on installment basis, only the amount collected in installments is treated as revenue.
- In case of long-term construction contracts, proportionate amount of revenue, based on part of the contracted completed by the end of the financial year is treated as realised.
Q.3: What is the basic accounting equation?
Ans : Assets = Liabilities + Capital
Q.4: The realisation concept determines when goods sent on credit to customers are to be included in the sales figure for the purpose of computing the profit or loss for the accounting period. Which of the following tends to be used in practice to determine when to include a transaction in the sales figure for the period. When the goods have been: a. dispatched b. invoiced c. delivered d. paid for Give reasons for your answer.
Ans : According to the realisation concept, revenue is recognised when a legal right to receive it arises. Therefore, when the goods are invoiced, it is treated as the transfer of ownership of goods from the seller to the buyer and hence the revenue is recognised.
Q.5: Complete the following worksheet: (i) If a firm believes that some of its debtors may ‘default’, it should act on this by making sure that all possible losses are recorded in the books. This is an example of the ___________ concept. (ii) The fact that a business is separate and distinguishable from its owner is best exemplified by the ___________ concept. (iii) Everything a firm owns, it also owns out to somebody. This co-incidence is explained by the ___________ concept. (iv) The ___________ concept states that if straight line method of depreciation is used in one year, then it should also be used in the next year. (v) A firm may hold stock which is heavily in demand. Consequently, the market value of this stock may be increased. Normal accounting procedure is to ignore this because of the ___________. (vi) If a firm receives an order for goods, it would not be included in the sales figure owing to the ___________. (vii) The management of a firm is remarkably incompetent, but the firms accountants can not take this into account while preparing book of accounts because of ___________ concept.
Ans : (i) conservatism (ii) business entity concept (iii) dual aspect (iv) dual aspect (v) dual aspect (vi) revenue recognition (vii) money measurement
NCERT / CBSE Book for Class 11 Accountancy
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