{"id":22188,"date":"2021-04-19T10:40:57","date_gmt":"2021-04-19T05:10:57","guid":{"rendered":"https:\/\/ncertsolutions.guru\/?p=22188"},"modified":"2021-04-19T10:44:28","modified_gmt":"2021-04-19T05:14:28","slug":"ncert-solutions-for-class-11-accountancy-chapter-2","status":"publish","type":"post","link":"https:\/\/ncertsolutions.guru\/ncert-solutions-for-class-11-accountancy-chapter-2\/","title":{"rendered":"NCERT Solutions for Class 11 Accountancy Chapter 2 Theory Base of Accounting"},"content":{"rendered":"

Detailed, Step-by-Step NCERT Solutions for 11 Accountancy<\/a> Chapter 2 Theory Base of Accounting Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.<\/p>\n

Theory Base of Accounting NCERT Solutions for Class 11 Accountancy Chapter 2<\/h2>\n

Theory Base of Accounting Questions and Answers <\/span>Class 11 Accountancy Chapter 2<\/h3>\n

Test Your Understanding – I
\n<\/span>Choose the Correct Answer.
\n<\/span>
\nQuestion 1.
\nDuring the lifetime of an entity accounting produce financial statements in accordance with which basic accounting concept:
\n(a) Conservation
\n(b) Matching
\n(c) Accounting period
\n(d) None of the above
\nAnswer:
\n(c) Accounting period<\/p>\n

\"NCERT<\/p>\n

Question 2.
\nWhen information about two difference enterprises have been prepared presented in a similar manner the information exhibits the characteristic of:
\n(a) Verifiability
\n(b) Relevance
\n(c) Reliability
\n(d) None of the above
\nAnswer:
\n(d) None of the above<\/p>\n

Question 3.
\nA concept that a business enterprise will not be sold or liquidated in the near future is known as :
\n(a) Going concern
\n(b) Economic entity
\n(c) Monetary unit
\n(d) None of the above
\nAnswer:
\n(a) Going concern<\/p>\n

Question 4.
\nThe primary qualities that make accounting information useful for decision-making are :
\n(a) Relevance and freedom from bias
\n(b) Reliability and comparability
\n(c) Comparability and consistency
\n(d) None of the above
\nAnswer:
\n(b) Reliability and comparability.<\/p>\n

Test Your Understanding – II
\n<\/span>Fill in the correct word :
\n1. Recognition of expenses in the same period as associated revenues is called ……….. concept.
\n2. The accounting concept that refers to the tendency of accountants to resolve uncertainty and doubt in favour of understating assets and revenues and overstating liabilities and expenses is known as ………………
\n3. Revenue is generally recognised at the point of sale denotes the concept of ………………
\n4. The ……………… concept requires that the same accounting method should be used from one accounting period to the next.
\n5. The ………………. concept requires that accounting transaction
\nAnswer:
\n1. Matching
\n2. Conservatism
\n3. Revenue Realisation
\n4. Consistency
\n5. Objectivity.<\/p>\n

\"NCERT<\/p>\n

Short Answer Type Questions<\/span><\/p>\n

Question 1.
\nWhy is it necessary for accountants to assume that business entity will remains a going concern.
\nAnswer:
\nThe Going Concern Concept – The Going Concern Concept holds that a business shall continue for an indefinites period and there is no intention to close the business or reduce its size significantly. It is because of this concept that distinction is made between expenditure that will render benefit for a long period and that whose benefit will be exhausted quickly, say, within the year. Of course, if it is certain that the business will exist only for a limited time, the accounting recordwill keep the expected life in view.<\/p>\n

On the basis of this assumption; fixed assets are recorded at their original cost and are depreciated in a systematic manner without reference to their market value. An example would be purchase of machinery which would last, say, for the next 10 years. The cost of machinery would be spread on a suitable basis over the next year for ascertaining the profit or los? of each year.<\/p>\n

The full cost of the machine would not be treated as an expense in the year itself. In brief, an enterprise is said to be a going concern when there is neither the intention nor the necessity to wind up its affairs or curtail substantially the scale of its operation. In other words, it would continue to operate at its present scale in the foreseeable future.<\/p>\n

Question 2.
\nWhen should revenue be recognised. Are there exceptions to the general rule.
\nAnswer:
\nMeaning of Revenue- Revenue is the gross inflow of cash, receivables or other considerations arising in the course of the ordinary activities of an enterprise from the sale of goods, from the rendering of services, and from the use by other of enterprise resources yielding interest, royalties and dividends.<\/p>\n

Revenue is measured by the charges made to customers or clients for goods supplied and services rendered to them and by the charges and rewards arising from the use of resources by them. In an agency relationship, the revenue is the amount of commission and not the gross inflow of cash, receivables or other consideration.<\/p>\n

Meaning of revenue recognition – Revenue recognition means identifying the revenues for a particular accounting period. Revenue recognition is mainly concerned with the timing of recognition of revenue in the statement of profit and loss of an enterprise. The amount of revenue arising on a transaction is usually determined by agreement between the parties involved in the transaction. When uncertainties exist regarding the determination of the amount, or its associated costs, these uncertainty may influence the timing of revenue recognition.<\/p>\n

Specific Requirements of AS-9 issued by ICAI – The specific requirements of AS-9 issued by the Institute of Chartered<\/p>\n

\"NCERT<\/p>\n

Accountants of India are as follows :
\n1. Regarding recognition of revenue from sales – Revenue from sale should be recognised when the following requirements as to performance are satisfied provided that at the time of performance it is not unreasonable to expect ultimate collection.<\/p>\n

In a transaction involving the sale of goods, performance should be regarded as being achieved when the following conditions have been fulfilled :<\/p>\n