Please refer to Theory Base of Accounting Class 11 Accountancy Exam Questions provided below. These questions and answers for Class 11 Accountancy have been designed based on the past trend of questions and important topics in your class 11 Accountancy books. You should go through all Class 11 Accountancy Important Questions provided by our teachers which will help you to get more marks in upcoming exams.
Class 11 Accountancy Exam Questions Theory Base of Accounting
Class 11 Accountancy er Science students should read and understand the important questions and answers provided below for Theory Base of Accounting which will help them to understand all important and difficult topics.
Very Short Question Answer:
Question: While preparing the annual accounts, if the company values the machinery at Rs. 8,00,000 which principle is being violated by Ananya Ltd.?
Answer: Historical cost concept.
Question: Accounting to which concept, all expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income?
Answer: Matching concept.
Question: Consider the following data pertaining to Ananya Ltd:
Question: Under which concept, Owner of business is treated as creditor to the extent of his capital?
Answer: Business entity concept.
Question: A business purchased goods for Rs. 2,00,000 and sold 75% of such goods during accounting year ended 31st March, 2016. The market value of remaining goods was Rs. 48,000. He valued closing stock at cost. Name the concept being violated in this situation.
Answer: Prudence or conservatism.
Question: According to which concept, each accounting transaction has at least two effects?
Answer: Dual aspect concept.
Question: According to which convention, depreciation is being charged as per one particular method year after year?
Question: Financial statements of an entity are prepared at regular intervals in accordance with which accounting concept?
Answer: Accounting period concept.
Question: Name the concept under which the skills or quality of the management team is not disclosed in the financial statements.
Answer: Money measurement concept.
Question: Which accounting convention takes into account all prospective losses but leaves all prospective Profits?
Question: Name the concept under which assets are recorded in books at the cost incurred for acquisition of such assets.
Answer: Historical cost concept
Question: Under which basis of accounting only cash transactions are recorded in the books?
Answer: Cash basis of accounting.
Question: An organisation prepares its accounts under the accrual basis. Salaries for the month of March 2018, Rs 12,000 to one employee was not paid. The owner did not want to record it in the books of accounts on the ground that the amount was not paid. The organisation closes its accounts on 31st march every year. Is he correct?
Answer: An organisation prepares its accounts under the accrual basis. Salaries for the month of March 2018, Rs 12,000 to one employee was not paid. The owner did not want to record it in the books of accounts on the ground that the amount was not paid. The organisation closes its accounts on 31st march every year. Is he correct?
• He is incorrect as he is not following the Accrual concept.
• According to Accrual concept, expense should be accounted at the time when it is incurred and not when it is paid. Salaries for March have become due on 31st March of that accounting year itself and therefore should be accounted in the books of account for the year ended 31st March 2018.
Question: ‘ Do not anticipate a profit but provide for all possible losses’-State and explain the principle behind.
Answer: ‘ Do not anticipate a profit but provide for all possible losses’-State and explain the principle behind.
• Concept of Prudence or Conservatism
• It states that business transactions should be recorded in such manner that profits are not overstated. All unrealised gains should be ignored but anticipated loses should be recorded.
Question: Differentiate between cash basis and accrual basis of accounting.
Answer: Differentiate between cash basis and accrual basis of accounting.
• Cash basis records only cash transactions whereas accrual basis records cash as well as credit transactions.
• Cash basis may not be a reliable basis of accounting because only cash transactions are recorded and correct profit or loses cannot be ascertained while accrual basis is more reliable because it records both cash and credit transactions and gives a true picture of the business during an accounting period.
Question: ‘Capital is the liability for the business’- Explain
Answer: ‘Capital is the liability for the business’- Explain
• According to business entity concept capital is a liability for the business. According to this principle, for accounting purpose distinction should be made between business affairs and personal affairs and in the accounting books of the business only business transactions to be recorded. The amount invested by the owner from his personal end into the business is capital and the amount withdrawn by the owner from the business for personal use is drawing. Thus from the point of view of the business the capital is the liability of the business towards its owner.
Question: Explain the concept of Full Disclosure.
Answer: Explain the concept of Full Disclosure.
• This concept states that all material and relevant facts concerned with the financial performance of the organisation should be fully and completely disclosed in the financial statements and their accompanying footnotes.
Question: What is the basic accounting equation?
Answer: The basic accounting equation is given below Assets = Liabilities + Capital
Assets = Claim of Outsiders + Owner’s Equity or Capital.
Question: Give two advantages of vouchers
Answer: Advantages of voucher
1. Documentary evidence
2. Base of accounting process
Question: Point out two differences between expense and expenditure
Answer: Difference between Expense and Expenditure:-
• Expenses are regular in nature
• The benefit is measurable for a given period like Salary, Rent
• Expenditure are not regular in nature
• The benefit is not measurable for a given period like buying of Machine and furniture.