Class 11 Accountancy Important Chapter 2 Theory Base of Accounting Solutions English Medium As Per AHSEC New Syllabus to each chapter is provided in the list so that you can easily browse through different chapters ASSEB Class 11 Accountancy Important Solutions and select need one. AHSEC Class 11 Accountancy Additional Notes English Medium Download PDF. HS 1st Year Accountancy Important Solutions in English.
Class 11 Accountancy Important Chapter 2 Theory Base of Accounting
Also, you can read the NCERT book online in these sections Solutions by Expert Teachers as per Central Board of Secondary Education (CBSE) Book guidelines. ASSEB Class 11 Accountancy Additional Question Answer are part of All Subject Solutions. Here we have given HS 1st Year Accountancy Important Notes in English for All Chapters, You can practice these here.
Theory Base of Accounting
Chapter: 2
| IMPORTANT QUESTION AND ANSWER |
Short Question and Answer:
1. What does the concept of ‘business entity’ mean?
Ans: The business entity concept assumes that a business has a distinct and separate identity from its owners, meaning their personal transactions are not recorded in the business’s books. This concept treats the business as a separate entity for accounting purposes.
2. What is the ‘money measurement’ concept?
Ans: The money measurement concept states that only transactions that can be expressed in monetary terms are recorded in the books of accounts. Non-quantifiable factors like employee skills or company reputation are not included in financial records.
3. Explain the ‘going concern’ concept.
Ans: The going concern concept assumes that a business will continue to operate indefinitely, meaning its assets are valued based on the assumption that the business will not be liquidated or cease operations in the foreseeable future.
4. What is the ‘matching’ concept in accounting?
Ans: The matching concept states that expenses should be recorded in the same period as the related revenues. This ensures that the expenses incurred to generate revenue are matched with the income in the same accounting period.
5. What does the ‘revenue recognition’ concept state?
Ans: The revenue recognition concept dictates that revenue should be recognized when it is earned, not when payment is received. This typically happens when goods are sold or services are rendered.
6. What is the ‘consistency’ concept in accounting?
Ans: The consistency concept ensures that once an accounting method is adopted, it should be consistently applied in subsequent periods. This allows for meaningful comparisons over time and reduces discrepancies.
7. Explain the ‘conservatism’ (prudence) concept.
Ans: The conservatism concept advises accountants to record anticipated losses immediately but to recognize profits only when they are realized. This approach helps to avoid overstating the financial position of the business.
8. What does the ‘materiality’ concept refer to?
Ans: The materiality concept requires that significant financial information, which could influence a decision by users of financial statements, must be disclosed. Insignificant items may be ignored to avoid over-complication.
9. Define the ‘objectivity’ concept in accounting.
Ans: The objectivity concept requires that accounting transactions be recorded in an objective manner, free from the influence of personal biases. Transactions must be supported by verifiable documents like invoices or receipts.
10. What is the ‘full disclosure’ concept?
Ans: The full disclosure concept mandates that all material and relevant financial information must be disclosed in the financial statements and their accompanying footnotes, ensuring transparency and informed decision-making.
11. What is the importance of the ‘dual aspect’ concept?
Ans: The dual aspect concept underlies double-entry accounting, where every transaction affects at least two accounts. This ensures the accounting equation (Assets = Liabilities + Owner’s Equity) remains balanced.
12. What is the ‘accrual basis’ of accounting?
Ans: The accrual basis of accounting records revenues and expenses when they are incurred, regardless of when cash is received or paid. This method provides a more accurate picture of a company’s financial performance.
13. What is the ‘cash basis’ of accounting?
Ans: The cash basis of accounting records transactions only when cash is received or paid. It is simpler than the accrual basis but may not provide an accurate reflection of a company’s financial condition.
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