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NCERT Solution for Class 11 Accountancy Chapter 2 -Theory Basic of Accounting

Chapter 2
Theory Basic of Accounting


Questions For Practices
   Why is it necessary for accountants to assume that business entity will remain a going concern?

   When should revenue be recognised? Are there exceptions to the general rule?

   What is the basic accounting equation?

   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.

   Complete the following work sheet:

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.

   Complete the following work sheet:

The fact that a business is separate and distinguishable from its owner is best exemplified by the ___________ concept.

   Everything a firm owns, it also owns out to somebody. This co-incidence is explained by the ___________ concept.

   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.

   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 ___________.

   If a firm receives an order for goods, it would not be included in the sales figure owing to the ___________.

   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.



Questions For Practices
   ‘The accounting concepts and accounting standards are generally referred to as the essence of financial accounting’. Comment

   Why is it important to adopt a consistent basis for the preparation of financial statements? Explain

   Discuss the concept-based on the premise ‘do not anticipate profits but provide for all losses’

   What is matching concept? Why should a business concern follow this concept? Discuss

   What is the money measurement concept? Which one factor can make it difficult to compare the monetary values of one year with the monetary values of another year?

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