Class 11 Accountancy - Chapter Introduction to Accounting NCERT Solutions | Explain the development and role of acco
Explain the development and role of accounting.
Development of accounting
In ancient times, around 4000 B.C., accounting was used for recording wages and salaries, deposits and withdrawals of valuable goods (such as gold and silver) by the treasures of the king. Afterwards, it was used to record the receipts and payments and balancing of government financial transactions. During 1500 A.D., accounting was used by business firms for recording transactions related to business. In 1800 A.D., accounting was used to record transactions and also to provide information to various users of financial data.
Role of accounting− While in the earlier times accounting was merely concerned with recording the financial events (i.e. record-keeping activity); however, now-a-days, accounting is done with the rationale of not only maintaining records, but also providing an information system that provides important and relevant information to various accounting users.
1. Substitute of memory− As, it is beyond human capabilities to remember each and every business transaction, so accounting plays an important role in recording these transactions in the book of accounts.
2. Assistance to management− Management uses accounting information for short term and long term planning of business activities and to control various costs and budgets.
3. Comparative study− In order to ascertain the performance of the business, accounting enables comparison of current year’s profit with that of previous years (intra-firm comparison) and also with other firms in the same business (inter-firm comparison).
4. Evidence in court− It acts as evidence that can be used or presented in the court, if any discrepancy arises in the future.
More Questions From Class 11 Accountancy - Chapter Introduction to Accounting
- Q:-
Mr. Sunrise started a business for buying and selling of stationery with ₹ 5,00,000 as an initial investment. Of which he paid ₹ 1,00,000 for furniture, ₹ 2,00,000 for buying stationery items. He employed a sales person and clerk. At the end of the month he paid ₹ 5,000 as their salaries. Out of the stationery bought he sold some stationery for ₹ 1,50,000 for cash and some other stationery for ₹ 1,00,000 on credit basis to Mr. Ravi. Subsequently, he bought stationery items of ₹ 1,50,000 from Mr. Peace. In the first week of next month there was a fire accident and he lost ₹ 30,000 worth of stationery. A part of the machinery, which cost ₹ 40,000, was sold for ₹ 45,000.
From the above, answer the following :
1. What is the amount of capital with which Mr. Sunrise started business?
2. What are the fixed assets he bought?
3. What is the value of the goods purchased?
4. Who is the creditor and state the amount payable to him?
5. What are the expenses?
6. What is the gain he earned?
7. What is the loss he incurred?
8. Who is the debtor? What is the amount receivable from him?
9. What is the total amount of expenses and losses incurred?
10. Determine if the following are assets, liabilities, revenues, expenses or none of the these: sales, debtors, creditors, salary to manager, discount to debtors, drawings by the owner. - Q:- Explain the qualitative characteristics of accounting information.
- Q:- Describe the role of accounting in the modern world.
- Q:-
Complete the following sentences with appropriate words:
(a) Information in financial reports is based on .....................
(b) Internal users are the ..................... of the business entity.
(c) A ..................... would most likely use an entities financial report to determine whether or not the business entity is eligible for a loan.
(d) The Internet has assisted in decreasing the ..................... in issuing financial reports to users.
(e) ..................... users are groups outside the business entity, who uses the information to make decisions about the business entity.
(f) Information is said to be relevent if it is ......................
(g) The process of accounting starts with ............ and ends with ............
(h) Accounting measures the business transactions in terms of ............ units.
(i) Identified and measured economic events should be recording in ............ order. - Q:- What do you mean by an asset and what are different types of assets?
- Q:-
Define accounting and state its objectives.
- Q:-
Enumerate informational needs of management.
- Q:-
'Accounting information should be comparable'. Do you agree with this statement? Give two reasons.
- Q:-
Giving examples, explain each of the following accounting terms:
* Fixed assets * Revenue * Expenses
* Gain * Profit * Capital
* Short-term liabilities - Q:-
Distinguish between debtors and creditors.
Popular Questions of Class 11 Accountancy
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Name any two types of commonly used negotiable instruments.
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State the meaning of incomplete records?
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Briefly state how the cash book is both journal and a ledger.
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State the meaning of a trial balance?
- Q:-
State the four basic requirements of a database applications.
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State the different elements of a computer system.
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Why is it necessary for accountants to assume that business entity will remain a going concern?
- Q:-
State the need for the preparation of bank reconciliation statement?
Recently Viewed Questions of Class 11 Accountancy
- Q:-
State the causes of difference occurred due to time lag.
- Q:-
Distinguish between ‘revenue reserve’ and ‘capital reserve’.
- Q:-
Fill in the Correct Words :
(a) Cash book is a ......... journal.
(b) In Journal proper, only......... discount is recorded.
(c) Return of goods purchased on credit to the suppliers will be entered in ...... Journal.
(d) Assets sold on credit are entered in .........
(e) Double column cash book records transaction relating to ......... and .........
(f) Total of the debit side of cash book is ......... than the credit side.
(g) Cash book does not record the ......... transactions.
(h) In double column cash book ......... transactions are also recorded.
(i) Credit balance shown by a bank column in cash book is .........
(j) The amount paid to the petty cashier at the beginning of a period is known as ......... amount.
(k) In purchase book goods purchased on ......... are recorded. - Q:-
Fill in the blanks:
1. Issued a cheque for ₹8,000 to pay rent. The account to be debited is ............
2. Collected ₹35,000 from debtors. The account to be credited is ............
3. Purchased office stationary for ₹18,000. The account to be credited is ...........
4. Purchased new machine for ₹1,70,000 and issued cheque for the same.
The account to be debited is ............
5. Issued cheque for ₹70,000 to pay off on of the creditors. The account to be debited is ............
6. Returned damaged office stationary and received ₹50,000. The account to be credited is ............
7. Provided services for ₹65,000 on credit. The account to be debited is ........... - Q:-
Name the various categories of accounting package.
- Q:-
If the opening capital is Rs. 50,000 as on April 01, 2016 and additional capital introduced Rs. 10,000 on January 01, 2017. Interest charge on capital 10% p.a. The amount of interest on capital shown in profit and loss account as on March 31, 2017 will be :
(a) Rs. 5,250 (b) Rs. 6,000
(c) Rs. 4,000 (d) Rs. 3,000 - Q:-
Give four examples each of ‘revenue reserve’ and ‘capital reserves’.
- Q:-
Match the items given under ‘A’ with the correct items under ‘B’
(i) Closing stock is credited to (a) Trial balance
(ii) Accuracy of book of account is tested by (b) Trading account
(iii) On returning the goods to seller, the buyer sends (c) Credit note
(iv) The financial position is determined by (d) Balance sheet
(v) On receiving the returned goods from the (e) Debit note
buyer, the seller sends - Q:-
What are financial statements? What information do they provide.
- Q:-
When should revenue be recognised? Are there exceptions to the general rule?
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