Class 11 Accountancy - Chapter Introduction to Accounting NCERT Solutions | What do you mean by an asset and what ar
What do you mean by an asset and what are different types of assets?
Any valuable thing which has monetary value and owned by a business, is its asset. In other words, assets are the monetary values of the properties or the legal rights that are owned by the business organisations.
Fixed Assets− These are those assets that are hold for the long term and increase the profit earning capacity and productive capacity of the business. These assets are not meant for sale, for example, land, building machinery, etc.
Current Assets− Assets that can be easily converted into cash or cash equivalents are termed as current assets. These are required to run day to day business activities; for example, cash, debtors, stock, etc.
Tangible Assets− Assets that have physical existence, i.e., which can be seen and touched, are tangible assets; for example, car, furniture, building, etc.
Intangible Assets− Assets that cannot be seen or touched, i.e. those assets that do not have physical existence, are intangible assets; for example, goodwill, patents, trade mark, etc.
Liquid Assets− Assets that are kept either in cash or cash equivalents are regarded as liquid assets. These can be converted into cash in a very short period of time; for example, cash, bank, bills receivable,Flexible Investments etc.
Fictitious Assets− These are the heavy revenue expenditures, the benefit of whose can be derived in more than one year. They represent loss or expense that are written off over a period of time, for example, if Research and Development expenditure is Rs 1,00,000 for 5 years, then each year Rs 2,00,000 will be written off.
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:-
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.
- Q:-
The role of accounting has changed over the period of time- Do you agree? Explain.
Popular Questions of Class 11 Accountancy
- Q:-
Name any two types of commonly used negotiable instruments.
- Q:-
Why is it necessary to record the adjusting entries in the preparation of final accounts?
- Q:-
State the meaning of incomplete records?
- Q:-
What is ‘Depreciation’?
- Q:-
Briefly state how the cash book is both journal and a ledger.
- Q:-
State the meaning of a trial balance?
- Q:-
State the four basic requirements of a database applications.
- Q:-
State the different elements of a computer system.
- Q:-
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:-
Define the purpose of maintaining subsidiary journal.
- Q:-
If wages paid for installation of new machinery is debited to wages Account, it is:
(a) An error of commission.
(b) An error of principle.
(c) A compensating error.
(d) An error of omission. - Q:-
A Trial balance is prepared:
(a) After preparation financial statement.
(b) After recording transactions in subsidiary books.
(c) After posting to ledger is complete.
(d) After posting to ledger is complete and accounts have been balanced. - Q:-
If a transaction is properly analysed and recorded:
(a) Only two accounts will be used to record the transaction.
(b) One account will be used to record transaction.
(c) One account balance will increase and another will decrease.
(d) Total amount debited will equals total amount credited. - Q:-
Which of following errors will be rectified through suspense account:
(a) Sales return book undercast by Rs. 1,000.
(b) Sales return by Madhu Rs. 1,000 not recorded.
(c) Sales return by Madhu Rs. 1,000 recorded as Rs. 100.
(d) Sales return by Madhu Rs. 1,000 recorded through purchases returns book. - Q:-
Credit balance of bank account in cash book shows :
(i) Overdraft
(ii) Cash deposited in our bank
(iii) Cash withdrawn from bank
(iv) None of these - Q:-
Fill in the correct word:
1. Recognition of expenses in the same period as associated revenues is called _______________concept.
2. 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 _______________.
3. Revenue is generally recognised at the point of sale denotes the concept of _______________.
4. The _______________concept requires that the same accounting method should be used from one accounting period to the next.
5. The_______________concept requires that accounting transactions should be free from the bias of accountants and others. - Q:-
Credit purchase, during the year is ascertained by preparing :
(a) Total creditors account (b) Total debtors account
(c) Cash account (d) Opening statement of affairs - Q:-
A bill of exchange must contain “an unconditional promise to pay” Do you agree with a statement?
- Q:-
Name any two types of commonly used negotiable instruments.
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