Class 11 Accountancy - Chapter Introduction to Accounting NCERT Solutions | Explain the qualitative characteristics

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.

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.

Define accounting and state its objectives.

Enumerate informational needs of management.

'Accounting information should be comparable'. Do you agree with this statement? Give two reasons.

Giving examples, explain each of the following accounting terms:
* Fixed assets              * Revenue              * Expenses
* Gain                           * Profit                    * Capital
* Short-term liabilities

Distinguish between debtors and creditors.

The role of accounting has changed over the period of time- Do you agree? Explain.

Name any two types of commonly used negotiable instruments.

Why is it necessary to record the adjusting entries in the preparation of final accounts?

State the meaning of incomplete records?

What is ‘Depreciation’?

Briefly state how the cash book is both journal and a ledger.

State the meaning of a trial balance?

State the four basic requirements of a database applications.

State the different elements of a computer system.

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

State the need for the preparation of bank reconciliation statement?

Briefly explain the effects of dishonour and noting of a bill of exchange.

Which of the following is not an error of principle:

(a) Purchase of furniture debited to purchases account.
(b) Repairs on the overhauling of second hand machinery purchased debited to repairs account.
(c) Cash received from Manoj posted to Saroj.
(d) Sale of old car credited to sales account.

How many sides does an account have?
(i) Two
(ii) Three
(iii) one
(iv) None of these

State any four essential features of bill of exchange.

Differentiate between source documents and vouchers.

Explain the reasons where the balance shown by the bank passbook does not agree with the balance as shown by the bank column of the cash book.

Name and explain different types of reserves in detail.

Cash withdrawn by the Proprietor should be credited to:
(i) Drawings account
(ii) Capital account
(iii) Profit and loss account
(iv) Cash account

Double entry accounting requires that :
(i) All transactions that create debits to asset accounts must create credits to liability or capital accounts;
(ii) A transaction that requires a debit to a liability account require a credit to an asset account;
(iii) Every transaction must be recorded with equal debits equal total credits.

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.