ACCOUNTANCY FOR CLASS XI STUDENTS - MLL

MINIMUM LEVEL LEARNING

Introduction to Accounting

1.      What is capital? Amount invested by the proprietor. 2.      What are drawings? Amount or goods withdrawn by the owner for his personal use. 3.      What are liabilities? The amount which the firm owes to outsiders. 4.      What are assets? Valuable resources owned by business. 5.      Give two examples of current assets. Cash, stock, bill receivable etc. 6.      What are current liabilities? Liabilities which are to be paid with in a year. 7.      What is expense? Cost incurred in producing and selling goods. 8.      What is revenue? Income of recurring nature. 9.      What is a  voucher? It is a source document. 10.  What is trade discount? Deduction in the price of goods sold given by the seller to customer.

Theory base of Accounting

Q1.Give two features of accounting principle. Ans. (i) these are man-made. (ii) These are flexible. Q2. What is money measurement principle? Ans: Only those transactions and events are recorded in accounting which can be expressed in terms of money. Q3. What is going concern concept? Ans: Business will continue to exist for a long time in the future and there is no intention to close it or reduce its size significantly. Q4. What is business entity concept? Ans: Business is treated as an entity separate and distinct from its owners. Q5. What is cost principle? Ans: Assets are shown in the books at cost of acquisition less depreciation. Q6. What is principle of full disclosure? Ans: There should be sufficient disclosure of information which is of significant interest to the users of financial statements. Q7. What is cash basis of accounting? Ans: Under this basis, incomes are not recorded unless they are received in cash. Similarly, expenses are recorded only when they are paid in cash. Q8. What is Accrual basis of accounting? Ans: Under this basis incomes are recorded when they are earned or accrued, irrespective of the fact whether cash is received or not. Q9. Write two advantages of accrual basis of accounting. Ans: (i) It discloses true profit or loss for a particular period. (ii) It follows the matching principle of accounting. Q10. Which basis of accounting is recognized under the Companies Act, 1956? Ans: Accrual basis of Accounting.

ACCOUNTING STANDARDS AND INTERNATIONAL FINANCIAL REPORTING STANDARDS 1.      What do you mean by accounting standards? Ans. Uniform rules and practices are known as accounting standards. 2.      Give two merits of accounting standards. Ans.1.Provides rules for accounting policies.2.provides accuracy of accounts. 3.      What are the two objectives of Accounting Standards?   Ans.1. Uniformity in accounting policies. 2. Transparency and comparability 4.      Name the accounting standard  applicable to valuation of inventory . Ans .Accounting  Standard (AS) 2 5.      Accounting  Standard (AS)  6 is   applicable to ……………………... Ans.Depreciation accounting. 6.      Name the accounting standard  applicable to Fixed assets. Ans. Accounting Standard (AS) 10 7.      Name the accounting standard  applicable to revenue recognition. Ans . Accounting Standard (AS)9 8.      Name the accounting standard  applicable to intangible assets. Ans. Accounting Standard (AS) 26 9.      Name the accounting standard  applicabletoprovisions ,contingent liabilities and contingent Assets. Ans. Accounting Standard (AS) 29 10.  Expand the term IASC. Ans.International Accounting Standard Committee.

3.Recording of transaction

1what is an Accounting equation? ans.  An accounting equation is a formula of accounting which shows that the assets of a business are always equal to the total   of capital and liabilities. 2. Give fundamental accounting equation. ans. Assets = Liabilities + Capital 3. name the side on which  increase in capital is recorded. ans. Credit side 4. Name any two source document? ans. cash Memo and invoice 5. what are the types of vouchers? ans. cash voucher and non cash voucher 6.what is a Journal? ans.  A Journal is a book of original entry in which transactions are recorded in which they occur. 7. what is a cash book? ans. cash book is a special journal in which all the transactions of cash and bank are recorded. 8.what are contra entries? ans. those entries which are recorded on both side of cash book. These entries are passed at the  time of depositing and withdrawing cash from bank. 9.what is petty cash book. ans. it is prepared to record petty expenses. 10. what is a purchase book? ans. purchase book is prepared to record  credit transactions

Trial Balance and Bank reconciliation statement

Bank reconciliation statement, Ledger and trial balance 1.      What is a Bank reconciliation statement? It is a statement to reconcile the cash book and pass book balance in a particular date. 2.      What is meant by debit balance in pass book? Overdraft 3.      Mention two causes of differences in cash book and pass book balances? a)      Cheque issued but not presented for payment. b)      Cheque deposited but not credited by the bank 4.      What is ledger? Classified and permanent record of all transactions. 5.      The process of entering the transaction in the ledger is known as .. Posting 6.      Ledger is a book of ---- Final entry 7.      What is Trial balance? Statement prepared to check the arithmetical accuracy of books of accounts. 8.      Give three objectives of preparing trial balance. a)      Help in locating errors b)      Test the arithmetical accuracy of ledger accounts. c)      Help in the preparation of final accounts. 9.      Mention two items which are not recorded in amended cash book. a)      Cheque deposited into bank but not credited b)      Cheque issued but not presented for payment 10.  Explain any four point of importance of preparing BRS a)      Locating the errors or omissions on the part of customer or bank b)      Reduce the chances of embezzlement by the staff of the firm c)      Reveals un necessary delay in collection of cheques by bank d)     Keeping a track of cheques which have been send to the bank

5.Depreciation, Provisions and Reserve

Q1. What is depreciation? An depreciation may be defined as the permanent and continuing diminution in the quality, quantity or the value of an assets. Q2. Name two causes of the depreciation. An constant use and by expiry of time Q3.write two objective of providing depreciation An a) for ascertaining the true profit /loss and b) to know the true and fair financial position Q4 what is residual / scrape / salvage value of an assets An it the estimated sale value of the assets at the end of the its use full life Q5.give two factors for determining the amount of depreciation An total cost of the assets and estimated life of the assets Q6.give the formula calculation of annual depreciation as per straight line method. An cost of  assets less estimated scrape value/estimated life of the assets Q7. Differentiate between original cost method and written down method. An 1) amount of depreciation - equal depreciation charge every year. Where asw.d.v .Depreciation goes ondecreasing year after year.    2) zero level- original cost method ,the book value of the assets can be zero Where as written down value method the book value of assets can never be reduced to zero. Q8.give two merits of providing depreciation by  original cost method An 1) calculation of depreciation is very simple       2)the burden of dep. On each years net profit is equal. Q9. What is depreciable cost. Depreciable cost equal to cost of asset less scrape value. Q10. Give two merits of providing depreciation by written down method. An 1) the total burden on profit and loss a/c in respect of depreciation and repairs put together remains almost equal year after year.   2) this method is approved by income tax authorities.

6.Accounting for Bill of Exchange

Q1. What is bill of exchange? Ans: A bill of Exchange is an instrument in writing, an unconditional order signed by the maker directing to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument.. Q2. What is promissory note? Ans: It is an instrument in writing containing an unconditional undertaking signed by the maker to pay a certain sum of money to, or to the order of, a certain person. Q3. What are different parties involve in bills of exchange? Ans: Three parties (i) Drawer (ii) Drawee (iii) Payee. Q4. What do you mean by maturity date? Ans: The date on which payment become due is called maturity date. Q5. How many Grace days are given on maturity of a bill of exchange? Ans: 3 days Q6. Calculate the due date of a bill of exchange written on July 13, 2007 for 30 days. Ans: August 14, 2007 Q6. What is discounting of the bill of exchange? Ans. Discounting means encashing the bill before the date of its maturity or borrowing from the bank on the security of the bill. Q7. What is meant by Noting of the bill of exchange? Ans: Noting is the recording of the fact of the fact of dishonor by a Notary Public. Q8. The person in whose favors an endorsement is made is called……… Ans: Endorsee. Q9. When a bill is called draft? Ans: Before its acceptance. Q10. What do you mean by Dishonor of a Bill? Ans: When the acceptor of the bill refuses to pay the amount of the bill on the date of maturity or becomes insolvent, it is called dishonor of the bill.

7.Rectification of Errors

RECTIFICATION OF ERRORS AND FINANCIAL STATEMENTS 1.      What is meant by rectifying entry? Ans. The entry which rectify the errors. 2.      Give an example of compensating error. Ans. Amount received from  X Credited to Y. 3.      Give an example of two sided error. Ans.Purchase of goods recorded in sales book. 4.      Give an example of one sided error. Ans. Purchase book overcast rs. 1000. 5.      What is a suspense account? Ans: it is an imaginary nominal account. 6.      Credit sales to MridhunRs. 2000 was not recorded. Rectify the error Ans: Mridhun   dr. sales a/c 7.      Purchase book has been overcast by Rs.1000. rectify the error Ans. Suspense a/c Dr. 1000    To purchase a/c              1000 8.      What do you mean by compensating error? Ans. If one error compensate the other error. 9.      What is an error of omission? Ans. Forgot to record the transaction.

Financial Statements of sole proprietorship

1.      What is gross profit? Ans. Net sales – cost of goods sold. 2.      What is Net profit? Ans. Gross profit – operating expenses + operating incomes. 3.      What is the primary objective of financial statements? Ans. True and fair position of business. 4.      What is a balance sheet? Ans. Statement showing financial position of business. 5.      Give any two examples of Fictitious Assets. Ans. Advertisement suspense, p&L dr. balance. 6.      Write any one difference between Trial Balance and Balance Sheet. Ans. It is list of all balances and it is only assets, liabilities and capital. 7.      Give a formula to calculate cost of goods sold. Ans. = sales – gross profit. 8.      What do you mean by outstanding expense?  Ans. Expense due but not paid. 9.      Give adjusting entry for prepaid expense. Ans. Prepaid exp    dr.   to cash a/c 10.  How accrued income is treated in final accounts? Ans. Current assets. 11.  What do you mean by bad debts? Ans. Irrecoverable debtors.

Financials statements of not-for-profit organisations

1.      What is NPO? Voluntary association of persons to provide service to the society. 2.      Give two examples of NPO Charitable organizations, Hospitals, trade unions, schools etc. 3.      Funds raised by NPOs through various sources are credited to which account? Capital fund or general fund 4.      Name the account which shows the classified summary of transactions of a cash book in NPO. Receipts and payments account 5.      Name any two items which appear on the credit side of receipts and payments account. Salary, purchase of furniture, insurance paid etc. 6.      What is the basis of accounting followed while preparing the receipts and payments account. Cash basis of accounting 7.      Name the account in which expenses and incomes of NPO are shown in a summarized form at the end of the year. Income and expenditure account 8.      What is the basis of accounting followed while preparing income and expenditure account? Accrual basis 9.      How will you treat sale of old news papers while preparing final accounts of NPO? Treated as income and credited to income and expenditure account 10.  Give two examples of revenue expenditure. Payment of rent, payment of salary, repair etc.

Accounts form incomplete records

1.      What do you mean by accounts from  incomplete records? Ans. The system of accounting which donot follow the rules of double entry system is known as accounts from incomplete records. 2.      Give any two features of incomplete records. Ans. 1.Simple method 2. Maintenance of personal A/c and cash book only 3.      Write any two limitations of single entry system. Ans. 1.unscientific method 2.Difficulity in comparative study 4.      Who prepares  the accounts with single entry system? Ans. Small business man 5.      Name the financial statements under single entry system. Ans. Statement of affairs , profit and loss A/c. 6.      Which system of accounting  follows the rule of dual aspect? Ans. Double entry system 7.      What is the other name of A/Cs from Incomplete records? Ans. Single entry system 8.      Which  statement under single entry system seems like Balance  Sheet ? Ans. Statement of affairs. 9.      What is the objective of preparing A/c from Incomplete records? Ans. To know the profit or loss. 10.  Give the formula for calculating opening capital. Ans.opening capital = capital at the end+drawings-additional capital-profit