Read DK Goel Class 11 Accountancy Solutions for Chapter 4 Process and Bases of Accounting below. These DK Goel Accountancy Class 11 solutions have been prepared based on the latest book for DK Goel Class 11 for the current academic year by expert accounts teachers at studiestoday.com. These DK Goel Class 11 Solutions help commerce students in class 11 understand accountancy and build a strong base in accounts. Students in Class 11 who study accountancy and use the DK Goel Accountancy book to understand concepts of Chapter 4 Process and Bases of Accounting should understand the concepts and solve practice questions and exercises given at the end of the chapter. We have provided solutions for all questions and have also provided short notes for each problem. This will help Class 11 DK Goel Accountancy students to understand the questions properly. Refer to the solutions provided below prepared by CBSE NCERT teachers
Chapter 4 Process and Bases of Accounting DK Goel Class 11 Solutions
Class 11 Accountancy students should read the following DK Goel Solutions for Class 11 Chapter 4 Process and Bases of Accounting in Standard 11. All solutions provided below can be downloaded in Pdf and are available for free. This DK Goel Book for Grade 11 Accountancy will be very useful for exams and help you to score good marks in Class 11 accountancy examinations. On our website www.studiestoday.com, we have provided solutions for all chapters given in the DK Goel Accountancy Book for Class 11.
DK Goel Solutions Chapter 4 Process and Bases of Accounting Class 11 Accountancy
Question 1. Define Process of Accounting.
Solution 1: Accounting process of a company starts with the identification of the company’s transaction and then recording, categorizing, and summarizing of a business transaction, which helps in preparation of trial balance and financial statement.
Question 2. What is the cash basis of accounting?
Solution 2: Cash basis of accounting is a system in which transactions are recorded when cash is received or paid. Revenue is recognised on receipt of cash. Expenses are recorded as incurred when they have been paid. The difference between the total incomes and total expenses represents profit or loss of a business for the accounting period. Thus, when Cash Basis of Accounting is followed, outstanding and prepaid expenses and income received in advance or accrued incomes are not considered.
Question 3. What is accrual basis of accounting?
Solution 3: Under accrual basis of accounting income is recorded as income when it is earned or accrued. Similarly, if an expense has been incurred but payment has not been made, it will be recorded as an expense. Accrual Basis of Accounting is based on the concept of realisation and expiration and follows two basic accounting principles, i.e., revenue recognition and matching principle. Under this method net income for the period is the result of matching revenue realised in the period and cost incurred, whether paid or not. The difference between total income and total expense incurred is the profit or loss for the period.
Question 4. In which basis of accounting outstanding expenses are not recorded?
Solution 4: In cash basis of accounting the outstanding expenses are not recorded.
Question 5. Write two advantages of accrual basis of accounting.
Solution 5: The two advantages of accrual basis of accounting are.
(i) Accrual basis of accounting is more scientific as contrast to cash basis of accounting so, the most of the accountants preferred accrual basis of accounting.
(ii) Accrual basis of accounting reflects true profit or loss during the accounting period and, therefore, has wide acceptability.
Question 6. Which basis of accounting is recognized under the Companies Act, 2013.
Solution 6: Accrual basis of accounting is recognized under the Companies Act, 2013.
Question 7. Does the cash basis of accounting violate GAAP? IF, yes, how?
Solution 7: Yes, the cash bases of accounting violate GAAP because it does not follow the rules and guidelines of accrual concept.
Question 8. Explain in details all the steps followed in the process of accounting.
Solution 8: The steps included in the process of accounting are.
1) Identifying the transaction- The first step of accounting is to detect what record in the books of accounts. Only those transactions are recorded in the books of accounts which are in monetary term. Any transaction that can’t be measurable in term of money cannot be recorded in the books. For all the financial transaction it is mandatory to have a voucher or an invoice as a piece of evidence.
2) Recording – A transaction will be recorded in the books of accounts only it is considered as an economic event and can be measured in terms of money. Once the economic events are identified and measured in economic terms they will be recorded in the books of accounts in monetary terms and in chronological order.
3) Posting in Ledger – Once the financial transactions are recorded in journal or subsidiary books, all the financial transactions are classified by grouping the transactions of one nature at one place in a separate room. The ledger is a book of account where all the transactions are recorded according to its nature.
4) Summarising the accounts – It is the final process accounting. In this step we can prepare the trial balance and financial statement. It is concerned with presentation of data and it begins with balance of ledger accounts and the preparation of trial balance with the help of such balances. After the trial balance we can prepare balance sheet.