CBSE Class 11 Accountancy HOTs Introduction to Accounting

Question. Define Accounting.
Answer : According to the American Institute of Certified Public Accountants, Accounting is, ‘It is an art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events, which are, in part at least, of a financial character, and interpreting the results thereof.’

Question. Define Book-keeping.
Answer : According to J.R. Batliboi, bookkeeping is, ‘Book-keeping is an art of recording business dealing in a set of books.’

Question. Mention the types of accounting.
Answer : There are 5 types of accounting. Namely,
• Financial Accounting
• Cost Accounting
• Management Accounting
• Tax Accounting
• Social responsibility Accounting

Question. What are the 3 advantages of accounting?
Answer : Advantages of accounting are,
• Helpful in business
• Helpful in decision making
• Helpful in controlling

Question. What is the end product of financial accounting?
Answer : End product of financial accounting is ‘Financial Statements’.

Question. External users of accounting information are not:
• Lenders
• Officers
• Employees
• Public
Answer : Officers

Question. What is the traditional function of accounting?
Answer : Recording of financial transactions.

Question. Accounting is the language of business. True or False?
Answer : True

CBSE Class 11 Accountancy Chapter 1 Introduction To Accounting And Basic Fill in The Blanks

Question. Amount due from Ajay was Rs. 10,000 being insolvent he paid Rs. 2500 only. Amount of bad debts of Ajay in terms of percentage will be-------------.
Answer. 75 Percent

Question. Double entry system of accounting involves two aspects----------and----------.
Answer. Debit and credit

Question. Liquid assets = Current assets–Prepaid expenses and-----------.
Answer. Closing stock/ inventory

Question. Paying salary to employee is a business transaction whereas paying salary to personal maid of owner is termed as---------------.
Answer. Drawings

Question. Buying of machine of Rs. 10,000,00 for business is a capital expenditure whereas buying of a calculator for business is-----------.
Answer. Revenue expenditure

Question. Sale of household furniture of Rs. 50,000 of proprietor for Rs. 45,000 and invested the same amount in business will be called as------------.
Answer. Capital

Question. At the end of the year following balances are given: Capital Rs. 100,000 Assets Rs. 5 00, 000 the amount of outside liabilities will be--------------.
Answer. Rs. 4 00, 000

Question. Ansari sold goods costing Rs. 2 00,000 for Rs. 2 60,000 and received cash Rs. 2 43, 500 Amount of cash discount allowed will be--------------.
Answer. Rs. 16,500

Question. Rent outstanding is an example of current liabilities whereas computer software for Microsoft is an example------------.
Answer. Current assets

Question. Machine of Rs. 6 00,000 was purchased at a commission of 10%. Total cost of machine will be Rs. -----------.
Answer. 6 60,000

Question. Anushka started business with cash Rs. 5,00,000, loan from friend. Rs. 2,00,000 and assets Rs. 7,00,000. Amount of Internal liability of Anushka is -------------------.
Answer. 500,000

Question. Debtors + B/R + short term investments + marketable securities are examples of -------------- Assets.
Answer. liquid assets

Question. Profit earned during year is called income and it is expressed as -----------.
Answer. Revenue - expense

Question. Proprietor borrowed long term loan from bank on collateral of assets of Rs. 1,00,000. It is an example of -----------------.
Answer. Long term liability

CBSE Class 11 Accountancy Chapter 1 Introduction To Accounting And Basic True and False

1. The excess of revenues of a period over its related expenses during an accounting year is called Profit. (True)
2. Inventory is valued at cost price or realisable value, whichever is more. (False)
3. Long – term transactions are also known as Revenue transactions. (False)
4. Purchase of Machinery is a capital transaction. (True)
5. Net Profit or Net Loss of a particular period is ascertained by preparing a Trading Account. (False)
6. The benefit of an expenditure lasts for more than a year is treated as Revenue Expenditure. (False)
7. Amount received from sale of goods is example of Revenue. (True)
8. The excess of current liabilities over current assets is known as working capital. (False)
9. Capital Expenditure is non – recurring and irregular. (True)
10. Resources minus Capital Equities is equal to Liabilities. (True)
11. Double Entry System of Accounting means entry in two sets of books. (False)
12. The Purchase account is used for goods that are for the purpose of resale. (True)
13. Written Document for Credit Sale given by seller to buyer is known as Invoice. (True)

CBSE Class 11 Accountancy Chapter 1 Introduction To Accounting And Basic MCQs

Question. A person who owns business Alone is called:
(a) Investor
(b) Vendor
(c) Proprietor
(c) Buyer
Answer: Proprietor

Question. Recording business transactions in a set of books is known as:
(a) Book keeping
(b) Ledger
(c) Accountancy
(d) All of these
Answer: Book keeping

Question. The goods unsold at the end of the accounting year are called:
(a) Opening stock
(b) Goods
(c) Closing stock
(d) All of these
Answer: Closing stock

Question. Property of the business is called:
(a) Assets
(b) Liabilities
(c) Expenditure
(d) Gain
Answer: Assets 

Question. Winning a court case an example of:
(a) Profit
(b) Income
(c) Gain
(d) Revenue
Answer: Gain

Question. Objective of Accounting are:
(a) Calculate profit and loss
(b) Maintain records of business
(c) Depict the financial position
(d) All of these
Answer: All of these 

Question. Inventory valued at:
(a) Cost price
(b) Market price
(c) Whichever is less
(d) Whichever is more
Answer: Whichever is less 

Question. The person who draw a bill of exchange is known as:
(a) Drawer
(b) Drawee
(c) Payee
(d) Endorsee
Answer: Drawer

Question. Goods purchased for resale are called:
(a) Sales
(b) Purchases
(c) Return inward
(d) Return outward
Answer: Purchases

Question. Long term transactions are also called:
(a) Paper transaction
(b) Capital transaction
(c) Revenue transaction
(d) Non monetary transaction
Answer: Capital transaction

CBSE Class 11 Accountancy Chapter 1 Introduction To Accounting And Basic Match The Following

Question.
1. Assets - External Liabilities      A. Current Assets - Current Liabilities
2. Working Capital                       B. Total liabilities
                                                    C. Capital
                                                    D. Fixed Assets - Fixed Liabilities
Answer. 1.C ; 2.A

Question.
1. Business transaction       A. Debit balance of profit and loss account
2. Fixed assets                   B. Economic activity
3. Nominal assets
Answer.1. B ; 3.A

Question.
1. Current assets + fixed assets - capital      A. Bad debts
2. Irrecoverable amount from debtor            B. Internal liabilities
                                                                     C. External liabilities
                                                                     D. Provision for bad debts
Answer.1.C ; 2.A

Question.
1. Debtors                                                A. Cash in hand
2. Deployment of funds in the share       B. Current assets
                                                                C. Investment
Answer. 1.B. ; 2.C

Question.
1. Materials held by an enterprise         A. Turnover
2. Total sales of a particular period       B. Stock of finished goods
                                                             C. Bad debts
                                                             D. Stores
Answer. 1.D ; 2.A

Question. 
1. Entity                     A. Definite individual existence
2. Classification        B. Journal
                                 C. Ledger
                                  D. Assets
Answer. 1.A ; 2.C

Question.
1. Summarisation     A. Trial balance
2. Goods                  B. In which business unit is dealing
Answer. 2.A ; 3.B