CBSE Class 11 Accountancy Question Paper Set 11 with Solutions

Answer: (d) Total amount debited will be equal to total amount credited. Every transaction has a dual aspect, so the debit and credit amounts are always equal.

Teacher's Note:
1. This is the double entry principle: every debit has an equal credit.
2. A transaction may affect more than two accounts, so option (a) is not always true.

Answer: (b) Debit Rs 5,600.
Bad debts (600 + 1,400) = 2,000 debit; additional provision (8,600 − 5,000) = 3,600 debit; total debit = 2,000 + 3,600 = Rs 5,600.

Teacher's Note:
1. Total charge to Profit and Loss is bad debts written off plus the increase in provision.
2. Do not forget to add the bad debts already in the trial balance to the further bad debts.

Answer: (a) Sales return book under cast by Rs 1,000. Only the Sales Returns account is affected (one-sided error), so the trial balance disagrees and the difference is rectified through suspense. The other errors are two-sided and do not affect the trial balance.

Teacher's Note:
1. Only errors that affect one account alone (one-sided errors) go through suspense.
2. Check whether both the debit and credit were affected equally; if so, no suspense is needed.

Answer: (a) Only statement 1 is true and 2 is false. Depreciation is a non-cash expense charged to Profit and Loss, and it must be charged every year even when the business makes a loss.

Teacher's Note:
1. Depreciation is charged because the asset is used, not because the business earns profit.
2. Say that depreciation is a non-cash expense when asked to explain statement 1.

Answer: (a) Error of omission. The transaction was recorded in the book of original entry but not posted to the ledger.

Teacher's Note:
1. Omission means a transaction is left out wholly or partly from the books.
2. Commission errors involve wrong posting, wrong totalling or wrong balancing, not leaving it out.

Answer: (c) Identification of the transaction, then voucher (source document), then recording in journal/books of original entry, then posting to ledger, and finally trial balance and financial statements.

Teacher's Note:
1. Remember the order as: identify, document, record, post, summarise.
2. Recording in the journal always comes before posting to the ledger.

Answer: (c) Credit note. Namrita receives the returned goods and credits Namita's account, so she issues a credit note to Namita.

Teacher's Note:
1. The party that returns the goods sends a debit note, and the party that receives them issues a credit note.
2. Think of whose account is being credited: the one who returned the goods.

Answer: (b) Rs 8,300.
The cash book has overstated the receipt by 5,200 − 2,500 = 2,700, so its overdraft is understated by 2,700.
Overdraft as per cash book = 11,000 − 2,700 = Rs 8,300 (credit).

Teacher's Note:
1. A debit balance in the pass book means an overdraft, which is a credit balance in the cash book.
2. An overstated receipt reduces the cash book overdraft, so correct it in the right direction.

Answer: (b) Rs 9,900.
Balance as per cash book 12,000
Less: dishonoured cheque (2,400)
Add: bank charges entered twice 300
Balance as per pass book = Rs 9,900.

Teacher's Note:
1. A dishonoured cheque reduces the bank balance, while a double-entered expense wrongly lowered the cash book and must be added back.
2. Start from the cash book balance and adjust each item one by one.

Answer: (c) Debenture. Debentures are normally repayable after a long period, so they are a long-term (non-current) liability. The others are due within one year.

Teacher's Note:
1. A current liability is payable within one year or the operating cycle.
2. Do not confuse debentures, which are long-term borrowings, with creditors.

Answer: Comparability. Information of two periods can be compared to find trends and make decisions.

Teacher's Note:
1. Comparability means accounting information can be compared across periods or firms.
2. Do not confuse it with relevance, which means the information helps in the decision itself.

Answer: Journal Proper (Purchases Book is used only for credit purchase of goods meant for resale; machinery is a fixed asset).

Teacher's Note:
1. Credit purchase of assets is not recorded in the Purchases Book.
2. Entries that have no special book, like assets bought on credit, go to Journal Proper.

Answer: Both are capital expenditure: freight on a new asset is part of its cost, and additions increase the earning capacity of the asset.
Total capital expenditure = 1,800 + 20,000 = Rs 21,800.

Teacher's Note:
1. Expenses needed to bring an asset to working condition are capitalised.
2. Repairs that only maintain the asset would be revenue expenditure, but additions are capital.

Answer: Imprest amount (as in the imprest system of petty cash).

Teacher's Note:
1. Under the imprest system the petty cashier is reimbursed exactly what was spent.
2. The amount of the fixed advance is called the imprest.

Answer: A suspense account is a temporary account in which the difference of the trial balance is put to make it agree. It is closed when the errors are located and rectified.

Teacher's Note:
1. It is only a temporary account, never to be kept permanently.
2. A debit difference in the trial balance is transferred to the credit of suspense, and vice versa.

Answer: A provision is created by charging against profit (debited to the Profit and Loss Account as an expense), whereas a reserve is created by appropriation out of profits (after the profit is determined).

Teacher's Note:
1. Provision is a charge against profit, reserve is an appropriation of profit.
2. A provision is made before arriving at profit, so it reduces profit; a reserve does not.

Answer: 1. Rs 40,000 is credited in the Trading Account (deducted from purchases) as the goods are lost.
2. The same Rs 40,000 is debited to the Profit and Loss Account as loss by fire, and the insurance claim of Rs 33,000 is credited, so the net loss of Rs 7,000 reduces profit.
3. The destroyed goods are not included in closing stock.

Teacher's Note:
1. Abnormal loss of goods is kept out of the cost of goods sold and shown separately in Profit and Loss.
2. Only the net loss after the insurance claim reduces profit.

Answer: Treat it as deferred revenue expenditure: charge Rs 2,00,000 to the Profit and Loss Account each year and show the unwritten-off balance (Rs 4,00,000 after year 1, Rs 2,00,000 after year 2) in the Balance Sheet as an asset.

Teacher's Note:
1. Deferred revenue expenditure is a revenue item whose benefit lasts several years.
2. It is written off in parts, and the balance appears on the assets side.

Answer: Gross profit = Net profit + Indirect expenses = 3,40,000 + 90,000 = Rs 4,30,000.

Teacher's Note:
1. Net profit is gross profit minus indirect expenses, so reverse it by adding them back.
2. The cost of goods sold is extra information here and is not needed.

Answer: Any two of: Dividend Equalisation Reserve, Debenture Redemption Reserve, Workmen Compensation Reserve, Investment Fluctuation Reserve.

Teacher's Note:
1. A specific reserve is created for a particular purpose.
2. General reserve is the opposite: it has no specific purpose.

Answer: Operating profit = Gross profit − Operating expenses (non-operating items such as gain/loss on sale of assets and interest on loan are excluded).

Teacher's Note:
1. Operating profit comes only from the normal business operations, so leave out gains, losses on sale of assets and financial costs.
2. Check the list twice, because three of the eleven items must not be used.

Answer: I. Conservatism (Prudence) is violated. This convention requires providing for all possible losses but not anticipating profits, so closing stock should be valued at cost or market price, whichever is lower. Valuing it at cost overstates profit.
II. Accounting Period concept is violated. Financial statements must be prepared for a fixed period, normally one year, so that results can be measured and compared. A single set for two years defeats this.

Teacher's Note:
1. Link each situation with its key words, like 'market price lower' for conservatism and 'two years' for accounting period.
2. Always state clearly whether the concept is followed or violated.

Answer: Depreciation up to 1 July 2021: 3 years × 8,000 = 24,000 plus 3 months (80,000 × 10% × 3/12) = 2,000, so total depreciation = Rs 26,000 (balance in Provision for Depreciation).
Book value = 80,000 − 26,000 = 54,000; sale price 68,200; profit = Rs 14,200.

Teacher's Note:
1. Remember to charge depreciation for the part of the year up to the date of sale.
2. If the sale price is above the book value, the balancing figure is a profit credited to Profit and Loss.

Answer: Use of accounting information by internal users:
1. Owners use it to judge the profitability and financial position of the business and decide on further investment.
2. Management uses it for planning, controlling, evaluating performance and taking decisions such as pricing and cost cutting.
3. Employees use it to assess the ability of the firm to pay wages, bonus and other benefits.
OR
Gain is a profit that arises from events or transactions incidental to business, such as sale of a fixed asset at more than its book value. Profit is the excess of revenue over expenses of the business during an accounting period.

Teacher's Note:
1. Name each internal user and give one specific use of accounting information for it.
2. A gain is not part of the main trading activity, so treat it as different from operating profit.

Answer: Assumptions: goods were purchased for cash; accrued interest is interest income earned but not yet received.
(iii) Cost of goods sold = 30,000 ÷ 3 = 10,000; profit = 1,000; sale price = 11,000; cash received 5,500 and debtors 5,500.

Teacher's Note:
1. At every step check that total assets equal liabilities plus capital.
2. A profit increases capital, and goods sold are removed from stock at cost.

Answer: The cheque is entered in the bank column on 5/1/22 when it is deposited (no entry on 2/1/22). Withdrawal from bank for office use is a contra entry (C).

Teacher's Note:
1. A contra entry appears on both sides of the cash book, with the letter C in the L.F. column.
2. A cheque is entered in the bank column only when it is deposited into the bank.

Answer: Working: Harshit 30,000 − 10% = 27,000; Harshita 50,000 − 10% = 45,000; cash discount to Harshit 10% of 27,000 = 2,700 (paid in time); Harshita paid after 15 April, so no discount. Mohan Lal: 90,000 − 20% = 72,000; one-third = 24,000; discount 7.5% × 24,000 = 1,800; draft Rs 22,200.
Journal

Teacher's Note:
1. Trade discount is deducted before recording, while cash discount is recorded separately and only if payment is made in time.
2. The date of the purchase from Mohan Lal is not given, so the first of the month is assumed.

Answer: Sales Book

Teacher's Note:
1. Record the amounts in the sales book after deducting trade discount, which is not shown in the ledger.
2. The returned goods are valued at the same price and discount as the original sale.

Answer: Bank Reconciliation Statement as on 31st December 2022

Teacher's Note:
1. With an overdraft, items that would raise the bank balance in a favourable case must instead reduce the overdraft, so work direction by direction.
2. Treat the dishonoured cheque and the uncollected cheques as separate items because they are stated separately.

Answer: Working: Debtors after further bad debts = 82,000 − 2,000 = 80,000. New provision for doubtful debts = 5% × 80,000 = 4,000. Provision for discount on debtors = 2% × (80,000 − 4,000) = 1,520.
Profit and Loss Account (extract)

Teacher's Note:
1. Provision for discount is calculated on debtors left after deducting bad debts and the provision for doubtful debts.
2. Both provisions are shown as deductions from debtors in the Balance Sheet, not on the liabilities side.

Answer: Working notes (first alternative): Depreciation: 2019-20: machine A 3,00,000 × 10% × 8/12 = 20,000. 2020-21: A 30,000 + B (1,80,000 × 10% × 5/12) 7,500 = 37,500. 2021-22: A for 3 months 7,500 + B 18,000 + C (2,00,000 × 10% × 9/12) 15,000 = 40,500. Provision on A transferred on sale = 20,000 + 30,000 + 7,500 = 57,500.
Machinery Account

Teacher's Note:
1. Charge depreciation on each asset only for the months it was actually held in the year.
2. When an asset is sold, transfer its accumulated depreciation to the disposal account, or under WDV remove its book value net of depreciation to the date of sale.

Answer: Assumptions: GST is charged on the amounts after trade discount; machinery is purchased through the bank and its cost of Rs 1,25,000 is before GST; drawings of goods are recorded at purchase price.

Teacher's Note:
1. Compute GST on the invoice value after trade discount, and put equal CGST and SGST for a transaction within the state.
2. GST paid on purchases is input credit, whereas GST collected on sales is output tax and is reversed on sales return.

Answer: Rectifying entries (first alternative)

Teacher's Note:
1. First decide whether each error is one-sided (needs suspense) or two-sided (no suspense) before writing the rectifying entry.
2. Check your work by making sure the suspense account totals tally on both sides.

Answer: Working: Debit Returns 300 = sales returns; credit Returns 500 = purchases returns. Wages and salaries = 2,800 − 1,000 (capital expenditure) + 200 outstanding = 2,000. Interest on capital = 5% × 21,000 = 1,050. Depreciation: plant 800, motor cycle 4,200 − 4,000 = 200. Stationery used = 1,500 − 500 = 1,000.
Trading Account for the year ended 31st March 2018

Teacher's Note:
1. Capital expenditure hidden in an expense, like the building extension, must be removed from the expense and added to the asset.
2. Interest on capital is an expense of the business but an income of the owner, so add it to capital.