11th NCERT Accountancy Chapter 2
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Topics from the chapter and their summaries for students to study:
1. Dual Aspect: Every transaction has a dual effect on various accounts and should be recorded in two places. It is expressed in the fundamental accounting equation: Assets = Liabilities + Capital.
2. Revenue Recognition: Revenue is the cash inflow from sales of goods and services, and the concept requires recognizing revenue when a legal right to receive it arises.
3. Matching: Emphasizes that expenses incurred should be matched with revenues during the same accounting period.
4. Full Disclosure: Requires all material facts regarding an enterprise's financial performance to be disclosed in the financial statements and footnotes.
5. Consistency: Accounting policies should be consistent over time for comparability and standardization.
6. Conservatism: Transactions should be recorded to avoid overstating profits and account for anticipated losses.
7. Materiality: Focuses on material facts that could influence decisions of investors or creditors and should be included in financial statements.
8. Objectivity: Transactions should be recorded objectively, free from biases.
9. Systems of Accounting: Includes double entry and single entry system for recording transactions.
10. Basis of Accounting: Involves cash basis (recorded when cash is exchanged) and accrual basis (revenue/costs recognized when they occur).
11. Accounting Standards: Written statements of uniform accounting rules and guidelines for consistent financial statement preparation.
Students should focus on understanding these concepts and their application in accounting practices for a thorough understanding of the chapter content【4:0†source】.
Why is it necessary for accountants to assume that a business entity will remain a going concern?
When should revenue be recognized? Are there exceptions to the general rule?
What is the basic accounting equation?
The realization concept determines when goods sent on credit to customers are to be included in the sales figure for the purpose of computing the profit or loss for the accounting period. Which of the following tends to be used in practice to determine when to include a transaction in the sales figure for the period: a. dispatched b. invoiced c. delivered d. paid for. Give reasons for your answer.
Complete the following worksheet: (i) If a firm believes that some of its debtors may 'default,' it should make sure that all possible losses are recorded in the books. This is an example of the _____________ concept. (ii) The fact that a business is separate and distinguishable from its owner is best exemplified by the _____________ concept. (iii) Everything a firm owns, it also owns out to somebody. This coincidence is explained by the _____________ concept. (iv) The _____________ concept states that if the straight-line method of depreciation is used in one year, then it should also be used in the next year. (v) A firm may hold stock which is heavily in demand. Consequently, the market value of this stock may be increased. Normal accounting procedure is to ignore this because of the _____________.
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