CBSE Class 11 NCERT 2023 Solution Accounts Chapter 1 Introduction to Accounting

Short Answers

1. Define accounting.

Ans. Accounting is a process of identifying, measuring,

recording the business transactions and communicating thereof the required

information to the interested users

2. State the end product of financial accounting?

Ans.

3. Enumerate the main objectives of accounting.

4. Who are the users of accounting information?

5. State the nature of accounting information required by long-term lenders.

6. Who are the external users of information?

7. Enumerate information needs of management.

8. Give any three examples of revenues.

9. Distinguish between debtors and creditors; profit and gain

10. ‘Accounting information should be comparable’. Do you agree with this

statement? Give two reasons.

11. If the accounting information is not clearly presented, which of the qualitative

characteristic of the accounting information is violated?

12. “The role of accounting has changed over the period of time”- Do you agree?

Explain.

13. Giving examples, explain each of the following accounting terms :

• Fixed assets • Revenue • Expenses

• Short-term liability • Capital

14. Define revenues and expenses?

15. What is the primary reason for business students and others to

familiarise themselves with the accounting discipline?

Long Answers

1. What is accounting? Define its objectives.

2. Explain the factors which necessitated systematic accounting.

3. Describe the informational needs of external users.

4. What do you mean by an asset and what are different types of assets?

5. Explain the meaning of gain and profit. Distinguish between these two terms.

6. Explain the qualitative characteristics of accounting information.

7. Describe the role of accounting in the modern world.

CBSE/NCERT Class 11 Accounts Chapter – 1, Introduction to Accounting | Definition & History

CBSE Class 11 NCERT 2021 Solution Accounts Chapter 1 is the gateway to accountancy, and a firm grasp on the relevant concepts is essential not only to this chapter but also to every form of accounting practice. Let’s take a look at the overview of all topics and Basic Accounting Definitions covered in our video.

According to the American Institute of Certified Public Accountants, “Accounting is the art of recording, classifying and summarizing 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.”

The Accounting Principles Board (APB) of AICPA(U.S.A) defined accounting as “Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities that are intended to be useful in making economic decisions.”

In Simple words, accounting is the process of collecting, recording, classifying, summarising and communicating financial information to the users for judgment and decision-making.

Watch the video to get answers of all the question related to introduction of accounting

CBSE/NCERT Class 11 Accounts Chap-1, Introduction To Accounting, Economic Event & Uses of Accounting

Business organisations involve economic events. An economic event is known as a happening of consequence to a business organisation which consists of transactions and which are measurable in monetary terms. For example,purchase of machinery, installing and keeping it ready for manufacturing is an event which comprises a number of financial transactions such as buying a machine, transportation of machine, site preparation for installation of a machine, expenditure incurred on its installation and trial runs. Thus,accounting identifies a bunch of transactions relating to an economic event. If an event involves transactions between an outsider and an organisation, these are known as external events. The following are the examples of such transactions:

• Sale of merchandise to the customers.
• Rendering services to the customers by ABC Limited.
• Purchase of materials from suppliers.
• Payment of monthly rent to the landlord.

An internal event is an economic event that occurs entirely between the internal wings of an enterprise, e.g., supply of raw material or components by the stores department to the manufacturing department, payment of wages to the employees, etc.

Watch this video,to understand the Economic Event & Uses of Accounting from chapter 1 of Class 11th Accounts

CBSE/NCERT Class 11 Accounts Chapter – 1, Accounting as a Source of Information, Lecture – 3

As discussed earlier, accounting is a definite process of interlinked activities,(refer figure 1.1) that begins with the identification of transactions and ends with the preparation of financial statements. Every step in the process of accounting generates information. Generation of information is not an end in itself. It is a means to facilitate the dissemination of information among different user groups. Such information enables the interested parties to take appropriate decisions. Therefore, the dissemination of information is an essential function of accounting. To be useful, the accounting information should ensure to:

• provide information for making economic decisions;
• serve the users who rely on financial statements as their principal source of information;
• provide information useful for predicting and evaluating the amount, timing and uncertainty of potential cash-flows;
• provide information for judging management’s ability to utilise resources effectively in meeting goals;
• provide factual and interpretive information by disclosing underlying >assumptions on matters subject to interpretation, evaluation,
  prediction,or estimation;
• provide information on activities affecting the society.

Watch the video to have clear understanding of  1.2 Accounting as source of Information

CBSE/NCERT Class 11 Accounts Chap-1, Qualitative Characteristics of Accounting Information, Lect-4

Qualitative characteristics are the attributes of accounting information which

tend to enhance its understandability and usefulness. In order to assess

whether accounting information is decision-useful, it must possess the

characteristics of reliability, relevance, understandability and comparability.

Reliability

Reliability means the users must be able to depend on the information. The

reliability of accounting information is determined by the degree of

correspondence between what the information conveys about the transactions or events that have occurred, measured and displayed. Reliable information should be free from error and bias and faithfully represents what it is meant to represent. To ensure reliability, the information disclosed must be credible, verifiable by independent parties use the same method of measuring, and be neutral and faithful

Watch the video for proper classification of Chapter 1 of Class 11Accounts. Topic- Qualitative Characteristics of Accounting Information.

CBSE/NCERT Class 11 Accounts Chapter – 1, Objectives of Accounting, Lecture – 5

As an information system, the basic objective of accounting is to provide useful information to the interested group of users, both external and internal. The necessary information, particularly in case of external users, is provided in the form of financial statements, viz., profit and loss account and balance sheet. Besides these, the management is provided with additional information from time to time from the accounting records of the business.

Watch this video for proper understanding of objectives of accounting. 

CBSE/NCERT Class 11 Accounts Chapter – 1, Role of Accounting & Basic Terms Lecture – 6

For centuries, the role of accounting has been changing with the changes in

economic development and increasing societal demands. It describes and

analyses a mass of data of an enterprise through measurement, classification and summarization, and reduces those data into reports and statements, which show the financial condition and results of operations of that enterprise. Hence, it is regarded as the language of business. It also performs service activity by providing quantitative financial information that helps users in various ways. Accounting as an information system collects and communicates economic information about an enterprise to a wide variety of interested parties. However, accounting information relates to past transactions and is quantitative and financial in nature, it does not provide qualitative and non-financial information. These limitations of accounting must be kept in view while making use of the accounting information.

This video will help to know the roles of accounting