{"id":107688,"date":"2021-07-26T19:08:16","date_gmt":"2021-07-26T13:38:16","guid":{"rendered":"https:\/\/www.kopykitab.com\/blog\/?p=107688"},"modified":"2021-08-07T21:54:25","modified_gmt":"2021-08-07T16:24:25","slug":"ncert-solutions-for-class-11-accountancy-chapter-2","status":"publish","type":"post","link":"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/","title":{"rendered":"Class 11 Accountancy NCERT Solutions for Chapter 2 2021"},"content":{"rendered":"\n<p><img class=\"alignnone size-full wp-image-107695\" src=\"https:\/\/www.kopykitab.com\/blog\/wp-content\/uploads\/2021\/07\/chapter2-1.jpg\" alt=\"NCERT Solutions for Class 11 Accountancy Chapter 2\" width=\"1200\" height=\"675\" srcset=\"https:\/\/www.kopykitab.com\/blog\/wp-content\/uploads\/2021\/07\/chapter2-1.jpg 1200w, https:\/\/www.kopykitab.com\/blog\/wp-content\/uploads\/2021\/07\/chapter2-1-768x432.jpg 768w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<p><strong>NCERT Solutions for Class 11 Accountancy Chapter 2: <\/strong>We&#8217;ve put together a guide that covers all of the subjects in this chapter in an easy-to-understand manner. These NCERT solutions have been developed by subject matter specialists in accordance with the most recent CBSE rules and can be downloaded for free from our website. They assist students in revising every idea in this chapter and achieving high exam scores. Know more about the NCERT Solutions for <a href=\"https:\/\/www.kopykitab.com\/Class-11-Accountancy\" target=\"_blank\" rel=\"noopener\">Class 11 Accountancy<\/a> Chapter 2.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_47_1 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"ez-toc-toggle-icon-1\"><label for=\"item-69ea41bb5c1f5\" aria-label=\"Table of Content\"><span style=\"display: flex;align-items: center;width: 35px;height: 30px;justify-content: center;direction:ltr;\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/label><input  type=\"checkbox\" id=\"item-69ea41bb5c1f5\"><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-visibility-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#ncert-solutions-for-class-11-accountancy-chapter-2\" title=\"NCERT Solutions for Class 11 Accountancy Chapter 2\">NCERT Solutions for Class 11 Accountancy Chapter 2<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#download-free-pdf-for-ncert-solutions-for-class-11-accountancy-chapter-2\" title=\"Download free PDF for NCERT Solutions for Class 11 Accountancy Chapter 2\">Download free PDF for NCERT Solutions for Class 11 Accountancy Chapter 2<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#ncert-solutions-for-class-11-accountancy-chapter-2-overview\" title=\"NCERT Solutions for Class 11 Accountancy Chapter 2: Overview\u00a0\">NCERT Solutions for Class 11 Accountancy Chapter 2: Overview\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#access-ncert-solutions-for-class-11-accountancy-chapter-2\" title=\"Access NCERT Solutions For Class 11 Accountancy Chapter 2\">Access NCERT Solutions For Class 11 Accountancy Chapter 2<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#1-why-is-it-necessary-for-accountants-to-assume-that-business-entity-will-remain-a-going-concern\" title=\"1. Why is it necessary for accountants to assume that business entity will remain a going concern?\">1. Why is it necessary for accountants to assume that business entity will remain a going concern?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#2-when-should-revenue-be-recognized-are-there-exceptions-to-the-general-rule\" title=\"2. When should revenue be recognized? Are there exceptions to the general rule?\">2. When should revenue be recognized? Are there exceptions to the general rule?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#3-what-is-the-basic-accounting-equation\" title=\"3. What is the basic accounting equation?\">3. What is the basic accounting equation?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#4-give-reasons-for-your-answer\" title=\" 4. Give reasons for your answer.\"> 4. Give reasons for your answer.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#5-complete-the-following-work-sheet\" title=\"5. Complete the following work sheet:\">5. Complete the following work sheet:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#6-%e2%80%98the-accounting-concepts-and-accounting-standards-are-generally-referred-to-as-the-essence-of-financial-accounting%e2%80%99-comment\" title=\"6. &#8216;The accounting concepts and accounting standards are generally referred to as the essence of financial accounting&#8217;. Comment.\">6. &#8216;The accounting concepts and accounting standards are generally referred to as the essence of financial accounting&#8217;. Comment.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#7-why-is-it-important-to-adopt-a-consistent-basis-for-the-preparation-of-financial-statements-explain\" title=\"7. Why is it important to adopt a consistent basis for the preparation of financial statements? Explain.\">7. Why is it important to adopt a consistent basis for the preparation of financial statements? Explain.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#8-discuss-the-concept-based-on-the-premise-%e2%80%98do-not-anticipate-profits-but-provide-for-all-losses%e2%80%99\" title=\"  8. Discuss the concept-based on the premise &#8216;do not anticipate profits but provide for all losses&#8217;.\">  8. Discuss the concept-based on the premise &#8216;do not anticipate profits but provide for all losses&#8217;.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#9-what-is-matching-concept-why-should-a-business-concern-follow-this-concept-discuss\" title=\"9. What is matching concept? Why should a business concern follow this concept? Discuss?\">9. What is matching concept? Why should a business concern follow this concept? Discuss?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#10-what-is-the-money-measurement-concept-which-one-factor-can-make-it-difficult-to-compare-the-monetary-values-of-one-year-with-the-monetary-values-of-another-year\" title=\"10. What is the money measurement concept? Which one factor can make it difficult to compare the monetary values of one year with the monetary values of another year?\">10. What is the money measurement concept? Which one factor can make it difficult to compare the monetary values of one year with the monetary values of another year?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#access-other-ncert-chapters-solutions-of-class-11-accountancy\" title=\"Access Other NCERT Chapters Solutions of Class 11 Accountancy.\u00a0\">Access Other NCERT Chapters Solutions of Class 11 Accountancy.\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#faq-on-ncert-solutions-for-class-11-accountancy-chapter-2\" title=\"FAQ on NCERT Solutions for Class 11 Accountancy Chapter 2\">FAQ on NCERT Solutions for Class 11 Accountancy Chapter 2<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#what-is-the-most-fundamental-accounting-equation\" title=\"What is the most fundamental accounting equation?\u00a0\">What is the most fundamental accounting equation?\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#why-is-it-required-to-adopt-a-consistent-method-of-preparation-of-financial-statements\" title=\"Why is it required to adopt a consistent method of preparation of financial\u00a0statements?\u00a0\">Why is it required to adopt a consistent method of preparation of financial\u00a0statements?\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#what-are-the-types-of-liabilities\" title=\"What are the types of liabilities?\u00a0\">What are the types of liabilities?\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/#how-do-you-define-assets\" title=\"How do you define assets?\u00a0\">How do you define assets?\u00a0<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"ncert-solutions-for-class-11-accountancy-chapter-2\"><\/span><strong>NCERT Solutions for Class 11 Accountancy Chapter 2<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><a href=\"https:\/\/www.kopykitab.com\/blog\/wp-content\/uploads\/2021\/07\/NCERT-Solutions-for-Class-11-Accountancy-Part-1-Chapter-2-.pdf\" target=\"_blank\" rel=\"noopener\">NCERT solutions for Class 11 Accountancy Chapter 2<\/a><\/p>\n<div id=\"example1\" style=\"text-align: justify\">\u00a0<\/div>\n<p style=\"text-align: justify\">.pdfobject-container { height: 500px;}<br \/>.pdfobject { border: 1px solid #666; }<\/p>\n<p style=\"text-align: justify\"><br \/>PDFObject.embed(&#8220;https:\/\/www.kopykitab.com\/blog\/wp-content\/uploads\/2021\/07\/NCERT-Solutions-for-Class-11-Accountancy-Part-1-Chapter-2-.pdf&#8221;, &#8220;#example1&#8221;);<\/p>\n<h2><span class=\"ez-toc-section\" id=\"download-free-pdf-for-ncert-solutions-for-class-11-accountancy-chapter-2\"><\/span><strong>Download free PDF for <\/strong><strong>NCERT Solutions for Class 11 Accountancy Chapter 2<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p style=\"text-align: center\"><a style=\"width: auto;padding: 18px;cursor: pointer;font-weight: bold;border-radius: 40px;color: #ffffff;background: #ff4500\" href=\"https:\/\/www.kopykitab.com\/blog\/wp-content\/uploads\/2021\/07\/NCERT-Solutions-for-Class-11-Accountancy-Part-1-Chapter-2-.pdf\" target=\"_blank\" rel=\"noopener\">Click Here<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"ncert-solutions-for-class-11-accountancy-chapter-2-overview\"><\/span><strong>NCERT Solutions for Class 11 Accountancy Chapter 2: Overview<\/strong>\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>What is the definition of accounting principles?<\/strong>\u00a0<\/p>\n<p>Accounting principles refer to how accountants conduct themselves and follow criteria when recording accounting transactions around the world. Accountants prepare financial statements by following a set of rules for reporting and recording business transactions. GAAP refers to the set of regulations that they follow (Generally accepted accounting principles).\u00a0<\/p>\n<p>The following two categories can be used to classify these principles:\u00a0<\/p>\n<p><strong>Accounting concepts<\/strong>\u00a0<\/p>\n<p>\u00a0Accounting functions are documented and prepared based on a set of fundamental assumptions.\u00a0<\/p>\n<p><strong>Accounting practices<\/strong>\u00a0<\/p>\n<p>\u00a0Over a lengthy period of time, various accounting\u00a0practises\u00a0have specific results.\u00a0<\/p>\n<p>The importance of accounting principles: Accounting information only makes sense and is beneficial to consumers if the financial statements of the firm are prepared in a\u00a0standardised\u00a0style that is easy to understand.\u00a0<\/p>\n<p>\u00a0<strong>What are the different types of accounting principles?\u00a0<\/strong>\u00a0<\/p>\n<p>Principal of a counting entity or a business entity\u00a0<\/p>\n<p>\u00a0It is necessary for a company to have a distinct existence apart from its owner. A business, according to this notion, is a distinct entity from its owner. As a result, transactions are recorded and\u00a0analyses, and financial statements are generated from the perspective of the firm rather than the owner. The credit is due to the owner&#8217;s investment in the firm.\u00a0<\/p>\n<p><strong>The principle of monetary measurement<\/strong>\u00a0<\/p>\n<p>The fundamental is the documenting of transactions in terms of money, which is maintained in each company&#8217;s database. Even if events such as the death of firm employees have an impact on business operations, they have not been reported.\u00a0<\/p>\n<p><strong>Accounting Period Principle<\/strong>\u00a0<\/p>\n<p>The separation of a business&#8217;s timeline into smaller pieces, according to this approach, aids in the regular measurement of its performance. The accounting principal\u00a0entails calculating their profit and loss figures. They are given balance sheets to help them assess their position in the industry and make the best decisions possible\u00a0industry norms follow a one-year accounting period, which can be either a financial year or a calendar year.\u00a0<\/p>\n<p>\u00a0<strong>Full Disclosure Principle<\/strong>\u00a0<\/p>\n<p>In the financial accounts, all important information relating to the corporation&#8217;s economic factors must be disclosed. These statements should support the fact that information is being conveyed rather than hidden.\u00a0<\/p>\n<p><strong>Verifiable Objective Concept<\/strong>\u00a0<\/p>\n<p>This idea holds that the firm&#8217;s accounting should be free of personal bias. Business documents such as cash memos, invoices, and sales bills are used to account for every monetary transaction.\u00a0<\/p>\n<h2><span class=\"ez-toc-section\" id=\"access-ncert-solutions-for-class-11-accountancy-chapter-2\"><\/span>Access NCERT Solutions For Class 11 Accountancy Chapter 2<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"1-why-is-it-necessary-for-accountants-to-assume-that-business-entity-will-remain-a-going-concern\"><\/span><strong>1. Why is it necessary for accountants to assume that business entity will remain a going concern?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Going Concern Concept assumes that the business entity will continue its operation for an indefinite period of time. It is necessary to assume so, as it helps to bifurcate revenue expenditure (i.e. expenditure related to current year), and capital expenditure (i.e. expenditure whose benefits accrue over a period of time). For example, a machinery that costs Rs 1,00,000, having an expected life of 10 years, will be treated as a capital expenditure, as its benefit can be availed for more than one year; whereas, the per year depreciation of the machinery, say Rs 10,000, will be regarded as a revenue expenditure.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"2-when-should-revenue-be-recognized-are-there-exceptions-to-the-general-rule\"><\/span>2. When should revenue be recognized? Are there exceptions to the general rule?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Revenue should be recognised when sales take place either in cash or credit and\/or right to receive income from any source is established. Revenue is not recognised, in case, if the income or payment is received in advance or the payment is actually received from the debtors. In a nutshell, revenue will be recognised when the right to receive income is established. For example, Mr. A sold goods in January and received payment in February; then revenue is considered to be recognised in the month of January and not in February. However, if Mr A received cash in advance, i.e. in December and goods are sold in January, then the revenue is recognised in January and not in December.<br \/>The exceptions to this rule are given below.<br \/>1) Hire purchase- When goods are sold on hire-purchase system , the amount received in instalments is treated as revenue.<br \/>2) Long term construction contract- The long term projects like construction of dams, highways, etc. have long gestation period.<br \/>Income is recognised on proportionate basis of work certified and not on the completion of contract.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"3-what-is-the-basic-accounting-equation\"><\/span><strong>3. What is the basic accounting equation?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The basic accounting equation is,<br \/>Assets = Liabilities + Capital<br \/>It means that all the monetary value of all assets of a firm are equal to the total claims, viz. owners and outsiders. The realisation concept determines when goods sent on credit to customers are to be included in the sales figure for the<br \/>purpose of computing the profit or loss for the accounting period. Which of the following tends to be used in practice to<br \/>determine when to include a transaction in the sales figure for the period. When the goods have been:<br \/>a. dispatched b. invoiced<br \/>c. delivered d. paid for<\/p>\n<h3><span class=\"ez-toc-section\" id=\"4-give-reasons-for-your-answer\"><\/span><br \/><strong>4. Give reasons for your answer.<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>According to the realisation concept, revenue is recognised when an obligation to receive the amount arises. When the goods are<br \/>invoiced, it is treated as the transfer of ownership of goods from the seller to the buyer and hence the revenue is recognised.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"5-complete-the-following-work-sheet\"><\/span><strong>5. Complete the following work sheet:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><strong>(i) If a firm believes that some of its debtors may \u201d\u00b2default\u201d\u00b2, it should act on this by<\/strong><br \/><strong>making sure that all possible losses are recorded in the books. This is an example of<\/strong><br \/><strong>the ___________ concept.<\/strong><br \/><strong>(ii) The fact that a business is separate and distinguishable from its owner is best<\/strong><br \/><strong>exemplified by the ___________ concept.<\/strong><br \/><strong>(iii) Everything a firm owns, it also owns out to somebody. This co-incidence is<\/strong><br \/><strong>explained by the ___________ concept.<\/strong><br \/><strong>(iv) The ___________ concept states that if straight line method of depreciation is used<\/strong><br \/><strong>in one year, then it should also be used in the next year.<\/strong><br \/><strong>(v) A firm may hold stock which is heavily in demand. Consequently, the market value<\/strong><br \/><strong>of this stock may be increased. Normal accounting procedure is to ignore this<\/strong><br \/><strong>because of the ___________.<\/strong><br \/><strong>(vi) If a firm receives an order for goods, it would not be included in the sales figure<\/strong><br \/><strong>owing to the ___________.<\/strong><br \/><strong>(vii) The management of a firm is remarkably incompetent, but the firms accountants can<\/strong><br \/><strong>not take this into account while preparing book of accounts because of ________<\/strong><br \/><strong>concept.<\/strong><\/p>\n<p><strong>Ans <\/strong>(i) If a firm believes that some of its debtors may \u201d\u00b2default\u201d\u00b2, it should act on this by<br \/>making sure that all possible losses are recorded in the books. This is an example of<br \/>the conservatism concept.<br \/>(ii) The fact that a business is separate and distinguishable from its owner is best<br \/>exemplified by the business entity concept.<br \/>(iii) Everything a firm owns, it also owns out to somebody. This co-incidence is<br \/>explained by the dual aspect concept.<br \/>(iv) The consistency concept states that if straight line method of depreciation is used in<br \/>one year, then it should also be used in the next year.<br \/>(v) A firm may hold stock which is heavily in demand. Consequently, the market value<br \/>of this stock may be increased. Normal accounting procedure is to ignore this<br \/>because of the conservatism.<br \/>(vi) If a firm receives an order for goods, it would not be included in the sales figure<br \/>owing to the revenue recognition.<br \/>(vii) The management of a firm is remarkably incompetent, but the firm&#8217;s accountants<br \/>cannot take this into account while preparing book of accounts because of money<br \/>measurement concept.<\/p>\n<p><strong>Long answers : Solutions of Questions on Page Number : 38<\/strong><\/p>\n<h3><span class=\"ez-toc-section\" id=\"6-%e2%80%98the-accounting-concepts-and-accounting-standards-are-generally-referred-to-as-the-essence-of-financial-accounting%e2%80%99-comment\"><\/span>6. &#8216;<strong>The accounting concepts and accounting standards are generally referred to as the essence of financial accounting&#8217;. Comment.<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><br \/>Financial accounting is concerned with the preparation of the financial statements and provides financial information to various accounting users. It is performed according to the basic accounting concepts like Business Entity, Money Measurement, Consistency, Conservatism, etc. These concepts allow various alternatives to treat the same transaction. For example, there are a number of methods available for calculating stock and depreciation, which can be followed by various firms. This leads to wrong interpretation of financial results by external users due to the problem of inconsistency and incomparability of financial results among different business entities. In order to mitigate inconsistency and incomparability and to bring uniformity in preparation of the financial statements, accounting standards are being issued in India by the Institute of Chartered Accountant of India. Accounting standards help in removing ambiguities and inconsistencies. Hence, accounting standards and accounting concepts are referred as the essence of financial accounting.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"7-why-is-it-important-to-adopt-a-consistent-basis-for-the-preparation-of-financial-statements-explain\"><\/span><strong>7. Why is it important to adopt a consistent basis for the preparation of financial statements? Explain.<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Financial statements are drawn to provide information about growth or decline of business activities over a period of time or comparison of the results, i.e. intra-firm (comparison within the same organisation) or inter-firm comparisons (comparison between different firms). Comparisons can be performed only when the accounting policies are uniform and consistent. According to the Consistency Principle, accounting practices once selected should be continued over a period of time (i.e. years after years) and should not be changed very frequently. These help in a better understanding of the financial statements and thus<br \/>make comparisons easy. For example, if a firm is following FIFO method for recording stock, and switches over to the weighted average method, then the results of this year cannot be compared to that of the previous years. Although consistency does not prevent change in the accounting policies, but if change in the policies is essential for better presentation and better understanding of the financial results, then the firm must undertake change in its accounting policies and must fully disclose all the relevant information, reasons and effects of those changes in the financial statements.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"8-discuss-the-concept-based-on-the-premise-%e2%80%98do-not-anticipate-profits-but-provide-for-all-losses%e2%80%99\"><\/span><br \/><br \/><strong>8. Discuss the concept-based on the premise &#8216;do not anticipate profits but provide for all losses&#8217;.<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>According to the Conservatism Principle, profits should not be anticipated; however, all losses should be accounted (irrespective whether they occurred or not). It states that profits should not be recorded until they get recognized; however, all possible losses<br \/>even though they may happen rarely, should be provided. For example, stock is valued at cost or market price, whichever is lower. If the market price is lower than the cost price, loss should be accounted; whereas, if the former is more than the latter, then this profit<br \/>should not be recorded until unless the stock is sold. There are numerous provisions that are maintained based on the conservatism principle like, provision for discount to debtors, provision for doubtful bad debts, etc. This principle is based on the common sense and depicts pessimism. This also helps the business to deal uncertainty and unforeseen conditions.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"9-what-is-matching-concept-why-should-a-business-concern-follow-this-concept-discuss\"><\/span><strong>9. What is matching concept? Why should a business concern follow this concept? Discuss?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Matching Concept states that all expenses incurred during the year, whether paid or not, and all revenues earned during the year, whether received or not, should be taken into account while determining the profit of that year. In other words, expenses incurred in<br \/>a period should be set off against its revenues earned in the same accounting period for ascertaining profit or loss. For example, insurance premium paid for a year is Rs1200 on July 01 and if accounts are closed on March 31, every year, then the insurance premium of the current year will be ascertained for nine months (i.e. from July to March) and will be calculated as, Rs 1200 &#8211; Rs 900 = Rs 300 Thus, according to the matching concept, the expense of Rs 900 will be taken into account and not Rs 1200 for determining profit,<br \/>as the benefit of only Rs 900 is availed in the current accounting period. The business entities follow this concept mainly to ascertain the true profit or loss during an accounting period. It is possible that in the same accounting period, the business may either pay or receive payments that may or may not belong to the same accounting period. This leads to either overcasting or undercasting of the profit or loss, which may not reveal the true efficiency of the business and its activities in the concerned accounting period. Similarly, there may be various expenditures like, purchase of machinery,<br \/>buildings, etc. These expenditures are capital in nature and their benefits can be availed over a period of time. In such cases, only the depreciation of such assets is treated as an expense and should be taken into account for calculating profit or loss of the<br \/>concerned year. Thus, it is very necessary for any business entity to follow the matching concept.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"10-what-is-the-money-measurement-concept-which-one-factor-can-make-it-difficult-to-compare-the-monetary-values-of-one-year-with-the-monetary-values-of-another-year\"><\/span><strong>10. What is the money measurement concept? Which one factor can make it difficult to compare the monetary values of one year with the monetary values of another year?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Money Measurement Concept states that only those events that can be expressed in monetary terms are recorded in the books of accounts. For example, 12 television sets of Rs10,000 each are purchased and this event is recorded in the books with a total<br \/>amount of Rs 1,20,000. Money acts a common denomination for all the transactions and helps in expressing different measurement units into a common unit, for example rupees. Thus, money measurement concept enables consistency in maintaining accounting<br \/>records. But on the other hand, the adherence to the money measurement concept makes it difficult to compare the monetary values of one period with that of another. It is because of the fact that the money measurement concept ignores the changes in the<br \/>purchasing power of the money, i.e. only the nominal value of money is concerned with and not the real value. What Rs 1 could buy 10 years back cannot buy today; hence, the nominal value of money makes comparison difficult. In fact, the real value of money<br \/>would be a more appropriate measure as it considers the price level (inflation), which depicts the changes in profits, expenses, incomes, assets and liabilities of the business.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"access-other-ncert-chapters-solutions-of-class-11-accountancy\"><\/span><b>Access Other NCERT Chapters Solutions of Class 11 Accountancy.\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>Chapter-1 Introduction to Accountancy<\/strong><\/p>\n<p><a href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-3\/\" data-wplink-edit=\"true\"><strong>Chapter-3 Recording Of Transactions &#8211; I<\/strong><\/a><\/p>\n<p><a href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-4\/\" data-wplink-edit=\"true\"><strong>Chapter-4 Recording Of Transactions &#8211; II<\/strong><\/a><\/p>\n<p><a href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-5\/\" data-wplink-edit=\"true\"><strong>Chapter-5 Bank Reconciliation Statement<\/strong><\/a><\/p>\n<p><a href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-6\/\" data-wplink-edit=\"true\"><strong>Chapter-6 Trial Balance And Rectification Of Errors<\/strong><\/a><\/p>\n<p><a href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-7\/\" data-wplink-edit=\"true\"><strong>Chapter-7 Depreciation, Provisions, and Reserves<\/strong><\/a><\/p>\n<p><a href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-7\/\" data-wplink-edit=\"true\"><strong>Chapter-8 Bill of Exchange<\/strong><\/a><\/p>\n<p><a href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-7\/\"><strong>Chapter-9 Financial Statements &#8211; 1<\/strong><\/a><\/p>\n<p><a href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-7\/\"><strong>Chapter-10 Financial Statements &#8211; 2<\/strong><\/a><\/p>\n<p><span style=\"color: #3366ff\"><a style=\"color: #3366ff\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-11\/\"><strong>Chapter-11 Accounts From Incomplete Records<\/strong><\/a><\/span><\/p>\n<p><a href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-12\/\"><strong>Chapter-12 Applications of Computers in Accounting<\/strong><\/a><\/p>\n<p><a href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-13\/\"><b>Chapter-13 Computerized Accounting System<\/b><\/a><\/p>\n<p><a href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-14\/\"><strong>Chapter-14 Depreciation<\/strong><\/a><\/p>\n<p><a href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-15\/\"><strong>Chapter-15 Bank Reconciliation Statement<\/strong><\/a><\/p>\n<p><b>We have provided all the important above in the article regarding the <a href=\"https:\/\/www.cbse.gov.in\/\" target=\"_blank\" rel=\"noopener\">CBSE<\/a> NCERT Solutions for Class 11 Accountancy Chapter 2. If you have any queries, you can mention them in the comment section.<\/b><\/p>\n<h2><span class=\"ez-toc-section\" id=\"faq-on-ncert-solutions-for-class-11-accountancy-chapter-2\"><\/span><strong>FAQ on<\/strong> <b>NCERT Solutions for Class 11 Accountancy Chapter 2<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div id=\"rank-math-faq\" class=\"rank-math-block\">\n<div class=\"rank-math-list \">\n<div id=\"faq-question-1627031510377\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"what-is-the-most-fundamental-accounting-equation\"><\/span><strong>What is the most fundamental accounting equation?<\/strong>\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Individuals must have prior knowledge of the basic fundamental equations of accounting to get good information about the field of accounting. The accounting equation is one of the most important aspects of the balance sheet. The total assessed amount of a corporation is equal to the total office liabilities plus the capital held by the owners. Many accounting equations can assist a student in identifying various variables such as working capital, asset value, and liability value. Accounting may be made easier and more participatory with the adoption of these ideas.\u00a0<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1627031552091\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"why-is-it-required-to-adopt-a-consistent-method-of-preparation-of-financial-statements\"><\/span><strong>Why is it required to adopt a consistent method of preparation of financial\u00a0statements?<\/strong>\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Every dependent accountant or business\u00a0organisation\u00a0should\u00a0recognize\u00a0the need of keeping appropriate books of accounts. It&#8217;s critical to figure out how the company is doing financially because profit is the fundamental goal of any corporation. This process can only be completed by keeping accurate books of accounts regularly.\u00a0Hence, consistency in bookkeeping is required. How consistent accounting process helps\u00a0with the decision making of the company. <br \/>For example, an\u00a0organisation\u00a0adopting one specific Method of preparing the financial statements should continue using the same procedure and not use a different way after a duration to calculate the financial results of two years\u00a0<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1627031575630\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"what-are-the-types-of-liabilities\"><\/span><strong>What are the types of liabilities?<\/strong>\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>There are two sorts of liabilities:\u00a0<br \/>Short term liability \u2013 These are the ones that an organization expects to pay for within or before 12 months.\u00a0<br \/>Long term liability \u2013 These are the ones that an organization expects to pay for within 12 months or later than that.\u00a0<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1627031604922\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"how-do-you-define-assets\"><\/span><strong>How do you define assets?<\/strong>\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>assets are the company&#8217;s resources that it owns and controls. In any form, it is a resource with monetary worth that is employed for future advantages. The forms can be used to generate cash flow, increase sales by lowering expenses, and so on (may affect the sales directly or indirectly).\u00a0<\/p>\n\n<\/div>\n<\/div>\n<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>NCERT Solutions for Class 11 Accountancy Chapter 2: We&#8217;ve put together a guide that covers all of the subjects in this chapter in an easy-to-understand manner. These NCERT solutions have been developed by subject matter specialists in accordance with the most recent CBSE rules and can be downloaded for free from our website. They assist &#8230; <a title=\"Class 11 Accountancy NCERT Solutions for Chapter 2 2021\" class=\"read-more\" href=\"https:\/\/www.kopykitab.com\/blog\/ncert-solutions-for-class-11-accountancy-chapter-2\/\" aria-label=\"More on Class 11 Accountancy NCERT Solutions for Chapter 2 2021\">Read more<\/a><\/p>\n","protected":false},"author":250,"featured_media":107695,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":""},"categories":[2934,73692,73413,73422],"tags":[3570,76233,76416],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/107688"}],"collection":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/users\/250"}],"replies":[{"embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/comments?post=107688"}],"version-history":[{"count":5,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/107688\/revisions"}],"predecessor-version":[{"id":113096,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/107688\/revisions\/113096"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/media\/107695"}],"wp:attachment":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/media?parent=107688"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/categories?post=107688"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/tags?post=107688"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}