Class 11 Accountancy - Chapter Introduction to Accounting NCERT Solutions | Explain the development and role of acco
Explain the development and role of accounting.
Development of accounting
In ancient times, around 4000 B.C., accounting was used for recording wages and salaries, deposits and withdrawals of valuable goods (such as gold and silver) by the treasures of the king. Afterwards, it was used to record the receipts and payments and balancing of government financial transactions. During 1500 A.D., accounting was used by business firms for recording transactions related to business. In 1800 A.D., accounting was used to record transactions and also to provide information to various users of financial data.
Role of accounting− While in the earlier times accounting was merely concerned with recording the financial events (i.e. record-keeping activity); however, now-a-days, accounting is done with the rationale of not only maintaining records, but also providing an information system that provides important and relevant information to various accounting users.
1. Substitute of memory− As, it is beyond human capabilities to remember each and every business transaction, so accounting plays an important role in recording these transactions in the book of accounts.
2. Assistance to management− Management uses accounting information for short term and long term planning of business activities and to control various costs and budgets.
3. Comparative study− In order to ascertain the performance of the business, accounting enables comparison of current year’s profit with that of previous years (intra-firm comparison) and also with other firms in the same business (inter-firm comparison).
4. Evidence in court− It acts as evidence that can be used or presented in the court, if any discrepancy arises in the future.
More Questions From Class 11 Accountancy - Chapter Introduction to Accounting
- Q:-
Mr. Sunrise started a business for buying and selling of stationery with ₹ 5,00,000 as an initial investment. Of which he paid ₹ 1,00,000 for furniture, ₹ 2,00,000 for buying stationery items. He employed a sales person and clerk. At the end of the month he paid ₹ 5,000 as their salaries. Out of the stationery bought he sold some stationery for ₹ 1,50,000 for cash and some other stationery for ₹ 1,00,000 on credit basis to Mr. Ravi. Subsequently, he bought stationery items of ₹ 1,50,000 from Mr. Peace. In the first week of next month there was a fire accident and he lost ₹ 30,000 worth of stationery. A part of the machinery, which cost ₹ 40,000, was sold for ₹ 45,000.
From the above, answer the following :
1. What is the amount of capital with which Mr. Sunrise started business?
2. What are the fixed assets he bought?
3. What is the value of the goods purchased?
4. Who is the creditor and state the amount payable to him?
5. What are the expenses?
6. What is the gain he earned?
7. What is the loss he incurred?
8. Who is the debtor? What is the amount receivable from him?
9. What is the total amount of expenses and losses incurred?
10. Determine if the following are assets, liabilities, revenues, expenses or none of the these: sales, debtors, creditors, salary to manager, discount to debtors, drawings by the owner. - Q:- Explain the qualitative characteristics of accounting information.
- Q:- Describe the role of accounting in the modern world.
- Q:-
Complete the following sentences with appropriate words:
(a) Information in financial reports is based on .....................
(b) Internal users are the ..................... of the business entity.
(c) A ..................... would most likely use an entities financial report to determine whether or not the business entity is eligible for a loan.
(d) The Internet has assisted in decreasing the ..................... in issuing financial reports to users.
(e) ..................... users are groups outside the business entity, who uses the information to make decisions about the business entity.
(f) Information is said to be relevent if it is ......................
(g) The process of accounting starts with ............ and ends with ............
(h) Accounting measures the business transactions in terms of ............ units.
(i) Identified and measured economic events should be recording in ............ order. - Q:- What do you mean by an asset and what are different types of assets?
- Q:-
Define accounting and state its objectives.
- Q:-
Enumerate informational needs of management.
- Q:-
'Accounting information should be comparable'. Do you agree with this statement? Give two reasons.
- Q:-
Giving examples, explain each of the following accounting terms:
* Fixed assets * Revenue * Expenses
* Gain * Profit * Capital
* Short-term liabilities - Q:-
Distinguish between debtors and creditors.
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- Q:-
State the need for the preparation of bank reconciliation statement?
Recently Viewed Questions of Class 11 Accountancy
- Q:-
Explain briefly the procedure of calculating the date of maturity of a bill of exchange? Give example.
- Q:-
What are the possible reasons for keeping incomplete records?
- Q:-
Give the performa of a Bills Payable Book.
- Q:-
Double column cash book records:
(i) All transactions
(ii) Cash and bank transactions
(iii) Only cash transactions
(iv) Only credit transactions - Q:-
Fill in the blanks:
(i) A bill of exchange is a __________ instrument.
(ii) A bill of exchange is drawn by the __________ upon his __________.
(iii) A promissory note is drawn by __________ in favour of his __________.
(iv) There are __________ parties to a bill of exchange.
(v) There are __________ parties to a promissory note.
(vi) Drawer and __________ can not be the same parties in case of a bill of exchange.
(vii) Bill of exchange in India languages is called __________.
(viii) __________ days of grace are added in terms of the bill to calculate the date of its __________. - Q:-
Give a specimen of an account.
- Q:-
Fill in the correct word:
1. Recognition of expenses in the same period as associated revenues is called _______________concept.
2. The accounting concept that refers to the tendency of accountants to resolve uncertainty and doubt in favour of understating assets and revenues and overstating liabilities and expenses is known as _______________.
3. Revenue is generally recognised at the point of sale denotes the concept of _______________.
4. The _______________concept requires that the same accounting method should be used from one accounting period to the next.
5. The_______________concept requires that accounting transactions should be free from the bias of accountants and others. - Q:-
Distinguish between bill of exchange and promissory note.
- Q:-
Balancing of account means :
(i) Total of debit side
(ii) Total of credit side
(iii) Difference in total of debit & credit
(iv) None of these - Q:-
Describe the events recorded in accounting systems and the importance of source documents in those systems?
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