Class 11 Accountancy NCERT Solutions Chapter 10 Financial Statements 2
Last updated date: 27th Jan 2023
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Vedantu delivers a detailed NCERT Solutions for Class 11 Accountancy Chapter 10 Financial Statements 2. The subject experts have provided thorough explanations as per the guidelines of NCERT (CBSE) for all the questions to make studying more fun and exciting for the students. NCERT Accountancy book Class 11 solutions PDF can be downloaded from Vedantu which has examples and solved questions with explanations for each concept to help students practise the questions effectively and become more efficient in scoring marks. Vedantu also provides solutions for a variety of subjects ranging from Science, Maths, English and Hindi of Class 11. Without further delay, let’s understand the basic questions from CBSE Class 11 Accountancy Chapter 10.
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What are Financial Statements?
Financial Statements are those accounts that are prepared at the end of each financial year. It provides a detailed report about the financial position and the profitability of a business or organisation to the concerned people. With the help of the Financial Statements, you can calculate the profit or loss incurred due to every separate transaction, prepare the financial statements for future planning, get a precise picture of the current financial viability of the company and start on the mitigation process if there is a gross loss in a financial year. In short, Financial Statements serve as a performance record for the company or the organisation.
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How to Prepare a Final Statement?
The final statement should be prepared with the utmost care because it plays an important role in the evaluation of the business. The following are the steps to be followed while preparing the final statement:
There are three types of final accounts namely balance sheet, loss and profit account and trading account.
Generate and record all the transactions.
Include personal expenses such as rent, travel, shopping and power bill, etc.
Differentiate the transactions by book-keeping.
Close the drawing account to freeze further transactions.
To determine the accuracy, generate a trial balance sheet.
After the trial balance sheet, a final statement is generated.
What are Doubtful Debts?
A doubtful debt is a certain amount of money that the business or organisation does not expect to collect back from the client. The difference between doubtful debt and bad debt is that there is a possibility that the client might return the debt in the case of doubtful debt whereas bad debt is identified as the debt not being collectable. It is important to make provisions for doubtful debts in the final account to get an accurate estimate. This is called Provision for foreseeable loss and the loss is taken into account in the next financial statement.
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Solved Example for Accountancy Class 11 Chapter 10
Q1) Why do we need Financial Statements?
To calculate profit and loss.
To estimate the financial viability of a company.
To prevent future losses
All the above.
Ans: 4) All the above.
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FAQs on NCERT Solutions for Class 11 Accountancy Chapter 10 Financial Statements - 2
1. What is a Closing Stock? How Does the Final Statement Interpret Closing Stock?
The amount of raw materials that are left unsold at the end of the accounting period will be treated as the closing stock. The value of the closing stock is calculated based on the difference between cost price and its resalable value. In the final statement, the closing stock will be put in the trial balance sheet where the value of the closing stock will be added as credit or debit based on the resale value of the goods. Closing stock will come under the asset part of the balance sheet as the goods still have monetary value at the end of the accounting period.
2. What is a Trading Account? How to Open a Trading Account?
A trading account is predominantly used to buy and sell stocks in the share market. This account acts as an interface between your bank account and the Demat account. Money is debited from your bank account and shares that were bought will be credited to your Demat account. This account ensures frictionless trading with safety and security from your laptop or mobile phone. Opening a trading account is an easy and simple process. The documents like Aadhar, PAN, personalised cheque and a photograph must be provided and you can open a trading account online from the ease of your desk.
3. What are outstanding expenses?
It is very normal that in any business enterprise there will be some unpaid expenditure at the end of the accounting year. This can include wages, salaries, interest on the loan if taken etc. When the amount remains unpaid till the end of the accounting period, it is known as outstanding expenses. This is opened as a new account as outstanding expenses which reflects as liabilities in the balance sheet.
4. What do you understand about depreciation?
Depreciation can be defined as the decline in the value of assets and is added and shown as the business expenditure and gets debited to profit and loss account. The asset is shown as the cost minus the depreciation in the balance sheet. Depreciation is shown in the profit and the loss account. For further clarification of this chapter please refer to Vedantu where the solutions are easy to understand.
5. Explain accrued income.
Some of the income such as rent, interest on the loan, and commission is earned in the current year but it is not received till the end of the accounting period. Such accounts are known as accrued income, as mentioned in Class 11 Accountancy Chapter 10 NCERT Solutions. The amount of this account gets added to the related income in the profit and loss account. A new entry will be made on the asset side of the balance sheet.
6. What do you understand about interest in the capital?
Sometimes it is obvious that the proprietor would like to know the profit made by the business after providing the interest on the capital. In such conditions, interest is calculated on the given rate of interest at the beginning of the accounting year. If any additional capital is added the interest is calculated for the additional amount from the date it is added. You can also refer to NCERT Solutions for a detailed explanation of all the topics in the chapter at Vedantu’s website. Any solution or study material is available to download free of cost.
7. What are the provisions of discount on debtors?
A business enterprise allows a certain discount to its debtors as a token of encouragement to prompt payments. This provision is given to the good debtors only. This is calculated on the amount of the debtors arrived at after deducting the doubtful debts. This is further shown as the deduction in the debtors account so that the expected value is portrayed accurately. Refer to the NCERT Solutions of Chapter 10 of Class 11 Accountancy to learn more about this.