Class 11 Accountancy NCERT Solutions Chapter 8 Financial Statements 1
Vedantu provides easy to understand NCERT Solutions for Class 11 Accountancy Chapter 8. Our faculty have solved and explained all the questions given in the chapter, as per the CBSE guidelines, in the NCERT Solutions Class 11 Accountancy Chapter 8. The solutions to the questions are provided here in a PDF format to simplify the learning experience. Students can download the NCERT Solutions for Class 11 Accountancy Chapter 8 PDF from Vedantu for free. Referring to these NCERT Solutions will help them revise the chapter properly and secure good marks in the examinations.
- 2.1What Are the Financial Statements? What Are the Objectives of Financial Statements?
- 2.2These Financial Statements Incorporate the Following Reports.
- 2.3Objectives of Preparing Financial Statements
- 2.4What is a Balance Sheet? What Are the Features of a Balance Sheet?
- 2.5The Features of the Balance Sheet Are as Follows.
- 2.6Solved Example
Now let's start with the basic questions related to Accountancy Class 11 Chapter 8.
FAQs on NCERT Solutions for Class 11 Accountancy Chapter 8 Financial Statements 1
1. What is meant by operating profit?
An operating profit measures the profit that a company makes from its underlying business functions. So it is an overall accounting metric. It does not consider the deduction in interest and rules out the calculation of tax. The operating profit of a company is usually available on the income statement as a total amount. This calculation is not necessary to be equivalent to the cash flow of business, but it is to get an idea of the profit-making potential of a company before the accounting of expenses.
The calculation formula for operating profit is as follows.
Operating Profit = Net Profit + Non-Operating Expenses – Non-Operating Incomes
2. What is the objective of preparing trading and profit and loss accounts?
A trading account is one of the most imperative books that must be maintained by a business organization in order to successfully maintain accounts for a particular financial year. The objectives of preparing a trading account are as follows.
For determining the total profit or loss in a financial year or for a particular period.
For determining the proportion of direct expenses and sales.
For determining the proportion of gross profit and sales.
The objectives of preparing a profit and loss account are as follows.
To determine the total profit or loss sustained by the business.
To meet the terms and regulations in statutory legislation such as the Partnership Act or Company Act.
3. How can you distinguish between capital and revenue?
In Chapter 9 of Class 11 Accountancy Financial Statements, the distinction is very important in making the trading, profit and loss account and the balance sheet. The revenue is the part of the trading, profit and loss account whereas the capital helps in the preparation of the balance sheet. A more elaborated difference can be obtained on the Vedantu website as well as the mobile app free of cost.
4. What are the main objectives of a business?
The main objective of the business is to have meaningful communication with the stakeholders so that it becomes easier for them to make decisions. A stakeholder is a person who is associated with the business directly or indirectly through a monetary or non-monetary association. He can also be internal or external. Internal means the stakeholder is within the business and external means he is outside the business.
5. What are profit and loss accounts?
Profit and loss account is very important in any business. The profit is said when the expenses are less than the revenue. The loss is said when the expenses are more than the revenue. Profit and the loss account is achieved by transferring the balances of the revenue and the expenses to the profit and loss account taken by the trial balance. This also includes the debit and the credit sides. The debit is transferred towards the loss and the credit balance towards the credit side.
6. What are the tips to prepare the Chapter?
Chapter 9 of Class 11 Accountancy Financial Statements is very important for any person who will be taking care of the accounts. Students should have comprehensive knowledge of all the topics. Each topic is important and is interconnected with one another. You should prepare the topics accordingly by understanding one topic and going to the other. This way, you will have the flow and you can properly get the concept.
7. What do you understand about operating profit?
In Chapter 9 of Class 11 Accountancy Financial Statements Operating profit is the profit earned from the operations and the business activities. Operating profit can be defined as the excess of operating revenue over the operating expenses. While calculating the operating profit the income and the expenses, which are purely financial are not taken into account. Operating profit is the profit before the interest and the tax.
