Revision Notes for CBSE Class 11 Accountancy Chapter 1 - Free PDF Download
Revision Notes for Class 11 Accountancy offered by Vedantu is a step-by-step coverage of all the topics of Class 11 Accountancy Chapter 1.
Our Accountancy Class 11 Chapter 1 Notes aid students to have a quick go-through of the various concepts and variables, which comprises all the topic coverage of the chapter. Our revision notes for CBSE NCERT books for Class 11 Accountancy provide simple and comprehensible study material as per the syllabus. Download the NCERT CBSE Revision Notes PDF to have a detailed sense of the chapter for a better understanding.
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CBSE Class 11 Accountancy Chapter-wise Revision Notes
Access Class 11 Accountancy Part 1 Chapter 1 - Introduction To Accounting
Accounting is an art of recording, classifying and summarizing the monetary transactions in an efficient manner and interpreting the results.
Functions of Accounting
Identifying: Identifying the business transactions from various sources is the first step of accounting.it involves observing all business activities and identifying those which are considered as financial transactions.
Recording: Only those transactions are recorded in books of accounts which can be measured in terms of money. It involves recording them in a journal and keeping a systematic record of all of them.
Classifying: After recording the transactions they are classified. Classification refers to the grouping of all the transactions of same nature at one place.
Summarising: It is the process of putting the balances of all accounts at one place i.e. Trial balance.
Communicating: Accounting also includes the communication of financial data like financial statements to the users who analyse them as per individual requirements.
Objectives of Accounting
To maintain proper records of business transactions according to specified rules which helps them to minimize the chance of omission and fraud.
To ascertain the net profit or loss suffered on account of business transactions during a particular period and to know the exact reasons leading to profit or loss.
To ascertain the financial position of business by means of financial statement i.e,Balance sheet.
To ascertain the progress of business from year to year and to detect errors and frauds.
To provide accounting information to various interested parties like owners, creditors, banks, employees etc. who perform an in depth analysis as per the requirement of the stakeholders.
Advantages of Accounting
Accounting provides permanent records for all business transactions and provides reliable information to various parties.
Accounting provides the Profit and loss of a business for a given period of time.
Accounting provides the facility of comparative study of the various aspects of business like profit sales, purchase,etc. with that of previous years and helps businessmen to make decisions.
Accounting forms a basis in the process of performance evaluation to improve the performance of employees, divisions,activities, etc.
Accounting records act as an approved evidence in legal matters.
Limitations of Accounting
One of the major limitations of accounting is that it considers only monetary transactions. Non monetary aspects like quality, honesty, skills are ignored in accounting.
It considers only historical transactions and the figures given in the financial statement do not consider price level changes.
It is influenced by personal judgements and not free from personal bias which affects its credibility.
It is affected by window dressing which means manipulation of accounts so that financial statements describe a more favourable position than the actual position.
Financial accounts are unsuitable for forecasting because they are only records of past events.
Book-Keeping-Base of Accounting
Book keeping is an art of recording the transactions in the books of accounts. Only those transactions which bear a monetary value are recorded. It is the first step of accounting. Its main purpose is record keeping or maintenance of books of accounts, It should not be confused with accounting. Differences between the two are as follows.
Basis of distinction
It is concerned only with recording of monetary transactions.
It also includes classifying, summarizing, analysing and also communicating the results to users.
It’s a primary stage.
It’s a secondary stage.
To maintain systematic records of business.
To calculate the net profit or net loss in the business.
Routine and clerical.
It is done by junior level staff.
It is done by senior level staff.
Subfields of Accounting
Financial Accounting:The main purpose of this branch is to record the business transactions in a systematic manner, to ascertain profit or loss and to present the financial position of the business with the help of a balance sheet.
Cost Accounting: The main purpose of cost accounting is to ascertain the total cost and per unit cost of goods produced and services rendered by business.
Management Accounting: The main purpose of this branch is to present the accounting information in such a way as to assist the management in planning and controlling the operations of business.
Tax Accounting: This branch is used for tax purposes. Income tax and gst are computed on the basis of this accounting.
Qualitative Characteristics of Accounting Information
Accounting information should be prepared and presented in such a way that is able to depict a clear view of business enterprise.
1. Reliability: It implies that information must be factual and verifiable. And free from errors.
2. Relevance: Accounting information must be relevant to the objectives of enterprise. To be relevant, information must help the users of accounting information in making decisions.
3.Understandability: Accounting information should be presented in such a manner that they are understood easily by their users such as investors, employees, etc.
4. Comparability: It is a very useful quality of accounting information. Financial statements should contain previous year data so that it can be compared with current year so that current performance be compared with past performance.
Business Transaction: A Business transaction is an economic activity of business that changes its financial position.
Account: It is a record of all business transactions relating to a particular person or item. It is a T Shaped proforma.
Capital: It refers to the amount invested by the owner in a business. The amount invested could be in the form of cash, goods, etc.
Drawing: Any cash or goods withdrawn by the owner for personal use made out of business funds are known as drawings.
Profit: It is the excess of total revenue over total expense of a business. Profit =Revenue-Expenses.
Loss: The excess of expenses over related revenue is known as loss. Loss= Expenses-Revenue.
Gain: It is a monetary benefit resulting from events or transactions which are incidental to business like profit on sale of fixed assets.
Stock: It includes goods unsold on a particular date.
Purchases: It refers to the amount of goods bought by business for resale or use in production.it can be of cash or credit.
Purchase return: When purchased goods are returned to suppliers, it is referred to as purchase return.
Sales: It means transfer of goods or services for money in the normal course of business.
Sales return: When customers return the goods sold to them it is known as sales returns.
Debtors: It refers to those persons whose business has been sold goods on credit and payment has not been received yet.
Creditors:It refers to those persons whose business buys goods on credit and payment has not been done yet.
Voucher: A voucher is a written document which is created in support of a particular transaction. It may be in the form of a cash memo, invoice or receipt. Voucher is a necessary component of auditing.
Income: It is the difference between revenue and expense.
Expense: It is the amount used in order to produce and sell goods and services.
Discount: It is the rebate given by the seller to the buyer. It is of 2 types: Cash Discount and Trade Discount.
Cash Discount: When discount is allowed to customers for making prompt payment.It is always recorded in books of accounts.
Trade Discount: This is a type of discount allowed by the sellers to their customers at a fixed percentage on the list price of goods. and also it is not entered in the books of accounts.
Bad Debts: It refers to the amount that debtor has not paid even after repeated reminders and has no intention of paying in the future.
Liabilities refers to financial obligations of business.it denote the amount which a business owes to others.ex- Creditors,loan,etc.It is of 2 types;
Non current liabilities: It refers to those which fall due for payment in a relatively longer period. For ex- long term loans.
Current liabilities: It refers to those which are to be paid in the near future. Ex-Creditors, Outstanding expenses.
It involves spending cash or incurring a liability for the purpose of acquiring assets,goods or services. It is of 3 types.
Revenue Expenditure: It refers to any expenditure,the full benefit of which is received during one accounting period.ex-salaries,rent.
Capital Expenditure: It refers to expenditure,the benefit of which is received during more than one year. Ex- Machinery.
Deferred Revenue Expenditure: It refers to expenditure which are revenue in nature but benefit of which is likely to be derived over no of years. Example-Advertisement.
Accountancy Class 11 Chapter 1 Notes Introduction to Accounting – A Quick Glimpse
The first chapter in the Class 11 Accounts book deals with the theoretical base required for the practice of accountancy. It defines in detail the Basic Accounting Terms which students will come across repeatedly in their studies. Our offered Introduction to Accounting PDF is structured and written by experts with many years of experience in teaching. Consequently, the study materials in the revision notes are precise and offer a comprehensive and easy understanding of the various topics.
The Accounting Notes from the chapter allow students to grasp difficult concepts such as recording financial and economic events, analysis of events to understand its classification, etc. easily.
The points and notes in the Introduction to Accounting Class 11 PDF treat all the concepts in a manner that aids students in easily memorising and understanding them.
It will further help them to exercise such knowledge in further chapters in Accounts Class 11. Our revision notes cover all key points pertinent to the chapter.
Accountancy Class 11 Chapter 1 Notes Introduction to Accounting – Benefits of Revision Notes
Let us check some of the benefits which are rendered by Class 11 Accountancy Chapter 1 Notes which is basically a revision material for the students:
Accountancy Chapter 1 Revision Notes will help the students to revise the entire chapter in a capsulated manner, this will lessen their exam preparation pressure.
Revision is a must for a student, and when it comes to the concepts of Accountancy, then this must be taken seriously.
But do the CBSE Class 11 Accountancy students have enough time to make their own revision notes? The chapters in Accountancy are so huge that the students struggle to complete the chapters, let alone make revision notes for them. In this scenario, Vedantu’s revision material will be a good resort. The students get ready-to-revise revision material which they can revise with complete reliability.
Revision must be done smartly. Thus follow our revision notes to revise in the same manner with lucid explanation.
At times, students tend to forget the concepts already studied, in such cases they can just have a quick look at the same and the concept is refreshed in their minds.
These capsulated revision studies will help the students to revise the content in less time, this will be especially beneficial at the time of their exam.
Accountancy Class 11 Chapter 1 Notes Introduction to Accounting - Topics Covered
Following are the topics covered which are covered:
Meaning of Accounting
Accountancy, Accounting, and Book-keeping
Relationship between Accountancy, Accounting, and Book-keeping
Distinguish between Book-keeping and Accounting
Users of Accounting information
Advantages and limitations of Accounting.
Basic Accounting terms
Double Entry System of Book-keeping
Accountancy Class 11 Chapter 1 Notes Introduction to Accounting - Extra Questions (Solved) for Practice
1. What are three examples of Revenue?
Ans. The three examples of revenue are as follows:
2. Why must two accounting information be compared?
Ans. Two reasons why accounting information must be compared are as follows:
The accounting information of a particular entity must be compared against the competitor’s accounting information in order to know where the entity stands in the market.
The accounting information of an entity must be also compared to its own information taken out over the years; this will help the management to know their progression and the entity’s trend can also be determined.
3. What are the two types of users of accounting information?
Ans. The two types of users of accounting information are:
How Do I Study Class 11 Accountancy? Tips to Study Better
Take note of some suggested tips on how to study accountancy better:
Accountancy is a subject that requires continuous practice. Thus, practice is the key to scoring excellent marks in accountancy.
In order to totally understand the chapters of Accountancy, you are required to study the concept priorly and then go through the illustrations given in the textbook after which you can solve the practical problems.
Revise the chapters well from these revision notes.
One can also study the NCERT Notes in order to know the Accountancy Class 11 Exam pattern accurately.
Vedantu – Your Before-Exam Study Partner
We, at Vedantu, aim to maintain the lucidity and easiness of our study material. As one of the most preferred online education platforms, our teachers are all subject experts with years of experience. These professionals have composed our Accountancy Class 11 Chapter 1 Notes keeping in perspective students’ learning curve. With our Class 11 Accountancy Notes PDF download, students can study at their convenience.
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FAQs on Introduction to Accounting Class 11 Notes CBSE Accountancy Chapter 1 (Free PDF Download)
1. What is Accounting in simple terms?
Accounting is an umbrella term for all the financial transactions carried out in any business. Accounting involves the process of recording financial transactions of a business, analysing them, summarising the financial statements, to create a consolidated report.
Accounting helps in keeping a record of the assets and liabilities of a business, thereby making it easier to balance the expenses and calculate the profit margin through all the financial transactions. The basic concepts of accounting are introduced in the syllabus of Class 11. Also, these interesting concepts of accounting make it a very scoring subject.
2. What are the topics covered in the CBSE Class 11 Accountancy Chapter 1?
The very elementary concepts of accounting are introduced in the first chapter of Class 11 Accountancy. A sound understanding of all these basic concepts is important, as they have an application in the higher learning of this subject. The topics covered in Chapter 1 - Accounting are listed below for your reference.
Definition of Accounting
Functions of Accounting (Identification, Recording, Classification, Summarising, Communication)
Objectives of Accounting
Advantages of Accounting
Limitations of Accounting
Bookkeeping (Double Entry system)
Types of Accounting Information
Branches of Accounting
Concepts of Assets, Liabilities, Receipts, Expenses, Expenditure, etc.
Introduction to basic terms of Accounting (Capital, Drawings, Purchase Returns, Sales, Sales Returns, Creditors, Debtors, Stock, Income, Voucher, etc.).
You can refer to the revision notes of this chapter on Vedantu, for a better understanding of all the concepts.
3. What is the difference between assets and liabilities?
Assets is an umbrella term for all the things that a business owns, whereas liabilities refer to all the money or services that a business owes. Assets help in identifying the benefits of a business, to some extent. The items in the inventory of a business, or the property such as buildings owned by the business, or the liquid cash that facilitates the business to thrive- all can be categorised as assets of the business. Liabilities are mostly the services or credit that a business owes in the industry or to its investors, to be more precise.
Even though a business should ideally have a greater amount of assets than liabilities, liabilities are not always a disadvantage. For example, instead of utilising the assets, if a business takes credit amount for expansion, then liabilities are helpful in this case. Of course, the credit amount has to be paid off, preferably with the sales proceeds.
4. Are the Revision Notes Chapter - 1 Introduction to Accounting for CBSE Class 11 Accountancy, reliable for the exam preparation?
Yes. The revision notes for Chapter 1 of Class 11 Accountancy are very reliable for your exam preparation. These notes are prepared by highly qualified teachers at Vedantu to facilitate an easy understanding of the concepts of accounting. These revision notes are available in a PDF format and can be downloaded for absolutely free of cost. All the key points of the topics covered in this chapter are highlighted in these notes to help students make a quick revision of this chapter before the exam.
5. What are the characteristics of accounting Class 11?
Accounting information should be prepared without keeping a bias. It should give relevant and true information about accounts. An accountant should record the information consistently. The report prepared by the accountant should be useful for the company for making future decisions. It should not only be just putting figures in the sheet. The report should be prepared after consulting the other members of the team so that proper information is available at all times.
6. How can CBSE Class 11 Accounting Chapter 1 notes help me?
CBSE Class 11 accounting notes available on Vedantu can be very useful for the students of class 11. They can use the notes for exam preparation and for understanding the basic concepts of accounting. The Class 11 Accountancy Chapter 1 Revision Notes are prepared by professional teachers in easy language. Students can easily understand the concepts given in the first chapter of class 11 accounting by reading the notes from the Vedantu website or from the Vedantu app at free of cost.
7. How can I find important questions for Class 11 Accounting Chapter 1?
All important questions for Class 11 Accounting Chapter 1 are given on the page Important Questions for CBSE Class 11 Accountancy Chapter 1. Students can download all important questions for Class 11 Accounting Chapter 1 from Vedantu. Important questions can help students to prepare for their final exams. Important questions help students to understand the concepts easily. Students can study from important questions. They can have a clear understanding of the entire chapter from the important questions. All textbook questions are available online from where students can download a PDf file.
8. What are the benefits of accounting Class 11 Chapter 1?
Accounting is an important topic that gives important information to the companies for making economic decisions. Accounting helps to compare the results of different years and make changes in the activities for the growth of the company. An accountant of a company can make a complete record of transactions in the accounts book. It can help the company to assess the tax liabilities. More information about this is given in the Chapter 1 Revision Notes of Class 11 Accountancy.
9. What is the difference between bookkeeping and accounting?
Bookkeeping is the beginning of accounting and forms the base for accounting. Accounting starts when bookkeeping finishes. Bookkeeping is the recording of all information whereas accounting is the summary of financial information of a company. Bookkeeping does not give a proper financial position of a company whereas accounting gives proper information about the financial position of a company and helps to make a further decision. Students can learn more about this in the Class 11 Accountancy Chapter 1 Revision Notes.