Courses
Courses for Kids
Free study material
Offline Centres
More
Store Icon
Store

Introduction to Accounting Class 11 Notes: CBSE Accountancy Chapter 1

ffImage

Class 11 Accountancy Chapter 1 Notes - FREE PDF Download

Vedantu provides complete Introduction to Accounting Class 11 Notes in FREE PDF format. This chapter lays the foundation for understanding the basic principles and concepts of accounting. It covers essential topics such as the meaning, objectives, and importance of accounting, which are crucial for students beginning their journey in commerce. These Class 11 Accountancy Notes are designed to simplify key concepts and help students prepare effectively for their exams, ensuring a solid grasp of the fundamentals, and ultimately the Class 11 Accountancy Syllabus.

toc-symbol
Table of Content
1. Class 11 Accountancy Chapter 1 Notes - FREE PDF Download
2. Access Class 11 Accountancy Chapter 1 Notes
    2.1Advantages vs Limitations of Accounting:
    2.2Book-Keeping-Base of Accounting
3. 5 Important Topics of Class 11 Accountancy Chapter 1 you shouldn’t Miss
4. Importance of Class 11 Accountancy Chapter 1 Notes
5. Tips for Learning Chapter 1 Introduction to Accounting Class 11 Notes
6. Related Study Materials for Class 11 Accountancy Chapter 1
7. Chapter-wise Revision Notes Links for Class 11 Accountancy
8. Important Study Materials for Class 11 Accountancy
FAQs

Access Class 11 Accountancy Chapter 1 Notes

Accounting

Accounting is an art of recording, classifying and summarizing the monetary transactions in an efficient manner and interpreting the results.

Functions of Accounting


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

  1. To maintain proper records of business transactions according to specified rules which helps them to minimize the chance of omission and fraud.

  2. 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.

  3. To ascertain the financial position of business by means of financial statement i.e,Balance sheet.

  4. To ascertain the progress of business from year to year and to detect errors and frauds.

  5. 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 vs Limitations of Accounting:

Here's the information presented in a table format:


Advantages of Accounting

Limitations of Accounting

Accounting provides permanent records for all business transactions and offers reliable information to various parties.

One of the major limitations of accounting is that it considers only monetary transactions. Non-monetary aspects like quality, honesty, and skills are ignored in accounting.

Accounting provides the Profit and Loss of a business for a given period of time.

It considers only historical transactions, and the figures given in the financial statement do not account for price level changes.

Accounting allows for a comparative study of various aspects of business like profit, sales, purchases, etc., with that of previous years, aiding in decision-making.

It is influenced by personal judgments and is not free from personal bias, which affects its credibility.

Accounting forms a basis in the process of performance evaluation to improve the performance of employees, divisions, activities, etc.

It is affected by window dressing, meaning manipulation of accounts to present a more favourable position than the actual one.

Accounting records act as approved evidence in legal matters.

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

Bookkeeping

Accounting

Scope

It is concerned only with recording of monetary transactions.

It also includes classifying, summarizing, analysing and also communicating the results to users.

Stage

It’s a primary stage.

It’s a secondary stage.

Objective

To maintain systematic records of business.

To calculate the net profit or net loss in the business.

Nature

Routine and clerical.

Analytical.

Staff involved

It is done by junior level staff.

It is done by senior level staff.


Subfields of Accounting

  1. 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.

  2. 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.

  3. 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.

  4. 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.

Accounting Terms

  1. Business Transaction: A Business transaction is an economic activity of business that changes its financial position.

  2. Account: It is a record of all business transactions relating to a particular person or item. It is a T Shaped proforma.

  3. 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.

  4. Drawing: Any cash or goods withdrawn by the owner for personal use made out of business funds are known as drawings.

  5. Profit: It is the excess of total revenue over total expense of a business. Profit =Revenue-Expenses.

  6. Loss: The excess of expenses over related revenue is known as loss. Loss= Expenses-Revenue.

  7. Gain: It is a monetary benefit resulting from events or transactions which are incidental to business like profit on sale of fixed assets.

  8. Stock: It includes goods unsold on a particular date.

  9. Purchases: It refers to the amount of goods bought by business for resale or use in production.it can be of cash or credit.

  10. Purchase return: When purchased goods are returned to suppliers, it is referred to as purchase return.

  11. Sales: It means transfer of goods or services for money in the normal course of business.

  12. Sales return: When customers return the goods sold to them it is known as sales returns.

  13. Debtors: It refers to those persons whose business has been sold goods on credit and payment has not been received yet.

  14. Creditors:It refers to those persons whose business buys goods on credit and payment has not been done yet.

  15. 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.

  16. Income: It is the difference between revenue and expense.

  17. Expense: It is the amount used in order to produce and sell goods and services.

  18. Discount: It is the rebate given by the seller to the buyer. It is of 2 types: Cash Discount and Trade Discount.

  19. Cash Discount: When discount is allowed to customers for making prompt payment.It is always recorded in books of accounts.

  20. 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.

  21. 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.

Assets


Assets


Liabilities

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;

  1. Non current liabilities: It refers to those which fall due for payment in  a relatively longer period. For ex- long term loans.

  2. Current liabilities: It refers to those which  are to be paid in the near future. Ex-Creditors, Outstanding expenses.

Expenditure

It involves spending cash or incurring a liability for the purpose of acquiring assets,goods or services. It is of 3 types.

  1. Revenue Expenditure: It refers to any expenditure,the full benefit of which is received during one accounting period.ex-salaries,rent.

  2. Capital Expenditure: It refers to expenditure,the benefit of which is received during more than one year. Ex- Machinery.

  3. 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.


5 Important Topics of Class 11 Accountancy Chapter 1 you shouldn’t Miss

S. No

Important Topics

1

Functions of Accounting

2

Objectives of Accounting

3

Advantages vs Limitations of Accounting

4

Characteristic Qualities of Accounting

5

Assets, Liabilities and Expenditures


Importance of Class 11 Accountancy Chapter 1 Notes

  • The Class 11 Accountancy Chapter 1 Notes simplify complex accounting concepts for easier understanding and retention.

  • The Class 11 Accountancy Chapter 1 Notes PDF provide a structured overview of essential topics like objectives, importance, and principles of accounting.

  • These notes facilitate quick revision and reinforcement of key ideas, crucial for exam preparation.

  • The Accountancy Class 11 Chapter 1 Notes help students save time by offering concise and clear explanations.

  • These notes enhance practical understanding, laying a strong foundation for future studies in commerce.

  • The Class 11 Accountancy Chapter 1 Notes PDF is available for FREE download from the Vedantu website enabling offline access anywhere anytime as you want.

  • The Notes of Accountancy Class 11 Chapter 1 are provided by top subject matter experts at Vedantu, thus ensuring complete accuracy and relevance of the content provided.


Tips for Learning Chapter 1 Introduction to Accounting Class 11 Notes

  • Begin by reading through Vedantu’s Introduction to Accounting Class 11 notes to understand the fundamental concepts, such as the meaning and objectives of accounting. This will give you a strong foundation.

  • While studying, highlight or underline important terms and definitions in the notes. This will help in quick revision before exams.

  • Pay special attention to the examples provided in the notes. They help in understanding how theoretical concepts are applied in real-life scenarios.

  • Schedule regular revision sessions with Vedantu’s notes to reinforce your understanding. Frequent revision helps in retaining information longer.

  • Compare the concepts in the current chapter with related topics in future chapters using Vedantu's Class 11 Accountancy Chapter 1 Notes PDF. This will help you see the connections and deepen your understanding.

  • If you come across any doubts or unclear concepts, revisit the specific section in Vedantu's notes or seek help from Vedantu's online resources.


Conclusion

Class 11 Accountancy Chapter 1, Introduction to Accounting, provides a fundamental understanding of accounting principles, laying the groundwork for more advanced topics in commerce. This chapter covers essential concepts like the objectives, importance, and basic principles of accounting, which are crucial for any student pursuing commerce. Vedantu's revision notes for this chapter offer a clear and concise explanation of these topics, making it easier for students to grasp the material. These notes are an invaluable resource for exam preparation, helping students to review key points quickly and efficiently. By using Vedantu's notes, students can solidify their understanding and be well-prepared for their exams.


Related Study Materials for Class 11 Accountancy Chapter 1


Chapter-wise Revision Notes Links for Class 11 Accountancy


Important Study Materials for Class 11 Accountancy

S. No  

Links for Class 11 Accountancy

1.

CBSE Class 11 Accountancy NCERT Books

2.

CBSE Class 11 Accountancy Important Questions

3.

CBSE Class 11 Accountancy NCERT Solutions

4.

CBSE Class 11 Accountancy Previous Year’s Question Papers

5.

CBSE Class 11 Accountancy Sample Papers

FAQs on Introduction to Accounting Class 11 Notes: CBSE Accountancy Chapter 1

1. What is Accounting?

Accounting is the systematic process of recording, summarizing, and analysing financial transactions to provide useful information to stakeholders. Vedantu's revision notes explain the concept in simple terms, helping students understand its significance.

2. What are the objectives of Accounting in Class 11 Accountancy Chapter 1?

The primary objectives of accounting include maintaining systematic records, determining profit and loss, assessing the financial position, and providing financial information to users. 

3. Why is Accounting important?

Accounting is important because it provides vital financial information to various stakeholders, helps in decision-making, and ensures legal compliance. 

4. What are the basic principles of Accounting?

The basic principles of accounting include the principles of consistency, prudence, matching, and accrual. Vedantu's revision notes simplify these principles for easy understanding.

5. How does Accounting help in decision-making?

Accounting provides reliable financial data that helps managers and stakeholders make informed decisions. Vedantu’s notes explain how accounting data is used in decision-making processes.

6. What is the role of Accounting in evaluating performance?

Accounting plays a crucial role in evaluating the performance of employees, divisions, and overall business activities by providing accurate financial reports. 

7. What are the limitations of Accounting in Class 11 Accountancy Chapter 1?

Accounting has limitations, such as focusing only on monetary transactions and historical data, and being influenced by personal judgments. 

8. Why does Accounting only consider monetary transactions?

Accounting focuses on monetary transactions because they are measurable and comparable. Non-monetary aspects like quality and skills are not included, as explained in Vedantu's notes.

9. How do Vedantu's revision notes help with Class 11 Accountancy Chapter 1?

Vedantu's revision notes help by providing clear explanations of key concepts, summarizing important points, and offering practice questions to reinforce understanding. These notes are designed to make studying more effective and efficient.