CBSE Class 11 Accountancy Revision Notes Chapter 10

Chapter 10 of Class 11 Accountancy curriculum continues where Chapter 9 talks about a very important consideration to be made while making final accounts, the need for accounting adjustments. The need for accounting adjustments arises due to the use of the accrual basis of accounting. Students will learn about these adjustments and their needs in detail in this chapter.

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In order to prepare for this chapter in a better way, students can access CBSE Class 11 Accounting Revision Notes Chapter 10 Financial Statements – II by Extramarks. Since it can be time taking for students to go through the entire chapter along with the various questions before their exams, these notes provide a complete and concise overview of the chapter. Students will be able to learn all the important concepts without the hassle of looking for different sources and learning material. . The notes can be downloaded from the Extramarks’ website at any time.

Revision Notes for CBSE Class 11 Accountancy Chapter-10 – Download

Access Class 11 Accountancy Chapter 10 – Financial Statements Part – 2 Notes

The revision notes are prepared by the subject experts and specialists with years of experience in their respective fields. They provide the best, most accurate and reliable revision notes for students of Class 11.

Need for Adjustments

Accounting adjustments are required because we use the accrual basis of accounting while preparing final accounts. In the accrual basis of accounting, revenues are considered on an earned basis, not on a receipt basis. Similarly, expenses are to be considered on an incurred basis and not on a paid basis.

Because of this, many payments and receipts that are recorded in the current year may not actually be attributable to the current year’s financial accounts after considering the accrual basis of accounting. Thus, these elements must be adjusted so that the objectives of the financial statements can be achieved i.e, to describe the company’s faithful and fair financial performance.

Adjustments are required in the following:

Closing stock: This is the stock of goods left at the end of the accounting year. The adjustment for closing inventory is made by:

crediting it to the trading and profit and loss account
recording it as an asset on the balance sheet

Outstanding Expenses: These are unpaid expenses that businesses have not paid in the current accounting period and are due.

To unpaid A/c expenses – Unpaid expenses are added to a specific expense item in the operating and Profit and Loss account and appear as liabilities on the balance sheet.

Prepaid Expenses: These are expenses paid in advance by the businesses. The benefits of these expenditures are not received in the current accounting year but in subsequent years.

An Affected Loads A/c – Prepaid expenses are subtracted from the particular expense head in Trading and Profit and Loss A/c and are shown as assets on the balance sheet.

Accrued Revenue: This is revenue that is accrued but not yet received.

To the income concerned, A/c – Accrued income is added to the relevant income item in the operations and Profit and Loss Account and appears as an asset on the balance sheet.

Income received in advance: This is income that is received in advance but not yet accrued.

Income received in advance A/c – Income received in advance is deducted from the respective income item in the operating and Profit and Loss account. It appears as a liability on the balance sheet.

Depreciation: Depreciation is the decline in the book value of the assets due to regular wear and tear and the passage of time.

To Asset Concerned A/c – It is debited from the Profit and Loss Account, and on the Balance Sheet, the asset is presented at cost less depreciation.

Bad Debts: This is the amount that cannot be recovered from the debtors. This is considered a loss.

To A/C debtors – It is debited to the operating and Profit and Loss Accounts, and on the balance sheet, debtors have presented at their book value less bad debts.

Provision for bad debts: Sometimes, we make a provision for a certain amount of debtors who may/ may not be realized in the future, such provisions are called provisions for bad debts.

To Allowance for Doubtful Accounts A/C – The provision for bad debts is Debited from the operating and income statement. The number of debtors has presented as book value less the provision for bad debts on the balance sheet.

Allowance for Discount on Accounts Receivable: Sometimes, companies allow a discount on the amount receivable from accounts receivable. There is a provision for a discount on accounts receivable, which is an expense for the company. Provision for discount is always made on good debtors by deducting the bad debts from the book value.

A Provision for discount on accounts receivable A/c – This provision is an expense debited from the operating and income statement. On the Balance Sheet, the amount of debtors is reduced by the amount of the requirement for a discount on debtors.

Manager’s commission: This is the commission that the manager receives from the company’s net profit. Manager’s commission percentage can be in the form of a share before the invoicing of the Manager’s commission or after the invoicing of this commission. And in case of nothing is mentioned in the question, it is assumed that the commission is paid before charging such a commission.

CBSE Revision Notes for Chapter 10 Accounts Class 11 – An Overview of Financial Statements – II

Financial statements are very important to track a business’s financial position and performance. It further helps the organization to track the growth and efficiency of its business and take more practical decisions. These reasons make it vital for students to understand the basics of this chapter early and, therefore, build a solid foundation for higher education.

It is important for students to review this chapter frequently. Extramarks offer Class 11 Accountancy Chapter 10 notes to facilitate a smooth learning process for the students. The revision notes are accurate and reliable. They provide an in-depth explanation of each concept thoroughly.

Using these revision notes will help students to comprehend the concepts of the chapter easily and effectively prepare for their exams.

Revision Notes for Chapter 10 Class 11 Accountancy – In a Nutshell

The NCERT notes for Chapter 10 Accounts Class 11 provide a substantial idea of what this chapter is about. The notes provide a proper explanation and help you identify important information about the chapter.

Given below are some of the topics that are included in Chapter 10 Accountancy Class 11 notes:

Need for accounting adjustment: This section highlights the importance of adjustments in exceptional cases, such as income that has been received in advance and payment that has not yet been received.
Closing inventory: Our review notes for Chapter 10 Class 11 Accounting explain what is represented as closing inventory. The formulas for solving the numerical are available in the NCERT book. Additionally, you will also come across the step-by-step adjustment entry for completing the checklist, and on the same side of the balance sheet, it should be placed.
Unpaid expenses: Determine the condition that turns expenses into unpaid expenses by referring to our study notes for Class 11 Accounts in Chapter 10. Therefore, a clear concept of unpaid expenses will help you accurately address theoretical and practical problems based on it.
Prepaid expenses: Our current notes on Class 11 Accounts Chapter 10 would give you a better perspective on the difference between prepaid and unpaid expenses. The CBSE syllabus will help you familiarize yourself with its definition and understand which prepaid expenses can be considered.

Extramarks revision provides precise definitions for these topics and briefly highlights the essential components. Furthermore, it also offers valuable insight into their respective treatments and necessary adjustments accordingly.

CBSE Class 11 Accountancy Revision Notes Chapter 10