Important Questions for CBSE Class 11 Accountancy Chapter 10 – Financial Statements 2

Important Questions Class 11 Accountancy Chapter 10 – Financial Statements 2

In Accountancy creation of simple final accounts does not include any accounting complexities which occur during regular business transactions. This happens because the accrual system of accounting is followed. Due to this, some expenses and revenues are realised in the next year. Chapter 10 of Class 11 Accountancy deals with these adjustments. Students will learn about the adjustments of different items such as outstanding and prepaid expenses, accrued and advanced receipts of payments, provisions, bad debts, depreciation, etc. As students will learn about constructing the adjusted P & L account and Balance Sheet, this chapter holds importance from the examination point of view. The CBSE CBSE Important Questions Class 11 Accountancy Chapter 10 provided by Extramarks can be an excellent aid to students preparing for their examinations.

Extramarks, an online study companion which helps lakhs of students around the country, is a trusted source from which students prepare, revise, and study for their examinations. The Important Question Class 11 Accountancy Chapter 10 is collated from various sources such as NCERT books, reference books, CBSE sample papers, etc., which will give the students an overview of how the questions will appear in the examination. Subject experts provide step-by-step solutions to the questions for a better understanding, so the Important Questions Class 11 Accountancy Chapter 10 is an essential resource for students studying and preparing for tests.

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Financial Statements With Adjustments Class 11 Solutions

Accountancy is not just a theoretical subject but requires a lot of practice when it comes to practical questions. Chapter 10 of Financial Statements 2 contains numerical questions which need regular practice. The Class 11 Accountancy Chapter 10 Important Questions are created strictly in accordance with the most recent CBSE guidelines, so students can refer to them prior to their examination for revision purposes.

Here are some Important Questions Class 11 Accountancy Chapter 10 with solutions:

Question 1. Match the content of Column A and Column B

Answer 1:

Question 2. The Life Insurance premium of the proprietor is treated as drawings. True or false?

Answer 2: True. As it is the personal expense of the proprietor, it is considered as drawings.

Question 3. What do you call it when a donor endows property, money, etc., to the concerns in order to provide a consistent source of revenue to them?

Answer 3: Endowment fund.

Question 4. Closing stock is shown in the Financial statement at

1. Cost Price
2. Realisable Value
3. Cost price or Realisable value, whichever is greater
4. Cost price or Realisable value, whichever is less

Answer 4: C) Cost price or Realisable value, whichever is greater

Explanation: Due to the Prudence Concept of accounting, which accounts for foreseen losses but not anticipated earnings, closing stock is valued at the lower of cost or net realisable value (market value).

Question 5. What is meant by closing stock? Show its treatment in final accounts.

Answer 5: The closing stock is the cost of goods in the inventory that are still not sold when the accounting period ends. Comparing the realisable value and cost price gives the closing stock value. The closing stock value is determined by taking the lower of two numbers.

Following entries are passed for the adjustment

Closing Stock A/c Dr.

               To Trading A/c

Question 6. Why is the provision for discount on debtors allowed?

Answer 6: In accounting, “provision for discount on debtors” refers to the sum set aside to cover losses due to debtor discounts. To speed up payment from clients, business owners offer discounts. The provision for discount on debtors is created for good debtors, and the amount is arrived at by deducting the doubtful debts from the debtors.

The adjustment entry that is passed in the journals is as follows:

                                                       Profit and loss A/c Dr. 

                                                       To Provision for discount on debtor’s A/c 

Question 7. Define the following terms with adjustment entries: 

1. Provisions for bad and doubtful debts. 
2. Depreciation
3. Accrued income
4. Prepaid expenses
5. Outstanding expenses

Answer 7:

• Provision for bad and doubtful debts: 

Provision for bad and doubtful debts occurs when there is a chance that the debtors will not repay the amount due to the company on time.

The following adjustment entry is passed for provision for bad and doubtful debts:

                                                         Profit and Loss A/c Dr.

To Provision for doubtful debts A/c

• Depreciation: 

Depreciation is an asset’s wear and tear, resulting in a decline in value. This decline can occur due to the passage of time or continuous use of the asset.

The following adjustment entry is passed for depreciation:

Depreciation A/c Dr.

To Concerned Asset A/c

• Accrued Income:

Accrued income includes all those incomes earned in an accounting year but not received during that period.

The following adjustment entry is passed for accrued income:

Accrued Income A/c Dr.

To Concerned Income A/c

• Prepaid Expenses: 

Prepaid expenses are those which are to be paid in the future accounting year but are paid in the current accounting period.

The following adjustment entry is passed for prepaid expense:

Prepaid expense A/c Dr.

To Concerned Expense A/c

• Outstanding Expenses: 

Outstanding expenses are unpaid by the business at the end of the accounting year.

The following adjustment entry is passed for outstanding expense:

Concerned Expenses A/c Dr.

To Outstanding Expense A/c

Question 8. Give journal entries for the following adjustments listed below:

(a) Outstanding salary was ₹ 3,500.

(b) Rent unpaid for one month was ₹ 6,000 per annum.

(c) Insurance prepaid for a quarter was ₹ 16,000 per annum.

(d) Purchase of furniture costing ₹ 7,000 was entered in the purchases book.

Answer 8: 

Question 9. Question 9. From the following information, prepare the trading and profit and loss account for M/s Indian sports house for the year ending March 31, 2017.

Adjustments to be made:

1. The closing stock was valued at ₹ 45,000.
2. Provision for doubtful debts is maintained at 2% of debtors.
3. Depreciation is charged on: furniture and fixture at 5%, plant and machinery at 6% and motor cars at 10%.
4. A Machine costing ₹ 30,000 was purchased by the business on October 01, 2016.
5. The manager is entitled to receive a commission of 10% of the net profit after charging such a commission.

Answer 9:

Working Notes

1. Manager’s Commission

2. Out of the machinery valued at ₹ 1 00,000, ₹ 30,000 worth of machinery was purchased on 01 October 2016. Hence the depreciation on this machinery will be for six months at 6% p.a.

Question 10. The following balances have been taken from the trial balance of M/s Runway Shine Ltd. Prepare a trading and P & L account and a balance sheet as of March 31, 2017.

Adjustments

1. Further bad debts ₹ 1,000. Discount on debtors ₹ 500 and make a provision on debtors @ 5%.
2. Interest received on investment @ 5%.
3. Wages and interest outstanding ₹ 100 and ₹ 200, respectively.
4. Depreciation charged on motor car @ 5% p.a.
5. Closing Stock ₹ 32,500

Answer 10:

Benefits of Solving Financial Statements Class 11 Questions

Chapter 10 of Financial Statements 2 is a crucial chapter for Class 11 Accountancy. Students need optimum practise for solving questions as this chapter incorporates most of the theories studied in previous chapters. For practise, students can refer to Accountancy Class 11 Chapter 10 Important Questions provided by Extramarks which provides an overview of how questions can appear in the examinations.

Here are a few benefits of solving Important Questions Class 11 Accountancy Chapter 10

• The questions are created keeping in mind the latest CBSE guidelines and syllabus so that they are relevant for current examinations.
• Students can revise the entire chapter when they practise Chapter 10 Class 11 Accountancy Important Questions as they cover questions from the whole chapter.
• Expert-answered solutions will help students understand the concepts well and prepare  for the examinations.
• The Important Questions Class 11 Accountancy Chapter 10 can help the students practise numerical questions to get the confidence to achieve higher grades in the examinations.

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