Financial Statements with adjustments show the correct profit or loss and financial position after year-end corrections. Outstanding expenses, prepaid expenses, accrued income, depreciation, bad debts, and provisions affect final accounts at two places.
Final accounts become accurate only when every year-end item is adjusted in the right place. Important Questions Class 11 Accountancy Chapter 9 help students understand how closing stock, outstanding expenses, prepaid expenses, accrued income, income received in advance, depreciation, bad debts, provisions, manager’s commission, and interest on capital affect the Trading Account, Profit and Loss Account, and Balance Sheet. As per the NCERT 2026-27 chapter, these adjustments are needed because final accounts follow the accrual basis of accounting.
Key Takeaways
- Accrual basis controls Chapter 9: Income is recorded when earned, and expenses are recorded when incurred.
- Every adjustment has two effects: One effect goes to Trading Account or Profit and Loss Account, and the other goes to Balance Sheet.
- Debtor adjustments follow a fixed order: Deduct further bad debts first, then calculate provision for doubtful debts and discount.
- Final account formats matter: Trading Account shows gross profit, Profit and Loss Account shows net profit, and Balance Sheet shows financial position.
Important Questions Class 11 Accountancy Chapter 9 Structure 2026
| Key Area |
What To Revise |
Exam Use |
| Adjustment basics |
Closing stock, outstanding expenses, prepaid expenses, accrued income, income received in advance |
Short answers and treatment questions |
| Debtor and asset adjustments |
Depreciation, bad debts, provision for doubtful debts, provision for discount on debtors |
Numerical questions and two-place treatment |
| Final accounts preparation |
Trading Account, Profit and Loss Account, Balance Sheet, manager’s commission, interest on capital |
Long-format statement questions |
Financial Statements 2 Class 11 Important Questions
Final accounts with adjustments test whether students can connect rules with formats. The same adjustment may change profit and also appear in the Balance Sheet.
Students should learn the adjustment entry first. Then they should place the item in the correct final account.
Q1. What Are Financial Statements With Adjustments?
Financial statements with adjustments are final accounts prepared after recording year-end corrections.
They include Trading Account, Profit and Loss Account, and Balance Sheet. Adjustments help show correct profit and financial position.
Q2. Why Are Adjustments Needed In Final Accounts?
Adjustments are needed to follow accrual accounting and show true profit or loss.
Some expenses are unpaid. Some incomes are earned but not received. Some payments and receipts also belong to future periods.
Q3. What Is Accrual Basis In Final Accounts?
Accrual basis records income when earned and expenses when incurred.
It does not depend only on cash received or paid. It gives a more accurate profit figure.
Q4. Why Are Adjustments Shown At Two Places?
Adjustments are shown at two places because every transaction has two effects.
For example, outstanding salary is added to salary in Profit and Loss Account. It is also shown as a liability in Balance Sheet.
Q5. Name The Main Adjustments In Chapter 9.
The main adjustments are closing stock, outstanding expenses, prepaid expenses, accrued income, income received in advance, depreciation, bad debts, provisions, manager’s commission, and interest on capital.
These are the key adjustment items in Financial Statements II for Class 11 Accountancy 2026.
Final Accounts With Adjustments Class 11 Format
A final accounts question usually gives a Trial Balance and additional adjustments. Students must read both before preparing accounts.
The correct order is Trading Account, Profit and Loss Account, and Balance Sheet.
Trading Account Format With Adjustments
| Dr. Particulars |
Amount ₹ |
Cr. Particulars |
Amount ₹ |
| To Opening Stock |
|
By Sales |
|
| To Purchases |
|
Less: Sales Return |
|
| Less: Purchase Return |
|
By Net Sales |
|
| To Net Purchases |
|
By Closing Stock |
|
| To Wages |
|
|
|
| Add: Outstanding Wages |
|
|
|
| To Carriage Inwards |
|
|
|
| To Fuel And Power |
|
|
|
| To Gross Profit c/d |
|
|
|
| Total |
|
Total |
|
Trading Account includes direct items only. It calculates gross profit or gross loss.
Profit And Loss Account Format With Adjustments
| Dr. Particulars |
Amount ₹ |
Cr. Particulars |
Amount ₹ |
| To Salaries |
|
By Gross Profit b/d |
|
| Add: Outstanding Salaries |
|
By Commission Received |
|
| Less: Prepaid Salaries |
|
Add: Accrued Commission |
|
| To Rent |
|
By Rent Received |
|
| To Insurance |
|
Less: Rent Received In Advance |
|
| Less: Prepaid Insurance |
|
By Discount Received |
|
| To Depreciation |
|
|
|
| To Bad Debts |
|
|
|
| Add: Further Bad Debts |
|
|
|
| Add: New Provision For Doubtful Debts |
|
|
|
| Less: Old Provision For Doubtful Debts |
|
|
|
| To Provision For Discount On Debtors |
|
|
|
| To Manager’s Commission |
|
|
|
| To Net Profit |
|
|
|
| Total |
|
Total |
|
Profit and Loss Account includes indirect expenses and indirect incomes. It calculates net profit or net loss.
Balance Sheet Format With Adjustments
| Liabilities |
Amount ₹ |
Assets |
Amount ₹ |
| Capital |
|
Cash |
|
| Add: Net Profit |
|
Bank |
|
| Add: Interest On Capital |
|
Closing Stock |
|
| Less: Drawings |
|
Debtors |
|
| Less: Net Loss |
|
Less: Further Bad Debts |
|
| Creditors |
|
Less: Provision For Doubtful Debts |
|
| Bills Payable |
|
Less: Provision For Discount On Debtors |
|
| Outstanding Expenses |
|
Prepaid Expenses |
|
| Income Received In Advance |
|
Accrued Income |
|
| Manager’s Commission Outstanding |
|
Bills Receivable |
|
| Loan |
|
Fixed Assets |
|
| Add: Outstanding Interest |
|
Less: Depreciation |
|
| Total |
|
Total |
|
Balance Sheet carries the second effect of adjustments. It must balance after all assets, liabilities, and capital are correctly adjusted.
Adjustments In Financial Statements Class 11 Questions
Adjustments are the most scoring part of Chapter 9. Each adjustment has one profit effect and one Balance Sheet effect.
Students should revise this table before attempting numerical questions.
Final Accounts Adjustment Treatment Table
| Adjustment |
Trading / Profit And Loss Account Treatment |
Balance Sheet Treatment |
| Closing Stock |
Credit side of Trading Account |
Asset side |
| Outstanding Expenses |
Add to related expense |
Liability side |
| Prepaid Expenses |
Deduct from related expense |
Asset side |
| Accrued Income |
Add to related income |
Asset side |
| Income Received In Advance |
Deduct from related income |
Liability side |
| Depreciation |
Debit side of Profit and Loss Account |
Deduct from asset |
| Further Bad Debts |
Add to bad debts |
Deduct from debtors |
| Provision For Doubtful Debts |
Debit side of Profit and Loss Account |
Deduct from debtors |
| Provision For Discount On Debtors |
Debit side of Profit and Loss Account |
Deduct from good debtors |
| Interest On Capital |
Debit side of Profit and Loss Account |
Add to capital |
| Manager’s Commission |
Debit side of Profit and Loss Account |
Liability side if unpaid |
Q6. What Are Adjusting Entries?
Adjusting entries are journal entries passed at year-end to record unrecorded or corrected items.
They help final accounts follow accrual basis. They also complete the double-entry effect.
Q7. Why Is Two-Place Treatment Important?
Two-place treatment is important because every adjustment affects two accounts.
If only one place is recorded, final accounts become incomplete. The Balance Sheet may also fail to tally.
Q8. What Happens If Adjustments Are Ignored?
If adjustments are ignored, profit and financial position become incorrect.
Expenses, incomes, assets, liabilities, and capital may be overstated or understated.
Closing Stock Treatment Class 11 Important Questions
Closing stock means unsold goods at the end of the year. It affects both gross profit and assets.
Students should first check whether closing stock is given inside or outside the Trial Balance.
Q9. What Is Closing Stock?
Closing stock is the cost of unsold goods lying with the business at year-end.
It becomes opening stock for the next accounting year.
Q10. How Is Closing Stock Treated When Given As Adjustment?
Closing stock is shown on the credit side of Trading Account and asset side of Balance Sheet.
Adjustment Entry:
Closing Stock A/c Dr.
To Trading A/c
Final Treatment: Closing stock increases gross profit and appears as an asset.
Q11. How Is Closing Stock Treated When Given In Trial Balance?
Closing stock is shown only on the asset side of Balance Sheet when it appears in Trial Balance.
It is not shown again in Trading Account because it is already adjusted.
Q12. Why Is Closing Stock Shown In Balance Sheet?
Closing stock is shown in Balance Sheet because it is an asset.
It represents goods available for sale in the next accounting period.
Outstanding Expenses Class 11 Important Questions
Outstanding expenses are expenses of the current year that remain unpaid. They must be added because the business has already received their benefit.
Examples include salary outstanding, wages outstanding, rent outstanding, and interest due.
Q13. What Are Outstanding Expenses?
Outstanding expenses are expenses due in the current year but not yet paid.
They increase current-year expenses. They also create a liability.
Q14. What Is The Adjustment Entry For Outstanding Expenses?
The entry is to debit the expense account and credit outstanding expense account.
Entry:
Concerned Expense A/c Dr.
To Outstanding Expense A/c
Final Treatment: Add to expense and show as liability.
Q15. How Is Outstanding Salary Treated In Final Accounts?
Outstanding salary is added to salary and shown as a liability.
Example:
Salary paid = ₹20,000
Outstanding salary = ₹2,000
Salary shown in Profit and Loss Account = ₹22,000
Final Answer: Outstanding salary increases expense and liability.
Prepaid Expenses Class 11 Important Questions
Prepaid expenses are paid during the current year, but their benefit belongs to the next year. They are deducted from current-year expenses.
Insurance, rent, salary, and taxes are common prepaid items.
Q16. What Are Prepaid Expenses?
Prepaid expenses are expenses paid in advance for a future period.
They are also called unexpired expenses.
Q17. What Is The Adjustment Entry For Prepaid Expenses?
The entry is to debit prepaid expense account and credit the concerned expense account.
Entry:
Prepaid Expense A/c Dr.
To Concerned Expense A/c
Final Treatment: Deduct from expense and show as asset.
Q18. How Is Prepaid Insurance Treated In Final Accounts?
Prepaid insurance is deducted from insurance and shown as an asset.
Example:
Insurance paid = ₹3,200
Prepaid insurance = ₹800
Insurance shown in Profit and Loss Account = ₹2,400
Final Answer: Prepaid insurance reduces expense and appears as an asset.
Accrued Income Class 11 Important Questions
Accrued income is earned during the year but remains unreceived. It is added because the business has already earned it.
Common examples are accrued commission, accrued rent, and interest accrued on investment.
Q19. What Is Accrued Income?
Accrued income is income earned but not received by the end of the year.
It increases current-year income. It also creates an asset.
Q20. What Is The Adjustment Entry For Accrued Income?
The entry is to debit accrued income account and credit the concerned income account.
Entry:
Accrued Income A/c Dr.
To Concerned Income A/c
Final Treatment: Add to income and show as asset.
Q21. How Is Accrued Commission Treated In Final Accounts?
Accrued commission is added to commission received and shown as an asset.
Example:
Commission received = ₹5,000
Accrued commission = ₹1,500
Commission shown in Profit and Loss Account = ₹6,500
Final Answer: Accrued commission increases income and assets.
Income Received In Advance Class 11 Important Questions
Income received in advance is not current-year income. It belongs to a future accounting period.
This adjustment prevents profit from being overstated.
Q22. What Is Income Received In Advance?
Income received in advance is income received before it is earned.
It is also called unearned income.
Q23. What Is The Adjustment Entry For Income Received In Advance?
The entry is to debit the concerned income account and credit income received in advance account.
Entry:
Concerned Income A/c Dr.
To Income Received In Advance A/c
Final Treatment: Deduct from income and show as liability.
Q24. How Is Rent Received In Advance Treated?
Rent received in advance is deducted from rent income and shown as a liability.
It belongs to the next accounting year.
Depreciation In Final Accounts Class 11 Important Questions
Depreciation records the used-up value of a fixed asset. It is charged because assets support business operations over time.
It reduces profit and the book value of the asset.
Q25. What Is Depreciation?
Depreciation is the fall in the value of a fixed asset due to use, time, wear and tear, or obsolescence.
It is treated as a business expense.
Q26. What Is The Adjustment Entry For Depreciation?
The entry is to debit Depreciation Account and credit the concerned Asset Account.
Entry:
Depreciation A/c Dr.
To Asset A/c
Final Treatment: Show depreciation as expense and deduct it from asset.
Q27. Calculate Depreciation On Building Of ₹1,10,000 At 6%.
Depreciation on building is ₹6,600.
Given Data:
Building = ₹1,10,000
Rate = 6%
Calculation:
Depreciation = ₹1,10,000 × 6 / 100
Depreciation = ₹6,600
Final Answer: Depreciation on building is ₹6,600.
Bad Debts Class 11 And Provision For Doubtful Debts
Debtor adjustments need a fixed order. Students should never calculate provision before deducting further bad debts.
The correct order is further bad debts, provision for doubtful debts, then provision for discount.
Q28. What Are Bad Debts?
Bad debts are amounts that cannot be recovered from debtors.
They are treated as a loss. They reduce both profit and debtors.
Q29. What Is The Entry For Further Bad Debts?
The entry is to debit Bad Debts Account and credit Debtors Account.
Entry:
Bad Debts A/c Dr.
To Debtors A/c
Final Treatment: Add to bad debts and deduct from debtors.
Q30. What Is Provision For Doubtful Debts?
Provision for doubtful debts is an estimated amount for possible future bad debts.
It is created because some debtors may fail to pay.
Q31. How Is Provision For Doubtful Debts Calculated?
Provision for doubtful debts is calculated on debtors after deducting further bad debts.
Example:
Debtors = ₹82,000
Further bad debts = ₹1,000
Adjusted debtors = ₹81,000
Provision rate = 5%
Provision = ₹81,000 × 5 / 100
Provision = ₹4,050
Final Answer: Provision for doubtful debts is ₹4,050.
Q32. How Are Bad Debts And Provision Shown In Final Accounts?
Bad debts and new provision are shown in Profit and Loss Account.
Further bad debts and provision are deducted from debtors in Balance Sheet.
Provision For Discount On Debtors Class 11 Important Questions
Provision for discount on debtors is calculated after doubtful debt provision. It applies only to good debtors.
This order is important in final accounts numerical questions.
Q33. What Is Provision For Discount On Debtors?
Provision for discount on debtors is an estimated discount likely to be allowed for prompt payment.
It is treated as a charge against profit.
Q34. On Which Amount Is Provision For Discount Calculated?
Provision for discount is calculated on good debtors.
Good debtors mean debtors after deducting further bad debts and provision for doubtful debts.
Q35. Calculate Provision For Discount If Good Debtors Are ₹76,950 And Rate Is 2%.
Provision for discount on debtors is ₹1,539.
Calculation:
Provision for discount = ₹76,950 × 2 / 100
Provision for discount = ₹1,539
Final Answer: Provision for discount on debtors is ₹1,539.
Manager Commission Class 11 Important Questions
Manager’s commission is treated as an expense. It may be calculated before or after charging commission.
The wording of the question decides the formula.
Q36. What Is Manager’s Commission?
Manager’s commission is the amount payable to a manager based on profit.
It is debited to Profit and Loss Account. If unpaid, it appears as a liability.
Q37. What Is The Entry For Manager’s Commission?
The entry is to debit Profit and Loss Account and credit Manager’s Commission Account.
Entry:
Profit and Loss A/c Dr.
To Manager’s Commission A/c
Final Treatment: Debit Profit and Loss Account and show unpaid commission as liability.
Q38. How Is Commission Calculated Before Charging Commission?
Commission before charging commission is calculated on net profit before commission.
Formula:
Commission = Net Profit Before Commission × Rate / 100
Example:
Net profit before commission = ₹20,000
Rate = 10%
Commission = ₹20,000 × 10 / 100
Commission = ₹2,000
Final Answer: Manager’s commission is ₹2,000.
Q39. How Is Commission Calculated After Charging Commission?
Commission after charging commission uses the formula profit before commission × rate / (100 + rate).
Example:
Net profit before commission = ₹22,000
Rate = 10%
Commission = ₹22,000 × 10 / 110
Commission = ₹2,000
Final Answer: Manager’s commission is ₹2,000.
Interest On Capital Class 11 Important Questions
Interest on capital is allowed on the owner’s investment. It helps calculate profit after charging a return on capital.
It affects both Profit and Loss Account and Capital Account.
Q40. What Is Interest On Capital?
Interest on capital is the amount allowed on capital invested by the owner.
It is treated as a business expense and added to capital.
Q41. What Is The Entry For Interest On Capital?
The entry is to debit Interest on Capital Account and credit Capital Account.
Entry:
Interest on Capital A/c Dr.
To Capital A/c
Final Treatment: Debit Profit and Loss Account and add to capital.
Q42. Calculate Interest On Capital Of ₹50,000 At 10%.
Interest on capital is ₹5,000.
Calculation:
Interest on capital = ₹50,000 × 10 / 100
Interest on capital = ₹5,000
Final Answer: Interest on capital is ₹5,000.
Balance Sheet With Adjustments Class 11 Questions
Balance Sheet errors usually happen when students record only one effect of an adjustment. Every asset, liability, and capital item must be adjusted before totals are matched.
Use the Balance Sheet only after completing Trading Account and Profit and Loss Account.
Q43. How Are Outstanding Expenses Shown In Balance Sheet?
Outstanding expenses are shown on the liabilities side of Balance Sheet.
They represent expenses due but unpaid.
Q44. How Are Prepaid Expenses Shown In Balance Sheet?
Prepaid expenses are shown on the assets side of Balance Sheet.
They represent future benefits already paid for.
Q45. How Are Accrued Incomes Shown In Balance Sheet?
Accrued incomes are shown on the assets side of Balance Sheet.
They represent income earned but not yet received.
Q46. How Is Income Received In Advance Shown In Balance Sheet?
Income received in advance is shown on the liabilities side of Balance Sheet.
It represents income received before being earned.
Q47. How Is Depreciation Shown In Balance Sheet?
Depreciation is deducted from the concerned fixed asset in Balance Sheet.
For example, building of ₹1,10,000 less depreciation of ₹6,600 appears at ₹1,03,400.
Final Accounts With Adjustments Class 11 Worked Example
Students understand Chapter 9 better when the full format is visible. The reference article also uses proper Trading Account, Profit and Loss Account, and Balance Sheet tables for practical questions, which makes placement easier for students.
The following worked example follows the same student-friendly account format.
Q48. Prepare Trading Account, Profit And Loss Account, And Balance Sheet With Adjustments.
The following balances were extracted from the books of Yogita as on March 31, 2026. Prepare Trading Account, Profit and Loss Account, and Balance Sheet.
| Debit Balances |
Amount ₹ |
Credit Balances |
Amount ₹ |
| Cash in Hand |
540 |
Sales |
98,780 |
| Cash at Bank |
2,630 |
Return Outwards |
500 |
| Purchases |
40,675 |
Capital |
62,000 |
| Return Inwards |
680 |
Sundry Creditors |
6,300 |
| Wages |
8,480 |
Rent |
9,000 |
| Fuel and Power |
4,730 |
|
|
| Carriage on Sales |
3,200 |
|
|
| Carriage on Purchases |
2,040 |
|
|
| Opening Stock |
5,760 |
|
|
| Building |
32,000 |
|
|
| Freehold Land |
10,000 |
|
|
| Machinery |
20,000 |
|
|
| Salaries |
15,000 |
|
|
| Patents |
7,500 |
|
|
| General Expenses |
3,000 |
|
|
| Insurance |
600 |
|
|
| Drawings |
5,245 |
|
|
| Sundry Debtors |
14,500 |
|
|
| Total |
1,77,080 |
Total |
1,77,080 |
Adjustments:
- Closing stock was ₹6,800.
- Machinery is to be depreciated at 10%.
- Patents are to be depreciated at 20%.
- Salaries outstanding were ₹1,500.
- Prepaid insurance was ₹85.
- Further bad debts were ₹725.
- Create provision for doubtful debts at 5% on debtors.
- Rent receivable was ₹1,000.
Trading Account For The Year Ended March 31, 2026
| Dr. Particulars |
Amount ₹ |
Cr. Particulars |
Amount ₹ |
| To Opening Stock |
5,760 |
By Sales |
98,780 |
| To Purchases |
40,675 |
Less: Return Inwards |
680 |
| Less: Return Outwards |
500 |
By Net Sales |
98,100 |
| To Net Purchases |
40,175 |
By Closing Stock |
6,800 |
| To Wages |
8,480 |
|
|
| To Fuel and Power |
4,730 |
|
|
| To Carriage on Purchases |
2,040 |
|
|
| To Gross Profit c/d |
43,715 |
|
|
| Total |
1,04,900 |
Total |
1,04,900 |
Gross Profit = ₹43,715
Profit And Loss Account For The Year Ended March 31, 2026
| Dr. Particulars |
Amount ₹ |
Cr. Particulars |
Amount ₹ |
| To Salaries |
15,000 |
By Gross Profit b/d |
43,715 |
| Add: Outstanding Salaries |
1,500 |
By Rent |
9,000 |
| To Adjusted Salaries |
16,500 |
Add: Rent Receivable |
1,000 |
| To Carriage on Sales |
3,200 |
By Adjusted Rent |
10,000 |
| To General Expenses |
3,000 |
|
|
| To Insurance |
600 |
|
|
| Less: Prepaid Insurance |
85 |
|
|
| To Adjusted Insurance |
515 |
|
|
| To Further Bad Debts |
725 |
|
|
| To Provision for Doubtful Debts |
689 |
|
|
| To Debtor Adjustment Total |
1,414 |
|
|
| To Depreciation on Machinery |
2,000 |
|
|
| To Depreciation on Patents |
1,500 |
|
|
| To Total Depreciation |
3,500 |
|
|
| To Net Profit |
25,586 |
|
|
| Total |
53,715 |
Total |
53,715 |
Net Profit = ₹25,586
Balance Sheet As At March 31, 2026
| Liabilities |
Amount ₹ |
Assets |
Amount ₹ |
| Sundry Creditors |
6,300 |
Cash in Hand |
540 |
| Salaries Outstanding |
1,500 |
Cash at Bank |
2,630 |
| Capital |
62,000 |
Sundry Debtors |
14,500 |
| Add: Net Profit |
25,586 |
Less: Further Bad Debts |
725 |
|
87,586 |
|
13,775 |
| Less: Drawings |
5,245 |
Less: Provision for Doubtful Debts |
689 |
| Adjusted Capital |
82,341 |
Adjusted Debtors |
13,086 |
|
|
Prepaid Insurance |
85 |
|
|
Closing Stock |
6,800 |
|
|
Rent Receivable |
1,000 |
|
|
Freehold Land |
10,000 |
|
|
Building |
32,000 |
|
|
Machinery |
20,000 |
|
|
Less: Depreciation |
2,000 |
|
|
Adjusted Machinery |
18,000 |
|
|
Patents |
7,500 |
|
|
Less: Depreciation |
1,500 |
|
|
Adjusted Patents |
6,000 |
| Total |
90,141 |
Total |
90,141 |
Balance Sheet Total = ₹90,141
Working Notes
| Working |
Calculation |
Amount ₹ |
| Net Sales |
Sales ₹98,780 - Return Inwards ₹680 |
98,100 |
| Net Purchases |
Purchases ₹40,675 - Return Outwards ₹500 |
40,175 |
| Machinery Depreciation |
₹20,000 × 10 / 100 |
2,000 |
| Patents Depreciation |
₹7,500 × 20 / 100 |
1,500 |
| Debtors After Bad Debts |
₹14,500 - ₹725 |
13,775 |
| Provision for Doubtful Debts |
₹13,775 × 5 / 100 |
689 |
| Adjusted Debtors |
₹13,775 - ₹689 |
13,086 |
Class 11 Accountancy Chapter 9 Important Questions For Practice
A good Chapter 9 answer shows the adjustment entry, account treatment, and Balance Sheet effect. Numerical answers should always show working.
These questions revise common final accounts adjustments.
Q49. Prepare Adjustment For Salary Paid ₹25,000 Including Prepaid Salary ₹5,000.
Salary shown in Profit and Loss Account is ₹20,000.
Calculation:
Salary paid = ₹25,000
Less: Prepaid salary = ₹5,000
Salary expense = ₹20,000
Balance Sheet Treatment: Prepaid salary ₹5,000 appears as asset.
Q50. Prepare Adjustment For Commission Received ₹5,000 And Accrued Commission ₹1,500.
Commission shown in Profit and Loss Account is ₹6,500.
Calculation:
Commission received = ₹5,000
Add: Accrued commission = ₹1,500
Commission income = ₹6,500
Balance Sheet Treatment: Accrued commission ₹1,500 appears as asset.
Q51. Prepare Adjustment For Debtors ₹15,500 And Further Bad Debts ₹2,500.
Debtors after further bad debts are ₹13,000.
Calculation:
Debtors = ₹15,500
Less: Further bad debts = ₹2,500
Adjusted debtors = ₹13,000
Final Treatment: Further bad debts are added to bad debts and deducted from debtors.
Q52. Calculate Provision For Doubtful Debts At 5% On Debtors ₹13,000.
Provision for doubtful debts is ₹650.
Calculation:
Provision = ₹13,000 × 5 / 100
Provision = ₹650
Final Treatment: ₹650 is debited to Profit and Loss Account and deducted from debtors.
Q53. Calculate Rent Received In Advance If ₹1,000 Per Month Is Received For April, May, And June.
Rent received in advance is ₹3,000.
Calculation:
Monthly rent = ₹1,000
Months received in advance = 3
Rent received in advance = ₹3,000
Final Treatment: Deduct from rent income and show as liability.
Long Answer Questions From Important Questions Class 11 Accountancy Chapter 9
Long answers in Chapter 9 need meaning, adjustment entry, final account treatment, and example. Students should avoid writing only definitions.
These answers follow the NCERT 2026 treatment of Financial Statements II.
Q54. Explain The Need For Adjustments In Financial Statements.
Adjustments are needed to show correct profit or loss and true financial position.
Under accrual accounting, income is recorded when earned. Expenses are recorded when incurred.
Some expenses remain unpaid at year-end. Some incomes remain unreceived. Some payments and receipts also belong to future periods.
Depreciation, bad debts, provisions, manager’s commission, and interest on capital are also adjusted at year-end. These entries make final accounts reliable.
Q55. Explain The Treatment Of Outstanding And Prepaid Expenses.
Outstanding expenses increase current-year expenses, while prepaid expenses reduce current-year expenses.
Outstanding expenses:
- They are unpaid expenses of the current year.
- They are added to the related expense.
- They are shown as liabilities.
Entry:
Expense A/c Dr.
To Outstanding Expense A/c
Prepaid expenses:
- They are paid in advance for a future year.
- They are deducted from the related expense.
- They are shown as assets.
Entry:
Prepaid Expense A/c Dr.
To Expense A/c
Q56. Explain The Treatment Of Accrued Income And Income Received In Advance.
Accrued income increases current-year income, while income received in advance reduces current-year income.
Accrued income:
- It is earned but not received.
- It is added to the related income.
- It is shown as an asset.
Entry:
Accrued Income A/c Dr.
To Income A/c
Income received in advance:
- It is received but not earned.
- It is deducted from the related income.
- It is shown as a liability.
Entry:
Income A/c Dr.
To Income Received In Advance A/c
Q57. Explain The Treatment Of Bad Debts And Provision For Doubtful Debts.
Bad debts are actual losses, while provision for doubtful debts is an estimated future loss.
Further bad debts are added to existing bad debts in Profit and Loss Account. They are also deducted from debtors.
Provision for doubtful debts is calculated on debtors after deducting further bad debts. It is shown as a charge in Profit and Loss Account and deducted from debtors.
Order:
- Deduct further bad debts from debtors.
- Calculate new provision on remaining debtors.
- Deduct provision from debtors in Balance Sheet.
Q58. Explain The Difference Between Provision For Doubtful Debts And Provision For Discount On Debtors.
Provision for doubtful debts covers possible non-payment, while provision for discount covers possible cash discount.
Provision for doubtful debts is calculated after deducting further bad debts. Provision for discount is calculated after deducting further bad debts and provision for doubtful debts.
Both are debited to Profit and Loss Account. Both are deducted from debtors in Balance Sheet.
CBSE Class 11 Accountancy Important Questions Chapter-Wise