NCERT Solutions Class 11 Accountancy Chapter 10

NCERT Solutions for Class 11 Accountancy Chapter 10 Financial Statements – 2

Accountancy is a conceptual subject that demands a lot of practise. The Central Board of Secondary Education (CBSE) has curated a standard syllabus for Class 11 Accountancy. Chapter 10, Financial Statements -2 has many theories that students need to understand thoroughly. The practise questions given at the end of the chapter can help students revise the concepts learned in the chapter and understand the right way to answer a question. 

If you are looking for NCERT Solutions for Class 11 Accountancy Chapter 10, refer to the solutions by Extramarks. These are prepared by subject matter experts who understand the CBSE guidelines and ensure that all the answers are written in a simple language.

Class 11 Accountancy NCERT Solutions Chapter 10 Financial Statements 2

What are Financial Statements?

The formally written records that convey the various business activities, including the company’s financial information and performance, are known as financial statements. Financial statements also help in understanding the current position of the business. To ensure the tax and financing details and the purposes of investing, the government officials, accountants, agencies, firms, etc., often audit the financial statements. They mostly include: 

• Balance sheet: An overview of the stakeholders’ liabilities, assets, and equity is provided by a balance sheet as a written record.
• Income statement: The income statement is all about the revenues and expenses of the company in a particular period of time.
• Cash Flow statement: The measurement of the cash generated and utilised by a company in order to pay the obligations of debt, investments of funds, operating expenses and many more are calculated in the cash flow statement. 

The financial analysts and the investors of a company depend upon the company’s current financial status and information to determine its performance and its direction in the near future. The annual report in this regard plays a major role. The accurate audited financial statement of a firm is contained in this report.

How to Prepare a Financial Statement?

When preparing a financial statement, the aggregation of financial accounting into a structured sequence is essential. The financial statements are then disseminated to the creditors, investors, the management body, etc. The evaluation of the financial statements is then carried out, which includes the cash flows, overall economic performance, and liquidity of the business. Given below are a few steps that are to be followed for the preparation of financial statements, which may vary from company to company:

• Step 1: Includes the verification of the receipt of supplier invoices
• Step 2: Is the verification of the issuance of the customer invoices
• Step 3: Is the accruing of the wages that are yet to be paid
• Step 4: Calculation of the depreciation is the fourth step
• Step 5: To estimate the ending inventory balance
• Step 6: Is the reconciliation of the bank accounts
• Step 7: The posting of all ledger balances
• Step 8: Analysing accounts
• Step 9: Reviewing the financials is the eighth step
• Step 10: Accruing income taxes is the ninth step
• Step 11: Closing of accounts
• Step 12: The final step involves issuing financial statements

What are Doubtful Debts?

There are many types of debts that an individual or a business is unlikely to collect. These are known as doubtful debts. Non-payment can include many reasons such as: oversupply, delivery, the position of the items, and the financial stress included in a customer’s operations. In case of such disputes, it is suggested to add this debt to the doubtful debt reserve in order to avoid overstatement of the business assets. And when there remains no doubt, the debt becomes terrible and uncollectable. These debts are doubtful of recovery and can turn miserable at any point. Every year,  a certain percentage can be allocated as uncollectible out of the total credit provided to the buyer, which the business can analyse. This percentage is kept separately from the profits. The provision made in the process made out of the profits is termed as provision for doubtful debts. 

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The NCERT Solutions for Class 11 Accountancy Chapter 10 are an essential resource to find accurate answers to the NCERT textbook questions. Both students and teachers can refer to these solutions to cross-check their answers.

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• Availability of learning materials for Class 1 to 12.
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Solved Example for Accountancy Class 11 Chapter 10

Q1. Why do we need financial statements? Select one of the below given options:

1. To prevent future losses
2. To calculate profit and loss
3. To estimate the financial viability of a company
4. All the above

Ans. All the above

Fun Fact

• Before the generation of numbering system, the accountants kept track of animals and grains with the help of tokens made of clay.