TS Grewal Accountancy Class 11 Solution Chapter 1 Introduction of Accounting

About this chapter: TS Grewal Accountancy Class 11 Chapter 1 Introduction of Accounting helps to set up basic understanding relating to accounting. It provides definition of accounting and its importance for an organization. Some basic details about various branches of accounting is also provided in this chapter. This chapter also explains the role of an accountant and what type of financial statements are prepared. Students will be able to understand the basics of accounting which will be used when they are going through the other chapters in class 11 accountancy. This is a very important chapter which the students should read and understand carefully as the foundation of accountancy will be formed only by understanding all the topics which have been given in this chapter. All important topics have been explained in a very easy to understand manner and are followed by lot of theoretical and practical questions which will be very useful for all students. We have provided below answers to all the questions which have been given in this chapter 

Question.1 Explain the meaning of Accounting.

Answer.1

Accounting is a process of indentifying financial transactions, measuring them in money terms, recording them in primary books, classifying, summarizing, analyzing, interpreting them and communicating the result to the users.

Question.2 What is the process of Accounting?

Answer.2

Accounting is the process of identifying financial transaction, measuring them in money terms, recording them in primary books, classifying, summarizing, analyzing and interpreting them.

Question.3 Define book keeping. What is the function of Book keeping?

Answer.3

According to Northcott, “Book Keeping is an art of recording in the books of accounting the monetary aspect of commercial and financial transaction.”

The Function of Book keeping is to identify financial transactions and events, measuring them in money terms, recording them in the book of accounts and classifying the recorded transactions. 

Question.4 Give one point of distinction between Book Keeping and Accounting?

Answer.4

Below are the difference between Book Keeping and Accounting:-

Question.5 Discuss briefly the type of Accounting Information.

Answer.5

The type of accounting information is Income Statement or Profit and Loss Account and Position statement or Balance Sheet.

Question.6 Why the following parties are interested in Accounting Information:

(a) Investors

(b) Government

Answer.6

The following parties are interested in Accounting Information:

(a) Investors:-  Investors do not have direct control over business affairs. Hence they rely on accounting information to know about the profitability of the business and the safety of their investments.

(b) Government:- Government is interested in interested in accounting information for assessment of different type of taxes and calculation of national income accounts.

Question.7 State what is the end-product of Financial Accounting.

Answer.7

The end products of financial accounting are financial statements, i.e., Income statement and Balance Sheet.

Question.8 What are the attributes (features) of Accounting?

Answer.8

Identification, measurement, recording, classification, summarization, interpretation and communication of financial data are the attributes or features of Accounting.

Question.9 What do you mean by Accounting? What are its main objectives?

Answer.9

Accounting is a process of identifying financial transactions, measuring them in money terms, recording them in primary books, classifying, summarizing, analyzing, interpreting them and communicating the results to the users.

Maintaining systematic record of transactions, ascertaining profit or loss, ascertaining financial position, assisting the management and communicating accounting information to users are the main objectives of Accounting.

Question.10 What are the advantages of accounting?

Answer.10

Financial information about business, assistance to management, replacement of memory, facilitation of comparative study, facilitation of settlement of tax liabilities, facilitation of loans, evidence in court, facilitation of sale of business, assistance in the event of insolvency and helpful in partnership accounts are the advantages of accounting. 

Question.11 Explain the primary objectives of accounting.

Answer.11

The primary objective of accounting are to maintain systematic records of transactions, ascertaining profit or loss, ascertaining financial position, assisting the management and communicating accounting information to users.

Question.12 Explain any four objectives of accounting.

Answer.12

Maintaining systematic record of transaction, ascertaining profit or loss, ascertaining financial position and communicating accounting information to user are the four objectives of accounting.

Question.13 Define Accounting. Explain any two limitations of accounting.

Answer.13

According to American Accounting Association, “Accounting is the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by the users of the information.”

Accounting ignores the effect of price level changes and may lead to window dressing. These are the two limitations of Accounting.

Question.14 What is accounting? Explain four of its functions.

Answer.14

Accounting is a process of identifying financial transactions, measuring them in money terms, recording them in primary books, classifying, summarizing, analyzing, interpreting them and communicating the results to the users.

Maintaining systematic records, communicating the financial result, meeting legal requirements and protecting business assets are four functions of accounting. 

Question.15 What do you mean by accounting? Explain in brief any four advantages of accounting.

Answer.15

Accounting is a process of identifying financial transactions, measuring them in money terms, recording them in primary books, classifying, summarizing, analyzing, interpreting them and communicating the results to the users.

Financial information about business, assistance to management, replaces memory and facilitates comparative study are the four advantages of accounting. 

Question.16 What do you mean by Financial Accounting? Explain the four main limitations of Financial Accounting.

Answer.16

Financial Accounting is that branch of accounting, which records financial transactions and events, summarizes and interprets them and communicates the result to the users.

Accounting ignores the effect of price level changes, may lead to window dressing, ignores the qualitative elements and doesn’t indicate the realizable value. These are four limitations of accounting.

Question.17 What do you mean by Financial Accounting? Explain its one main function.

Answer.17

Financial Accounting is that branch of accounting, which records financial transaction and events, summarizes and interprets them and communicates the result to the users.

One main function of Financial Accounting is maintaining systematic records for recording them in the Journal, posting them into the ledger and preparation of final accounts. 

Question.18 Write a short note on Double Entry System of Accounting.

Answer.18

The double entry system of accounting records every transaction in two aspects debit and credit. If more than two accounts are affected by a transaction, then the sum of debit transactions must be equal to the sum of credit transactions. The Double Entry System of accounting has provided to be a scientific and complete system of accounting followed by every enterprise and organization. 

Question.19 Accounting provides information about the profitability any financial soundness of a concern. In addition, it provides various other valuable information also. However, accounting has certain limitations. Explain any three of such limitations.

Answer.19

Accounting provides information about the profitability and financial soundness of the concern. In addition, it provides various other valuable information also. However, accounting has certain limitations.

Financial Accounting is that branch of accounting, which records financial transactions and events, summarizes and interprets them and communicates the results to the users.

Accounting ignores the effect of price level changes, may lead to window dressing and ignores the qualitative elements. These are three limitations of accounting.