Accountancy NCERT Notes, Solutions and Extra Q & A (Class 11th & 12th)
11th										12th

Class 11th Chapters
1. Introduction To Accounting	2. Theory Base Of Accounting	3. Recording Of Transactions - I
4. Recording Of Transactions - II	5. Bank Reconciliation Statement	6. Trial Balance And Rectification Of Errors
7. Depreciation, Provisions And Reserves	8. Bill Of Exchange	9. Financial Statements - I
10. Financial Statements - II

Class 11th Accountancy NCERT Concepts, Solutions and Extra Q & A

1. Introduction To Accounting

This chapter introduces Accounting as the process of identifying, measuring, recording, classifying, summarising, interpreting, and communicating financial information. It explains the objectives (e.g., calculating profit/loss ₹, financial position), functions, advantages, and limitations of accounting. The chapter discusses different branches (financial, cost, management accounting) and users of accounting information (owners, management, creditors, government). Basic accounting terms like assets, liabilities, capital, revenue, and expenses are defined, laying the foundation for understanding how businesses in India track their financial transactions.

2. Theory Base Of Accounting

This chapter delves into the foundational principles and concepts that underpin accounting practices. It discusses the Generally Accepted Accounting Principles (GAAP), which provide a standard framework. Key accounting concepts like Business Entity (business separate from owner), Money Measurement (₹ only), Going Concern, Accounting Period, Accrual (revenue/expenses recorded when incurred, not when cash exchanged), Matching, and Dual Aspect (every transaction has two effects, A = L + C) are explained. Accounting Conventions (Consistency, Full Disclosure, Conservatism) and the role of Accounting Standards (AS) issued by ICAI in India are also covered.

3. Recording Of Transactions - I

This chapter introduces the initial steps of recording financial transactions based on the Double-entry system, where every transaction affects at least two accounts. It explains the concept of Debit and Credit and the Golden Rules of Accounting (Debit the receiver/what comes in, Credit the giver/what goes out). The process of recording transactions chronologically in the Journal, the book of original entry, is detailed. Subsequently, transactions are transferred or posted to the respective accounts in the Ledger, allowing for a summarized view of each account balance, forming the core of accounting record-keeping for businesses in India.

4. Recording Of Transactions - II

This chapter continues the topic of recording transactions by introducing special purpose books, also known as Subsidiary Books or Books of Original Entry. Instead of journaling every transaction, similar transactions are recorded in dedicated books. These include the Cash Book (for cash receipts and payments ₹), Purchase Book (credit purchases), Sales Book (credit sales), Purchase Return Book, Sales Return Book, Bills Receivable Book, and Bills Payable Book. Transactions not fitting into these special books are recorded in the Journal Proper. This method streamlines recording recurring transactions for businesses in India.

5. Bank Reconciliation Statement

This chapter discusses the need for preparing a Bank Reconciliation Statement (BRS). A BRS is a statement prepared periodically (usually monthly) to reconcile the difference between the balance shown in the firm's Cash Book (bank column) and the balance shown in the bank's Pass Book (or statement). Reasons for these differences include unpresented cheques, uncredited cheques, bank charges , direct deposits by customers, and errors. Preparing a BRS helps identify discrepancies and ensure the accuracy of both the Cash Book and the bank records, crucial for financial control for businesses in India.

6. Trial Balance And Rectification Of Errors

This chapter introduces the Trial Balance, a statement listing all the debit and credit balances from the ledger accounts on a specific date. Its primary objective is to check the arithmetic accuracy of the ledger accounts and prove that total debits equal total credits (Total Debits = Total Credits). The chapter also discusses different types of errors that can occur in accounting (errors of omission, commission, principle, compensating errors) and methods for their rectification, which may involve passing journal entries or using a Suspense Account if the Trial Balance doesn't tally, ensuring accuracy of accounts for Indian businesses.

7. Depreciation, Provisions And Reserves

This chapter discusses important accounting concepts related to non-current assets and financial health. Depreciation is the gradual decrease in the value of a fixed asset due to wear and tear, obsolescence, or passage of time. The chapter explains the need for charging depreciation (e.g., matching principle) and methods like Straight Line Method and Written Down Value Method. Provisions are created for known liabilities whose amount is uncertain (e.g., Provision for Doubtful Debts). Reserves are appropriations of profit for strengthening the business or specific purposes (e.g., General Reserve), important for prudent financial management of companies in India.

8. Bill Of Exchange

This chapter introduces Bills of Exchange and Promissory Notes as instruments of credit and negotiable instruments, regulated in India by the Negotiable Instruments Act, 1881. A Bill of Exchange is a written order by the drawer to the drawee to pay a specified amount to the payee on demand or after a fixed time. A Promissory Note is a written promise to pay. The chapter discusses different scenarios involving Bills of Exchange, such as holding it till maturity, discounting it with a bank, endorsing it to another party, or sending it for collection. Accounting treatment for these situations and for the dishonour of a bill is explained, common in trade transactions.

9. Financial Statements - I

This chapter focuses on preparing Financial Statements from a Trial Balance, which summarize a business's financial performance for a period. It covers the Trading Account, which determines Gross Profit or Gross Loss , and the Profit and Loss Account, which determines Net Profit or Net Loss after considering operating and non-operating incomes/expenses. The chapter emphasizes incorporating common adjustments (e.g., for closing stock, outstanding expenses, prepaid expenses, accrued income, depreciation) to arrive at the true profit or loss, essential for accurate reporting of business performance in India.

10. Financial Statements - II

This chapter continues the preparation of Financial Statements by focusing on the Balance Sheet. The Balance Sheet is a statement showing the financial position of a business on a specific date. It presents the assets (what the business owns) on one side and the liabilities (what the business owes to outsiders) and capital (what the business owes to owners) on the other, following the fundamental accounting equation: Assets = Liabilities + Capital. The chapter discusses the grouping and marshalling of assets and liabilities and preparing the Balance Sheet with necessary adjustments, crucial for depicting the financial health of a business in India.