These properties are not meant for sale, as an instance, land, constructing machinery, and so forth. Current property- a property that can be without difficulty converted into coins or coins equivalents are termed as current belongings. Costs – charges are distinguish between debtors and creditors class 11 the one’s fees that might be incurred to maintain the profitability of a commercial enterprise, like lease, wages, depreciation, interest, salaries, and so forth. Those help in the manufacturing, enterprise operations and generating revenues. Capital – It refers to the quantity invested with the aid of the owner of a firm. It is able to be within the form of coins or belongings.
CBSE accountancy can be challenging for some students due to its detailed concepts and application of principles. However, with proper understanding and practice, it can be mastered effectively. Chapter 1 Accounts Class 11 ‘Introduction to Accounting’ is a very crucial chapter for the students belonging to the commerce stream. This chapter gives the students in-depth information about what accounting is and what its aspects are.
Related Important Links for Class 11 Accountancy
(i) Honesty – By not showing the true and fair view of the result of operations and financial position of the enterprises, management is not honest towards the users of financial statements. Unsecured creditors, on the other hand, do not require any collateral from their borrowers. Unsecured creditors have a general claim on a debtor’s assets in the event of bankruptcy, although they are usually only allowed to seize a tiny fraction of the assets. As a result, unsecured loans are regarded as riskier than secured loans. External stakeholders are those persons who, although not directly involved with a company but are impacted in some way through the actions and business outcomes.
Accountancy for Class 11, Part 2, Chapter 1- Financial Statements I
These include wages, salaries, manufacturing expenses, and carriage inward expenses. Interest on Drawings – Interest on drawings is revenue to the business organisation and hence the account is debited as it is payable to its partners. Interest is charged on the withdrawn money made by the partners or the goods taken by the partners for their personal use. Interest on drawings is debited in the capital account.
Cost of Goods Sold – The (COGS) cost of goods sold characterises all expenses a private company experiences to make an offer of its goods and services. Instances of cost of goods sold are overhead, materials, storage, the wholesale price of products resold elsewhere, and direct labour. Salaries – Salaries are paid to employees who are appointed to professional or management positions in the organisation. Salaries are fixed amount per pay period; the salaried employee receives a fixed remuneration per pay period by totalling the fixed remuneration over a financial year is called salaries. Carriage Inward or Freight Inwards – Carriage inwards is the shipping and handling costs incurred by a company that is receiving goods from suppliers. Carriage inwards also termed as transportation inwards or freight inwards is treated as a direct expense and is always reflected on the debit.
- In that case, a balance sheet is the most appropriate statement which will present the necessary information.
- Purchase Return – Returns outwards are goods or products that are returned by the customer or business to the supplier.
- Capital – It refers to the quantity invested with the aid of the owner of a firm.
- State the nature of accounting information required by long-term lenders.
Glance on NCERT Solutions for Class 11 Accountancy Chapter 1 Introduction To Accounting
The company’s debtors are listed as assets on the balance sheet, whereas the company’s creditors are listed as liabilities. Net Profit – Net profit is the excess (positive worth) that stays with the organisation subsequent to deducting all costs, taxes, and interest. Following this, an organisation arrives at the operating profit; then, at that point, the taxes and interest on long-term debt are deducted from it, which brings about net profit. It reveals the current benefit position of the organisation. Alongside that, it mirrors the achievement and insufficiency of the business entity. Net profits are likewise alluded to as earnings after taxes (EAT).
Lending Money:
Operating Profit/EBIT – Operating profit is the benefit or profit acquired from the standard business exercises of the undertaking. It is likewise named earnings before interest and taxes (EBIT) when there is no non-operating income. In general, debtors are the parties who owes debt towards the company. The parties can be an individual or a company or bank or government agency, etc. Whenever an entity sells its goods on credit to a person (buyer) or renders services to a person (receiver of services), then that person is considered as Debtor and the company is known as a creditor. It represents a tangible asset of the business and is classified as an asset account on the balance sheet.