Class 11 Book Keeping and Accountancy Chapter 1: Introduction to Book-keeping and Accountancy

Key concepts: Introduction to Book-keeping and Accountancy

Book-keeping

Recording of financial transactions in books of account in a systematic and orderly way.

Accountancy

Recording, classifying, summarising, analysing and interpreting financial data and communicating results.

Objectives

Maintain complete records, ascertain profit or loss, know the financial position, prevent fraud and provide information to users.

Difference

Book-keeping is the base and recording stage; accountancy is the next stage using those records.

Accounting concepts

Business entity, money measurement, going concern, cost, dual aspect, accounting period, matching and accrual.

Accounting equation

Assets = Liabilities + Capital.

Quick revision: important points

• Users: owners, managers, creditors, investors, government and employees.
• Business entity concept: business and owner are separate.
• Dual aspect: every transaction has two effects.

Practice MCQs with answers

1. Book-keeping is mainly concerned with:

   1. Recording transactions
   2. Only auditing
   3. Only taxation
   4. Only selling
   Show answer

   Answer: A. Recording transactions
   It is the recording function.

2. Accounting equation is:

   1. Assets = Liabilities + Capital
   2. Assets = Capital - Liabilities
   3. Liabilities = Assets + Capital
   4. Capital = Liabilities - Assets
   Show answer

   Answer: A. Assets = Liabilities + Capital
   Assets equal outside liabilities plus the owner's capital.

3. The business and the owner are treated as separate under the:

   1. Business entity concept
   2. Going concern concept
   3. Cost concept
   4. Accrual concept
   Show answer

   Answer: A. Business entity concept
   This is the business entity concept.

4. Which stage comes after recording?

   1. Classifying and summarising
   2. Nothing
   3. Selling
   4. Printing notes
   Show answer

   Answer: A. Classifying and summarising
   Accounting classifies and summarises recorded data.

5. A user of accounting information is:

   1. Investor
   2. Only the watchman
   3. Only the peon
   4. None
   Show answer

   Answer: A. Investor
   Investors, creditors and owners use accounts.

All Class 11 Book Keeping and Accountancy chapters

• Chapter 1: Introduction to Book-keeping and Accountancy
• Chapter 2: Meaning and Fundamentals of Double Entry Book-keeping
• Chapter 3: Journal
• Chapter 4: Ledger
• Chapter 5: Subsidiary Books
• Chapter 6: Bank Reconciliation Statement
• Chapter 7: Depreciation
• Chapter 8: Rectification of Errors
• Chapter 9: Final Accounts of a Proprietary Concern
• Chapter 10: Single Entry System

Class 11 Book Keeping and Accountancy notes: all chapters