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AccountancyClass 11CBSE

Describe briefly Errors of Commission

Errors of Commission: - These are the errors which are committed due to the wrong posting of wrong transaction, wrong totaling or balancing of the accounts, wrong casting of the subsidiary books

AccountancyClass 11CBSE

What is the Classification of Errors?

All the errors can be classified into the following four categoriesError of commissionErrors of OmissionErrors of PrincipleCompensating Errors

AccountancyClass 11CBSE

Create a list of the items that are included under Debit and Credit side of Trial balance.

Debit Account Items.Credit Account Items Land and Building]Plant and MachineryEquipmentFurniture and FixturesCash in HandCash at BankDebtorsBills ReceivableStock of Raw MaterialsWork in ProgressStock of Finished GoodsPrepaid InsurancePurchasesCarriage InwardsCarriage OutwardsSales ReturnInterest PaidSalariesOutstan

AccountancyClass 11CBSE

What are the characteristics or features of Trial Balance?

Characteristics of Trial BalanceIt is a list of balances of all Ledger accounts and Cash BookIt is not a part of the double entry system of book-keeping. It is only a working paper.It can be prepared on any dateIt verifies the arithmetical accuracy of posting of entries from the Journal to the Ledger.It is not a conclusive proof of the accuracy of the books of account since some errors are not disclosed by Trial Balance.

AccountancyClass 11CBSE

the following balance were extracted from the books of Shri S. Pal on 31st March, 2007. You are required to prepare a Trial Balance. The amount required to balance should be entered as capital. Purchases / Stock (April 1, 2006) / Sales / Sundry Debtors / Discount received / Carriage Outward / Cash in Hand / Machinery / Provision for Depreciation on Machinery | 1,70,000 / 24,000 / 1,05,000 / 23,800 / 3,500 / 700 / 3,500 / 1,24,500 / / 24,200 | Drawings / Return Inward / Premises / Sundry Creditors / Discount Allowed / Carriage Inward / Cash at Bank / General Expenses / Bad Debts Written off / Provision for Doubtful Debts | 7,700 / 3,500 / 5,28,000 / 16,100 / 2,800 / 1,400 / 17,500 / 2,100 / 2,450 / 2,380 | | |

Name of AccountsDr. BalanceRs.Cr. BalanceRs.PurchasesStock(April 1,2006)SalesSundry DebtorsDiscount ReceivedCarriage OutwardCash in HandMachineryProvision for DepreciationDrawingsReturn InwardPremises Sundry CreditorsDiscount AllowedCarriage InwardCash at Bank<b

AccountancyClass 11CBSE

From the following information, draw up a Trial Balance in the books of Shri Haridas Chaki as on 31st March, 2007: Capital Rs. 1,40,000; Purchases Rs. 36,000: Discount Allowed Rs. 1,200; Carriage Inward Rs. 8,700; Carriage Outwards Rs. 2,300; Sales Rs. 60,000; Return Inwards Rs. 300; Return Outwards Rs. 700; Rent and Taxes Rs. 1200; Plant and Machinery Rs. 80,700; Stock on 1-4-2006 Rs. 15,500; Sundry Debtors Rs. 20,200; Sundry Creditors Rs. 12,000; Investments Rs. 3600; Commission Received Rs. 1800; Cash in Hand Rs. 100; Cash at Bank rs. 10,100; Motor Cycle Rs. 34,600; and Stock on 31st March, 2007 (not adjusted) Rs. 20,500.

TRIAL BALANCE As at March 31, 2007Name of AccountsL.FDr. Balance RsCr. Balance Rs.CapitalPurchasesDiscount AllowedCarriage InwardCarriage OutwardsSalesReturn InwardReturn OutwardRent and TaxesPlant and MachineryStock(April 1, 2006)<br

AccountancyClass 11CBSE

Differentiate Between Trial Balance by Balance Method and Trial Balance by Total Method

Trial Balance By Balance MethodTrial Balance by Total Method1) It can be prepared after all the Ledger accounts have been balanced1) It can be prepared immediately after the completion of posting from books of original entry to the Ledger.2) It shows the balances of all the accounts in the Ledger.2) It shows the total amounts of the debit and credit s

AccountancyClass 11CBSE

Describe the methods of preparing the Trial Balance.

There are two methods of preparing a Trial Balance:Balance method: In this method, only the debit or credit balances are entered separately in two columns. This is known as the Net Trial Balance. This is the commonly used method of preparing a Trial Balance because it facilitates the preparation of the final accounts.Total Method: In this, the total of each side of the account is entered respectively in the debit and credit columns of the

AccountancyClass 11CBSE

What are the objectives of Trial Balance?

Objectives of Trial BalanceTo Ascertain the Arithmetical Accuracy of Ledger Accounts: The trial Balance enables one to establish whether posting and other accounting processes have been carried out without committing arithmetical errorsTo Help Prepare The Final Accounts: Financial statements are normally prepared on the basis of the Trial Balances. Otherwise, the work may be difficult, if </stro

AccountancyClass 11CBSE

What is trial Balance?

A) trial balance is a statement of accounts which appears in the ledger showing the balances or the total amounts of debit and credit items.”B) “A trial balance is a statement, prepared with the debit and credit balances of the Ledger accounts to test the arithmetical accuracy of the books”

AccountancyClass 11CBSE

What is Secret Reserve?

Secret reserve is a reserve which does not appear in the balance sheet. It may also help to reduce the disclosed profits and also the tax liability. The secret reserve can be merged with the profits during the lean periods to show improved profits. It cab be created by way of:Undervaluation of inventories/stock.Charging capital expenditure to profit and loss account.Making excessive provision for doubtful debts. Showing contingent liabilities as actual l

AccountancyClass 11CBSE

Explain Revenue reserve and Capital Reserve.

a) Revenue reserve: are created from revenue profits which arise out of the normal operating activities of the business and are otherwise freely available for distribution as dividend. Ex. of Revenue reserves are:General reserveWorkman compensation fundInvestment equalization reserveDebenture redemption reserveb) Capital reserve: are created out of capital out of capital profits which do not arise from the n

AccountancyClass 11CBSE

Explain Specific reserve.

Specific reserve is the reserve, which is created for some specific purposes and can be utilized only for that purpose. Example of specific reserve are:Dividend equalization reserve: This reserve is created to stablise or maintain dividend rate. In the year of high profit, amount is transferred to Dividend Equalisation reserve. In the year of low profit, This reserve amount is used to maintain the rate of dividend.Workmen compensation fund:</stron

AccountancyClass 11CBSE

What is General Reserve?

When the purpose for which reserve is created is not specified, it is called General Reserve. It is also termed as free reserve because the management can freely utilize it for any purpose. General reserve strengthens the financial position of the business.

AccountancyClass 11CBSE

Differentiate between Reserve and Provision.

BasisProvisionReserveBasic NatureA provision is a charge against profit. It is deducted from gross profitReserve is an appropriation of profit. It is created after net profitPurposeIt is made to for known liabilities or expenses pertaining to current accounting period.It is created for strengthening the financial position of the businessPresentation in balance sheet

AccountancyClass 11CBSE

Give some examples of reserves.

Examples of reservesGeneral reserveWorkmen compensation fundInvestment Fluctuation fund Capital reserveDividend equalization reserveReserve for redemption of debenture

AccountancyClass 11CBSE

What is Reserves?

Reserve is a part of the profit may be set aside and retainer in the business to provide for certain future needs like growth and expansion or to meet future contingencies such as workmen compensation.( Amounts set aside for future liabilities). Reserves are the appropriations of profit to strengthen the financial position of the business.

AccountancyClass 11CBSE

What are the three types of debtors?

Types of debtorsGood debtors: - are those from where collection of debts is certain.Bad debts: - are those debtors from where collection of money is not possible and the amount of credit given is a certain loss.Doubtful debts: - are those debtors who may pay but business firm is not sure about the collection of full amount from them.

AccountancyClass 11CBSE

Give some examples of Provisions.

Examples of Provisions Provision for deprecationProvision for bad doubtful debtsProvision for taxationProvision for discount on debtorsProvision for repairs and renewals

AccountancyClass 11CBSE

What is provision?

There are certain expenses/loses which are related to the current accounting period but amount of which is not known with certainty because they are not yet incurred. It is necessary to make provision for such items for ascertaining true net profit. (An amount set aside, usually out of retained profit, for a specific purpose or for some future intended action.)OR(A present liability with uncertain timing and amount, which will, arising from a past event, occur with

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