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Students Of CBSE Class 11 Commerce Accountancy Part A Financial Accounting Important Notes

Students Of CBSE Class 11 Commerce Accountancy Part A Financial Accounting Important Notes

CBSE Class 11 Commerce Accountancy Part A Financial Accounting :  CBSE is a renowned educational Board, which comes under the Union Government of India. The Central Board of Secondary Education or CBSE is a prestigious board of education and it provides affiliation to public and private schools. Apart from this, all Jawahar Navodaya Vidyalayas and kendriya vidyalayas are affiliated to this board.

Students Of CBSE Class 11 Commerce Accountancy Part A Financial Accounting Important Notes

Students Of CBSE Class 11 Commerce Accountancy Part A Financial Accounting Important Notes

Students Of CBSE Class 11 Commerce Accountancy Part A Financial Accounting Important Notes

CBSE Class 11 Commerce Accountancy Part A Financial Accounting : The fundamentals of accounting and including it as an information system play and important role in this field of study. The important points and syllabus structure is given here. The whole syllabus is divided into 3 parts, Part A- Financial accounting 1, Part B- Financial accounting 2 and Part C- Project work.

Part A has 2 units -Theoretical framework and accounting process. Part B has 3 units- Financial statements of sole proprietorship from complete and incomplete records, Financial statements of not for profit organizations and Computers in accounting.

Details of project work is added in this link. Theory contains 90 marks while project work is of 10 marks.

Students Of CBSE Class 11 Commerce Accountancy Part A Financial Accounting Important Notes

CBSE Class 11 Commerce Accountancy Part A Financial Accounting : Here we gave direct download links for CBSE Class 11 Commerce Accountancy Part A Financial Accounting Important Notes in PDF format. Our team Members provides solved papers, board question papers, revision notes and NCERT solutions for CBSE class 11 Accountancy art A Financial Accounting. The topics included are introduction to Theoretical Frame Work, Accounting Process and other information. CBSE Class 11 Commerce Accountancy Part A Financial Accounting has units two those are :

Download here Complete details of CBSE class 11 Accountancy study material in PDF format

PART A: FINANCIAL ACCOUNTING – I

Unit-1: Theoretical Frame Work

Introduction to Accounting

  • Accounting- concept, objectives, advantages and limitations, types of accounting information; users of accounting information and their needs.
  • Basic accounting terms: business transaction, account, capital, drawings, liabilities (non – current and current); assets (non-current and current) fixed assets (tangible and intangible assets), receipts (capital and revenue), expenditure (capital, revenue and deferred), expense, income, profits, gains and losses, purchases, purchases returns, sales, sales returns, goods, stock, inventory, trade receivables (debtors and bills receivable), trade payables (creditors and bills payable), cost, vouchers, discount – trade and cash.

Theory Base of Accounting

  • Fundamental accounting assumptions: going concern, consistency and accrual.
  • Accounting principles: accounting entity, money measurement, accounting period, full disclosure, materiality, prudence, cost concept, matching concept and dual aspect.
  • Accounting Standards and IFRS (International Financial Reporting Standards): concept and objectives
  • Double entry system of accounting.
  • Bases of accounting – cash basis and accrual basis.

Unit-2: Accounting Process

Recording of Transactions

  • Accounting equation: analysis of transactions using accounting equation.
  • Rules of debit and credit: for assets, liabilities, capital, revenue and expenses.
  • Origin of transactions- source documents/ supporting vouchers (invoice, cash memo, pay in slip, cheque), debit note, credit note, preparation of accounting vouchers – cash (debit and credit) and non cash (transfer).
  • Books of original entry: format and recording – Journal.
  • Cash book: simple cash book, cash book with discount column and cash book with bank and discount columns, petty cash book.
  • Other books: purchases book, sales book, purchases returns book, sales returns book and journal proper.

Preparation of Bank Reconciliation Statement,

Ledger and Trial Balance

  • Bank reconciliation statement- concept, calculating bank balance at an accounting date: need and preparation. Corrected cash book balance.
  • Ledger – format, posting from journal, cash book and other special purpose books, balancing of accounts.
  • Trial balance: objectives and preparation {Scope: Trial balance with balance method only)

Depreciation, Provisions and Reserves.

  • Depreciation: concept, need and factors affecting depreciation; methods of computation of depreciation: straight line method, written down value method (excluding change in method)
  • Accounting treatment of depreciation: by charging to asset account, by creating provision for depreciation/ accumulated depreciation account, treatment of disposal of asset.
  • Provisions and reserves: concept, objectives and difference between provisions and reserves; types of reserves- revenue reserve, capital reserve, general reserve and specific reserves.

Accounting for Bills of Exchange.

  • Bills of exchange and promissory note: definition, features, parties, specimen and distinction.
  • Important terms : term of bill, due date, days of grace, date of maturity, discounting of bill, endorsement of bill, bill sent for collection, dishonor of bill, noting of bill , retirement and renewal of a bill.
  • Accounting treatment of bill transactions. ‘

Rectification of Errors

  • Errors: types-errors of omission, commission, principles, and compensating; their effect on Trial Balance.
  • Detection and rectification of errors; preparation of suspense account.

Students Of CBSE Class 11 Commerce Accountancy Part A Financial Accounting Important Notes

CBSE Class 11 Commerce Accountancy Part A Financial Accounting : Financial accounting is a specialized branch of accounting that keeps track of a company’s financial transactions. Using standardized guidelines, the transactions are recorded, summarized, and presented in a financial report or financial statement such as an income statement or a balance sheet.

Companies issue financial statements on a routine schedule. The statements are considered external because they are given to people outside of the company, with the primary recipients being owners/stockholders, as well as certain lenders. If a corporation’s stock is publicly traded, however, its financial statements (and other financial reportings) tend to be widely circulated, and information will likely reach secondary recipients such as competitors, customers, employees, labor organizations, and investment analysts.

It’s important to point out that the purpose of financial accounting is not to report the value of a company. Rather, its purpose is to provide enough information for others to assess the value of a company for themselves.

Because external financial statements are used by a variety of people in a variety of ways, financial accounting has common rules known as accounting standards and as generally accepted accounting principles (GAAP). In the U.S., the Financial Accounting Standards Board (FASB) is the organization that develops the accounting standards and principles. Corporations whose stock is publicly traded must also comply with the reporting requirements of the Securities and Exchange Commission (SEC), an agency of the U.S. government.

Double Entry and the Accrual Basis of Accounting

At the heart of financial accounting is the system known as double entry bookkeeping (or “double entry accounting”). Each financial transaction that a company makes is recorded by using this system.

The term “double entry” means that every transaction affects at least two accounts. For example, if a company borrows $50,000 from its bank, the company’s Cash account increases, and the company’s Notes Payable account increases. Double entry also means that one of the accounts must have an amount entered as a debit, and one of the accounts must have an amount entered as a credit. For any given transaction, the debit amount must equal the credit amount. (To learn more about debits and credits, see Explanation of Debits & Credits.)

The advantage of double entry accounting is this: at any given time, the balance of a company’s asset accounts will equal the balance of its liability and stockholders’ (or owner’s) equity accounts. (To learn more on how this equality is maintained, see the Explanation of Accounting Equation.)

Financial accounting is required to follow the accrual basis of accounting (as opposed to the “cash basis” of accounting). Under the accrual basis, revenues are reported when they are earned, not when the money is received. Similarly, expenses are reported when they are incurred, not when they are paid. For example, although a magazine publisher receives a $24 check from a customer for an annual subscription, the publisher reports as revenue a monthly amount of $2 (one-twelfth of the annual subscription amount). In the same way, it reports its property tax expense each month as one-twelfth of the annual property tax bill.

By following the accrual basis of accounting, a company’s profitability, assets, liabilities and other financial information is more in line with economic reality. (To learn more on achieving the accrual basis of accounting, see the Explanation of Adjusting Entries.)

Accounting Principles

If financial accounting is going to be useful, a company’s reports need to be credible, easy to understand, and comparable to those of other companies. To this end, financial accounting follows a set of common rules known as accounting standards or generally accepted accounting principles (GAAP, pronounced “gap”).

GAAP is based on some basic underlying principles and concepts such as the cost principle, matching principle, full disclosure, going concern, economic entity, conservatism, relevance, and reliability.

GAAP, however, is not static. It includes some very complex standards that were issued in response to some very complicated business transactions. GAAP also addresses accounting practices that may be unique to particular industries, such as utility, banking, and insurance. Often these practices are a response to changes in government regulations of the industry.

In addition to following the provisions of GAAP, any corporation whose stock is publicly traded is also subject to the reporting requirements of the Securities and Exchange Commission (SEC), an agency of the U.S. government. These requirements mandate an annual report to stockholders as well as an annual report to the SEC. The annual report to the SEC requires that independent certified public accountants audit a company’s financial statements, thus giving assurance that the company has followed GAAP.

Financial Statements

Financial accounting generates the following general-purpose, external, financial statements:

  1. Income statement (sometimes referred to as “results of operations” or “earnings statement” or “profit and loss [P&L] statement”)
  2. Balance sheet (sometimes referred to as “statement of financial position”)
  3. Statement of cash flows (sometimes referred to as “cash flow statement”)
  4. Statement of stockholders’ equity

Income Statement

The income statement reports a company’s profitability during a specified period of time. The period of time could be one year, one month, three months, 13 weeks, or any other time interval chosen by the company.

The main components of the income statement are revenues, expenses, gains, and losses. Revenues include such things as sales, service revenues, and interest revenue. Expenses include the cost of goods sold, operating expenses (such as salaries, rent, utilities, advertising), and nonoperating expenses (such as interest expense). If a corporation’s stock is publicly traded, the earnings per share of its common stock are reported on the income statement.

Balance Sheet

The balance sheet is organized into three parts: (1) assets, (2) liabilities, and (3) stockholders’ equity at a specified date (typically, this date is the last day of an accounting period).

The first section of the balance sheet reports the company’s assets and includes such things as cash, accounts receivable, inventory, prepaid insurance, buildings, and equipment. The next section reports the company’s liabilities; these are obligations that are due at the date of the balance sheet and often include the word “payable” in their title (Notes Payable, Accounts Payable, Wages Payable, and Interest Payable). The final section is stockholders’ equity, defined as the difference between the amount of assets and the amount of liabilities.

Statement of Cash Flows

The statement of cash flows explains the change in a company’s cash (and cash equivalents) during the time interval indicated in the heading of the statement. The change is divided into three parts: (1) operating activities, (2) investing activities, and (3) financing activities.

The operating activities section explains how a company’s cash (and cash equivalents) have changed due to operations. Investing activities refer to amounts spent or received in transactions involving long-term assets. The financing activities section reports such things as cash received through the issuance of long-term debt, the issuance of stock, or money spent to retire long-term liabilities.

Statement of Stockholders’ Equity

The statement of stockholders’ (or shareholders’) equity lists the changes in stockholders’ equity for the same period as the income statement and the cash flow statement. The changes will include items such as net income, other comprehensive income, dividends, the repurchase of common stock, and the exercise of stock options.

Download here CBSE Class 11 Commerce Accountancy Part A Financial Accounting Important Notes

Students Of CBSE Class 11 Commerce Accountancy Part A Financial Accounting Important Notes

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