August 16, 2024
Overview: Dive into a comprehensive look at financial statements with adjustments for Class 11 CBSE, practice with previous year's questions and ace this chapter in your CBSE Class 11 Accountancy exam.
Financial Statements with Adjustments is an important topic in unit 3 of the 11th class Accountancy syllabus. This unit has 25% of the overall weightage in the question paper.
This post explains this chapter thoroughly to help you understand it and the types of questions that can be asked. Continue reading for previous year's questions, important concepts, and more.
Every financial year, every company prepares a Profit and loss account, Trading account (an income statement), and Balance Sheet statement (position statement).
The income statement indicates a company's net profit and loss status, whereas the balance sheet suggests the business's financial position. All these statements are provided according to the trial balance record.
While preparing these accounts, we encounter a few accounts or transactions that are Omitted from the record book, sometimes recorded wrongly, or entered only one part of the transactions.
Entries passed for such financial transactions are known as adjustment entries.
Accurate financial statements are crucial for businesses to make informed decisions. However, transactions often occur over different accounting periods, necessitating adjustments to ensure financial reports reflect the business's true financial performance and position.
These adjustments are made to account for items such as:
Check Out: Class 11 Accountancy Syllabus PDF Download
Here are a few questions asked in the previous year's board exams.
Also, it is important to solve more and more 11th Accountancy Question Papers to enhance preparation levels.
Q1. On which side of the balance sheet are prepaid expenses shown?
Q2. The following information is given in the trial balance
Bad debt | Rs 3,000 |
Provision for bad debts | Rs 3,500 |
Debtors | Rs 40,000 |
It is desired that a 10% provision be made for doubtful debts on debtors. What is the amount debited to the profit and loss account?
Q3. Is a provision for discounts on debtors made before making a provision for doubtful debts?
Q4. While Preparing final accounts, what treatment is made of prepaid expenses?
Q5. Give journal entries for the following adjustments listed below:
(a) Outstanding salary was ₹ 3,500.
(b) Rent unpaid for one month was ₹ 6,000 per annum.
(c) Insurance prepaid for a quarter was ₹ 16,000 per annum.
(d) Purchase of furniture costing ₹ 7,000 was entered in the purchases book.
Q6. Why is it necessary to record the adjusting entries to prepare final accounts?
The following balances have been taken from M/s Runway Shine Ltd.'s trial balance. Prepare a trading and P&L account and a balance sheet as of March 31, 2017.
Account Title | Amount ₹ | Account Title | Amount ₹ |
Purchases | 1,50,000 | Sales | 2,50,000 |
Opening stock | 50,000 | Return outwards | 4,500 |
Return inwards | 2,000 | Interest received | 3,500 |
Carriage inwards | 4,500 | Discount received | 400 |
Cash in hand | 77,800 | Creditors | 1,25,000 |
Cash at bank | 60,800 | Bill payable | 6,040 |
Wages | 2,400 | Capital | 1,00,000 |
Printing and Stationery | 4,500 | - | - |
Discount | 400 | - | - |
Bad debts | 1,500 | - | - |
Insurance | 2,500 | - | - |
Investment | 32,000 | - | - |
Debtors | 53,000 | - | - |
Bills receivable | 20,000 | - | - |
Postage and Telegraph | 400 | - | - |
Commission | 200 | - | - |
Interest | 1,000 | - | - |
Repair | 440 | - | - |
Lighting Charges | 500 | - | - |
Telephone charges | 100 | - | - |
Carriage outward | 400 | - | - |
Motor car | 25,000 | - | - |
- | 4,89,440 | - | 4,89,440 |
Adjustments to be made -
Q8. From the following balances obtained from the accounts of Mr. Ranjeet, Prepare the Trading and Profit & Loss Account:
Particulars | Rs. | Particulars | Rs. |
Stock on April 01, 2012 | 8,000 | Bad debts | 1,200 |
Purchases for the year | 22,000 | Rent | 1,200 |
Sales for the year | 42,000 | Discount (Dr.) | 600 |
Wages | 2,500 | Commission paid | 1,100 |
Salaries & Wages | 3,500 | Sales Expenses | 600 |
Advertisement | 1,000 | Repairs | 600 |
Closing stock on March 31, 2013, is Rs. 4,500.
Check Out: Class 11 Accountancy Sample Papers
Q9. From the following balances, prepare the final accounts of M/s Mangal & Sons for the year ended 31st March 2018 :
Particulars | Rs. |
Opening Stock | 12,500 |
B/R | 2,000 |
Sales | 70,000 |
Purchases | 37,500 |
Creditors | 20,000 |
Salaries | 3,850 |
Insurance | 200 |
Debtors | 32,500 |
Carriage | 1,450 |
Commission | 750 |
Interest | 900 |
Printing | 250 |
B/P | 3,150 |
Returns in | 1,300 |
Returns out | 500 |
Bank | 5,250 |
Rent and Taxes | 1,300 |
Furniture | 1,000 |
Capital | 7,100 |
Closing Stock on 31-3-2018 Rs.15,000
Q10. Suresh started business on 1 April 2013 with a capital of Rs 30,000. At the end of the year, the following trial balance was drawn up from his books.
Name of Accounts | Amt(Rs) | Name of Accounts | Amt(Rs) |
Drawings | 4,500 | Capital | 40,000 |
Plant and fixtures | 8,000 | Sales | 1,60,000 |
Purchases | 1,16,000 | Creditors | 12,000 |
Carriage inward | 2,000 | Bills payable | 9,000 |
Wages | 8,000 | - | - |
Return inward | 4,000 | - | - |
Salaries | 10,000 | - | - |
Printing | 800 | - | - |
Advertisement | 1,200 | - | - |
Trade Charges | 600 | - | - |
Rent | 1,400 | - | - |
Debtors | 25,000 | - | - |
Bills Receivable | 5,000 | - | - |
Investments | 15,000 | - | - |
Discount | 500 | - | - |
Cash at bank | 16,000 | - | - |
Cash in hand | 3,000 | - | - |
- | 2,21,000 | - | 2,21,000 |
The value of stock as of 31 March 2014 was Rs 26,000. You are required to prepare his trading and profit and loss account for the year ended 31 March 2014 and a balance sheet as of that date after taking the following facts into account.
Check Out: Financial Accounts Problems for Class 11
Chapter 10 of Financial Statements 2 is crucial for Class 11 Accountancy. Students need optimum practice for solving questions as this chapter incorporates most of the theories studied in previous chapters.
Here are a few benefits of solving Important Questions for Class 11 Accountancy Chapter 10 -
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