Class 11 Accountancy — Chapter 2: Theory Base of Accounting

What you'll learn

• ▸Need for Theory Base in Accounting
• ▸Generally Accepted Accounting Principles (GAAP)
• ▸Business Entity Concept
• ▸Money Measurement Concept
• ▸Going Concern Concept
• ▸Accounting Period Concept
• ▸Cost Concept (Historical Cost)
• ▸Dual Aspect Concept (Duality)

Chapter Summary

--- PAGE 1 --- 11110CH02 Theory Base of Accounting 2 LEARNING OBJECTIVES After studying this chapter, you will be able to: * identify the need for theory base of acco- unting; * explain the nature of Generally Accepted Accounting Principles (GAAP); * state the meaning and purpose of the basic accounting concepts; * list the accounting standards issued by Institute of Chartered Accountants of India; * describe the systems of accounting; and * describe the basis of accounting. As discussed in the previous chapter, accounting is concerned with the recording, classifying and summarising of financial transactions and events and interpreting the results thereof. It aims at providing information about the financial performance of a firm to its various users such as owners, managers employees, investors, creditors, suppliers of goods…

Practice Questions from this Chapter

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1. Define accounting principles simply. Get Solution →
2. Illustrate the business entity concept. Get Solution →
3. Explain why accounting rules exist. Get Solution →
4. What does the acronym GAAP stand for? Get Solution →
5. According to the Business Entity Concept, how is a business viewed in relation to its owner? Get Solution →
6. Which concept states that only transactions and events that can be expressed in monetary terms are recorded in the accounting books? Get Solution →
7. What is the primary assumption of the Going Concern Concept? Get Solution →
8. What is the term for the span of time at the end of which the financial statements of an enterprise are prepared? Get Solution →

Did you know?

• 💡 The first accounting records were made on clay tablets over 5,000 years ago!
• 💡 Before standard rules, every town had its own time, making travel confusing.
• 💡 Roman numerals don't have a zero, making complex calculations harder.
• 💡 Some ancient cultures used knotted ropes to count and record important data.
• 💡 Long ago, bankers weighed precious metals for every transaction instead of using paper money.

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