DK Goel Solutions Chapter 1 Meaning and Objectives of Accounting

DK Goel Accountancy Class 11 Solutions Chapter 1 Meaning and Objectives of Accounting which is outlined by expert Accountancy teachers from the latest version of DK Goel Class 11 Accountancy books. We at BYJU’S provide DK Goel Solutions to assist students to comprehend all the theories in particular. There are numerous concepts in Accountancy, but the concepts of Trial Balance, Depreciation and Bank Reconciliation Statement (BRS) are required.

DK Goel Accountancy Class 11 Solutions – Chapter 1

Question 1

Define Accounting.

Answer:

Accounting can be defined as a process of reporting, recording, interpreting, and summarizing economic data. The introduction of accounting helps the decision-makers of a company to make effective choices, by providing information on the financial status of the business. Today, accounting is used by everyone and a good understanding of it is beneficial to all. Accountancy act as a language of finance

Question 2

Distinguish between debtors and creditors.

Answer: Debtors are the persons who owe an amount to the enterprise for the goods sold or service provided to them on credit, whereas, creditors are the person who is to be paid an amount by the enterprise for buying from then goods and services on credit.

Question 3

What is a cash discount?

Answer: When a discount is allowed to the customer for making prompt payment it is called cash discount. It is always recorded in the books of account.

Question 4

Explain the characteristics of Accounting.

Answer: Few characteristics of Accounting are.

  • Accounting is an art as well as science- Accounting can be defined as an art as it has a technique to pre-determines object. It records, classifies, and summarizes all the transactions of a company, to determine the net profit and financial status of the business. Secondly, it can also be compared to science as it an organized body which is based on a particular principle and accounting standard.
  • Recording of Financial Transaction only- In accounting, only transaction or items related to the financial character are recorded.
  • Recording in terms of Money- In business, anything that is not related to money does not record in accounting.
  • Classifying- Once the recording is done in a journal or any subsidiary book, the transactions are then classified. Here classification means segregating one type of transaction in one place and separate accounts. The book in which each type of transactions is recorded according to its nature is known as Ledger.
  • Summarizing- It is a process where all the classified transactions are presented in such a way that it is understandable and useful to the management and other users.
  • Interpretation of the Results- Accounting summarizes the result of a company in such a way that it gives full and detailed information about the profits and financial status of a company to the bank, employees, investors, creditors, etc.
  • Communicating- Accounting also gives a progress report of a company to the users and examines them according to their requirement.

Also Check: DK Goel Solution for Chapter 2 Basic Accounting Terms

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