DK Goel Solutions Chapter 2 Basic Accounting Terms

DK Goel Accountancy Class 11 Solutions Chapter 2 Basic Accounting Terms 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 concept of Trial Balance, Depreciation and Bank Reconciliation Statement (BRS) is required.

DK Goel Accountancy Class 11 Solutions – Chapter 2

Question 1

Define basic accounting terms.

Answer- Basic accounting terms refers to the accounting terms that are used daily in the world of business.

Question 2

Explain a few basic accounting terms.

Answer- Few basic accounting terms are.

  • Business Transaction- Any economic activity that changes the financial position of a company is known as a business transaction. Few features of a business transaction are.
    • It includes all the economic activity of a company. All goods or services that are purchased and sold for cash or credit, employee salaries, interest on borrowed money, etc, are few examples of a business transaction.
    • Transactions are divided into two parts external and internal. The external transaction is those transactions that are made between two businesses. Such of purchase of goods and services. Internal are those economic activities that have taken place within the organization.
    • This transaction changes the financial status of a company.
  • Events- An event is defined as the result or the outcomes of a transaction. Examples of events are. Rahul starts a business with a capital of ₹5,00,000. He purchases products for ₹4,00,000 for cash and sells 3/4th of these goods for3,80,000. He also pays ₹20,000 as the rent of the godown. The following results can be outlined from the above transactions.
    • ₹5,00,000 of investment for the business
    • Goods purchased ₹4,00,000
    • Cash sales ₹3,80,000
    • Godown payment ₹20,000
  • Account- An account is a place where all the transactions of a person or a business are recorded. For each asset, liabilities, expenses or income separate account is maintained.
  • Capital- It is the total amount invested by the owner or proprietor in a business. This amount can be in the form of goods, assets, and cash, which is used in the purchase of goods and assets. CApital can be derived by Capital=Assets-Liabilities
  • Drawing- All the cash or cost of goods withdrawn by the owner for his/her personal use in known as drawings
  • Liability- This particular amount is the amount which the company owes to the external or another firm. Liabilities can be expressed as

Liabilities= Assets-Capital

  • Assets- Asset is something that is owned by the company including the due amount from other companies or debtors.

Also Check: DK Goel Solution for Chapter 3 Accounting Principles

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