Chapter financial-statements-i: Financial Statements - I Assertion-Reason Questions | accountancy Class 11 CBSE

Chapter financial-statements-i: Financial Statements - I Assertion-Reason Questions | accountancy Class 11 CBSE | ByteNotes.in

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 1

Logic Check

Assertion (A): The Trading and Profit & Loss Account is also called the Income Statement. Reason (R): It shows the financial performance of the business by summarising revenues and expenses for an accounting period.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 2

Logic Check

Assertion (A): Wages paid to factory workers is a direct expense and is debited to the Trading Account. Reason (R): Wages are indirect expenses related to administration of the business.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 3

Logic Check

Assertion (A): The Balance Sheet totals of Assets side and Liabilities side are always equal. Reason (R): The Balance Sheet is based on the accounting equation: Assets = Liabilities + Capital.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 4

Logic Check

Assertion (A): Capital expenditure is recorded in the Profit & Loss Account. Reason (R): Capital expenditure benefits more than one accounting period and is shown in the Balance Sheet.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 5

Logic Check

Assertion (A): Closing Stock is shown on the credit side of the Trading Account. Reason (R): Closing stock represents unsold goods and reduces the cost of goods sold, thereby increasing gross profit.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 6

Logic Check

Assertion (A): The Balance Sheet is an account, not a statement. Reason (R): It records all transactions of the business during the accounting period.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 7

Logic Check

Assertion (A): Drawings reduce the Capital Account of the proprietor. Reason (R): Drawings represent amounts withdrawn by the proprietor from the business for personal use.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 8

Logic Check

Assertion (A): Gross Profit is calculated in the Profit & Loss Account. Reason (R): Gross Profit is the excess of net sales over the cost of goods sold and is calculated in the Trading Account.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 9

Logic Check

Assertion (A): Financial statements are prepared to present a true and fair view of the financial performance and position of the business. Reason (R): Financial statements are useful only to the internal management of the business.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 10

Logic Check

Assertion (A): Revenue expenditure is generally recurring in nature. Reason (R): Revenue expenditure is incurred for day-to-day conduct of the business and its benefit is limited to one accounting period.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 11

Logic Check

Assertion (A): Operating Profit excludes non-operating incomes and non-operating expenses. Reason (R): Operating Profit measures profit from purely financial and abnormal activities of the business.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 12

Logic Check

Assertion (A): An Opening Entry is passed at the beginning of the new accounting year. Reason (R): The Balance Sheet of the previous year serves as the basis for the Opening Entry to re-open asset, liability, and capital accounts.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 13

Logic Check

Assertion (A): Sale of old machinery is treated as a revenue receipt. Reason (R): Sale proceeds from fixed assets are capital receipts as they arise from the disposal of fixed assets, not from normal business operations.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 14

Logic Check

Assertion (A): Carriage Outwards is debited to the Trading Account. Reason (R): Carriage Outwards is an indirect expense related to the delivery of goods sold to customers and is debited to the Profit & Loss Account.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 15

Logic Check

Assertion (A): If capital expenditure is wrongly treated as revenue expenditure, profit will be understated. Reason (R): Treating capital expenditure as revenue expenditure increases expenses for the period, thereby reducing the reported profit.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 16

Logic Check

Assertion (A): Goodwill is classified as a current asset in the Balance Sheet. Reason (R): Goodwill is an intangible asset that cannot be seen or touched but has long-term value for the business.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 17

Logic Check

Assertion (A): Net Profit is transferred to the Capital Account of the proprietor. Reason (R): Net Profit belongs to the proprietor and increases his/her equity in the business.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 18

Logic Check

Assertion (A): Closing Stock does not normally appear in the Trial Balance. Reason (R): Closing Stock is brought into the books at the end of the year through a separate journal entry after the Trial Balance is prepared.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 19

Logic Check

Assertion (A): Marshalling of assets and liabilities means arranging them in a specific order in the Balance Sheet. Reason (R): Assets and liabilities can only be arranged in the order of permanence, not liquidity.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 20

Logic Check

Assertion (A): Salaries paid to office staff are debited to the Trading Account. Reason (R): Salaries paid to office staff are indirect expenses and are debited to the Profit & Loss Account.

Reasoning Options

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Chapter financial-statements-i: Financial Statements - I | Assertion-Reason

Assertion (A): The Trading and Profit & Loss Account is also called the Income Statement. Reason (R): It shows the financial performance of the business by summarising revenues and expenses for an accounting period.

Assertion (A): Wages paid to factory workers is a direct expense and is debited to the Trading Account. Reason (R): Wages are indirect expenses related to administration of the business.

Assertion (A): The Balance Sheet totals of Assets side and Liabilities side are always equal. Reason (R): The Balance Sheet is based on the accounting equation: Assets = Liabilities + Capital.

Assertion (A): Capital expenditure is recorded in the Profit & Loss Account. Reason (R): Capital expenditure benefits more than one accounting period and is shown in the Balance Sheet.

Assertion (A): Closing Stock is shown on the credit side of the Trading Account. Reason (R): Closing stock represents unsold goods and reduces the cost of goods sold, thereby increasing gross profit.

Assertion (A): The Balance Sheet is an account, not a statement. Reason (R): It records all transactions of the business during the accounting period.

Assertion (A): Drawings reduce the Capital Account of the proprietor. Reason (R): Drawings represent amounts withdrawn by the proprietor from the business for personal use.

Assertion (A): Gross Profit is calculated in the Profit & Loss Account. Reason (R): Gross Profit is the excess of net sales over the cost of goods sold and is calculated in the Trading Account.

Assertion (A): Financial statements are prepared to present a true and fair view of the financial performance and position of the business. Reason (R): Financial statements are useful only to the internal management of the business.

Assertion (A): Revenue expenditure is generally recurring in nature. Reason (R): Revenue expenditure is incurred for day-to-day conduct of the business and its benefit is limited to one accounting period.

Assertion (A): Operating Profit excludes non-operating incomes and non-operating expenses. Reason (R): Operating Profit measures profit from purely financial and abnormal activities of the business.

Assertion (A): An Opening Entry is passed at the beginning of the new accounting year. Reason (R): The Balance Sheet of the previous year serves as the basis for the Opening Entry to re-open asset, liability, and capital accounts.

Assertion (A): Sale of old machinery is treated as a revenue receipt. Reason (R): Sale proceeds from fixed assets are capital receipts as they arise from the disposal of fixed assets, not from normal business operations.

Assertion (A): Carriage Outwards is debited to the Trading Account. Reason (R): Carriage Outwards is an indirect expense related to the delivery of goods sold to customers and is debited to the Profit & Loss Account.

Assertion (A): If capital expenditure is wrongly treated as revenue expenditure, profit will be understated. Reason (R): Treating capital expenditure as revenue expenditure increases expenses for the period, thereby reducing the reported profit.

Assertion (A): Goodwill is classified as a current asset in the Balance Sheet. Reason (R): Goodwill is an intangible asset that cannot be seen or touched but has long-term value for the business.

Assertion (A): Net Profit is transferred to the Capital Account of the proprietor. Reason (R): Net Profit belongs to the proprietor and increases his/her equity in the business.

Assertion (A): Closing Stock does not normally appear in the Trial Balance. Reason (R): Closing Stock is brought into the books at the end of the year through a separate journal entry after the Trial Balance is prepared.

Assertion (A): Marshalling of assets and liabilities means arranging them in a specific order in the Balance Sheet. Reason (R): Assets and liabilities can only be arranged in the order of permanence, not liquidity.

Assertion (A): Salaries paid to office staff are debited to the Trading Account. Reason (R): Salaries paid to office staff are indirect expenses and are debited to the Profit & Loss Account.

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