Chapter financial-statements-ii: Financial Statements - II Assertion-Reason Questions | accountancy Class 11 CBSE

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 1

Logic Check

Assertion (A): Outstanding expenses are added to the concerned expense in the Profit and Loss Account. Reason (R): Outstanding expenses relate to the current accounting period but remain unpaid at the end of the year.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 2

Logic Check

Assertion (A): Prepaid expenses are shown on the assets side of the Balance Sheet. Reason (R): Prepaid expenses represent expenditure incurred for which the benefit will be received in the next accounting period, making them a future economic benefit.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 3

Logic Check

Assertion (A): Accrued income is shown on the liabilities side of the Balance Sheet. Reason (R): Accrued income is an amount earned during the current year but not yet received in cash.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 4

Logic Check

Assertion (A): Income received in advance is treated as a liability in the Balance Sheet. Reason (R): Income received in advance represents an obligation to provide goods or services in a future period, as the amount received has not yet been earned.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 5

Logic Check

Assertion (A): Depreciation is treated as a revenue expense and charged to Profit and Loss Account. Reason (R): Depreciation involves actual payment of cash every year for the decline in value of assets.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 6

Logic Check

Assertion (A): In the Balance Sheet, a fixed asset is shown at cost minus accumulated depreciation. Reason (R): This treatment helps in revealing the true net book value of the asset at the end of 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): Bad debts are debited to the Profit and Loss Account. Reason (R): Bad debts represent a gain from irrecoverable amounts.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 8

Logic Check

Assertion (A): Provision for doubtful debts is created to bring certainty to the amount of bad debts charged every year. Reason (R): It is impossible to accurately know in advance which specific debtors will default, so an estimate is made.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 9

Logic Check

Assertion (A): Provision for discount on debtors is created on total debtors. Reason (R): Discount is expected to be given only to good (solvent) debtors who pay promptly.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 10

Logic Check

Assertion (A): Manager's commission on profit after charging such commission is always less than commission on profit before charging such commission. Reason (R): When commission is calculated on profit after charging commission, the base amount (profit) is reduced by the commission itself, resulting in a lower commission.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 11

Logic Check

Assertion (A): Interest on capital is shown as a deduction from capital in the Balance Sheet. Reason (R): Interest on capital is an expense for the business and is debited to the Profit and Loss Account.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 12

Logic Check

Assertion (A): All adjustments in the preparation of final accounts affect two places to complete double entry. Reason (R): Accounting follows the double entry system where every transaction has a debit and a credit aspect.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 13

Logic Check

Assertion (A): Closing stock is shown on the credit side of the Trading Account. Reason (R): Closing stock represents the cost of goods sold during the year.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 14

Logic Check

Assertion (A): Closing stock is valued at cost or net realisable value, whichever is lower. Reason (R): This practice follows the principle of conservatism which states that anticipated losses should be recorded but not anticipated profits.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 15

Logic Check

Assertion (A): Outstanding wages are added to wages in the Trading Account. Reason (R): Wages are a trading expense and outstanding wages represent the portion due but unpaid for the current period.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 16

Logic Check

Assertion (A): If the old provision for doubtful debts is MORE than the new provision required, the difference is credited to the Profit and Loss Account. Reason (R): Excess provision is no longer needed and represents a recovery, which increases profit.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 17

Logic Check

Assertion (A): The closing stock of the current year becomes the opening stock of the next year. Reason (R): Unsold goods carry forward their cost to the subsequent accounting period.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 18

Logic Check

Assertion (A): Under the adjusted purchases method, closing stock does not appear on the credit side of the Trading Account. Reason (R): In the adjusted purchases method, both opening and closing stocks are adjusted through the purchases account, so closing stock appears only in the Balance Sheet.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 19

Logic Check

Assertion (A): Further bad debts given as additional information are first deducted from debtors before computing provision for doubtful debts. Reason (R): Provision for doubtful debts is made only on the net remaining debtors who are expected to pay.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 20

Logic Check

Assertion (A): Manager's commission outstanding is shown on the assets side of the Balance Sheet. Reason (R): Manager's commission is payable by the business and hence it is a liability, not an asset.

Reasoning Options

ByteNotes

Chapter sections

Chapter financial-statements-ii: Financial Statements - II | Assertion-Reason

Assertion (A): Outstanding expenses are added to the concerned expense in the Profit and Loss Account. Reason (R): Outstanding expenses relate to the current accounting period but remain unpaid at the end of the year.

Assertion (A): Prepaid expenses are shown on the assets side of the Balance Sheet. Reason (R): Prepaid expenses represent expenditure incurred for which the benefit will be received in the next accounting period, making them a future economic benefit.

Assertion (A): Accrued income is shown on the liabilities side of the Balance Sheet. Reason (R): Accrued income is an amount earned during the current year but not yet received in cash.

Assertion (A): Income received in advance is treated as a liability in the Balance Sheet. Reason (R): Income received in advance represents an obligation to provide goods or services in a future period, as the amount received has not yet been earned.

Assertion (A): Depreciation is treated as a revenue expense and charged to Profit and Loss Account. Reason (R): Depreciation involves actual payment of cash every year for the decline in value of assets.

Assertion (A): In the Balance Sheet, a fixed asset is shown at cost minus accumulated depreciation. Reason (R): This treatment helps in revealing the true net book value of the asset at the end of the accounting period.

Assertion (A): Bad debts are debited to the Profit and Loss Account. Reason (R): Bad debts represent a gain from irrecoverable amounts.

Assertion (A): Provision for doubtful debts is created to bring certainty to the amount of bad debts charged every year. Reason (R): It is impossible to accurately know in advance which specific debtors will default, so an estimate is made.

Assertion (A): Provision for discount on debtors is created on total debtors. Reason (R): Discount is expected to be given only to good (solvent) debtors who pay promptly.

Assertion (A): Interest on capital is shown as a deduction from capital in the Balance Sheet. Reason (R): Interest on capital is an expense for the business and is debited to the Profit and Loss Account.

Assertion (A): All adjustments in the preparation of final accounts affect two places to complete double entry. Reason (R): Accounting follows the double entry system where every transaction has a debit and a credit aspect.

Assertion (A): Closing stock is shown on the credit side of the Trading Account. Reason (R): Closing stock represents the cost of goods sold during the year.

Assertion (A): Closing stock is valued at cost or net realisable value, whichever is lower. Reason (R): This practice follows the principle of conservatism which states that anticipated losses should be recorded but not anticipated profits.

Assertion (A): Outstanding wages are added to wages in the Trading Account. Reason (R): Wages are a trading expense and outstanding wages represent the portion due but unpaid for the current period.

Assertion (A): If the old provision for doubtful debts is MORE than the new provision required, the difference is credited to the Profit and Loss Account. Reason (R): Excess provision is no longer needed and represents a recovery, which increases profit.

Assertion (A): The closing stock of the current year becomes the opening stock of the next year. Reason (R): Unsold goods carry forward their cost to the subsequent accounting period.

Assertion (A): Under the adjusted purchases method, closing stock does not appear on the credit side of the Trading Account. Reason (R): In the adjusted purchases method, both opening and closing stocks are adjusted through the purchases account, so closing stock appears only in the Balance Sheet.

Assertion (A): Further bad debts given as additional information are first deducted from debtors before computing provision for doubtful debts. Reason (R): Provision for doubtful debts is made only on the net remaining debtors who are expected to pay.

Assertion (A): Manager's commission outstanding is shown on the assets side of the Balance Sheet. Reason (R): Manager's commission is payable by the business and hence it is a liability, not an asset.

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