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Chapter Summary

Basis of Accounting — Chapter Summary

ICSE · Class 11 · Accountancy

Summary of Basis of Accounting for ICSE Class 11 Accountancy. Key concepts: Under cash basis, Under accrual basis and The matching principle means.

60 questions28 flashcards2 formulas & key relations5 concepts

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Overview

Basis of accounting determines when income and expense are recorded for calculating profit or loss. The chapter explains two main bases: cash basis and accrual basis. Cash basis records transactions only when cash is received or paid, while accrual basis records them when they are earned or incurred

Key Concepts

Under cash basis

Under cash basis, incomes are recorded only when cash is received and expenses are recorded only when cash is paid. No adjustment is made for outstand

Under accrual basis

Under accrual basis, incomes are recorded when earned or accrued and expenses are recorded when incurred or become due, whether cash is received or pa

The matching principle means that expenses

The matching principle means that expenses should be matched with the income of the same period. Accrual basis follows this principle because it recor

True profit or loss is calculated

True profit or loss is calculated only under accrual basis because all incomes and expenses of the period are taken into consideration, not just cash

Some conservative organizations may adopt

Some conservative organizations may adopt a hybrid system, combining features of cash and accrual bases.

Learning Objectives

  • Understand the meaning of cash basis and accrual basis of accounting.
  • Identify the main differences between cash basis and accrual basis.
  • Recognize which basis is suitable for different types of organizations.
  • Understand the merits and limitations of both bases.
  • Learn why accrual basis is considered better for showing true profit and financial position.

Frequently Asked Questions

What are the important topics in Basis of Accounting for ICSE Class 11 Accountancy?
Key topics in Basis of Accounting include Meaning of Cash Basis of Accounting, Meaning of Accrual Basis of Accounting, Difference Between Cash Basis and Accrual Basis, Which Basis Should Be Followed?. Study these first, then practise questions on each for Class 11 exams.
How should I revise Basis of Accounting for Class 11 exams?
Learn the core ideas first, then work through the 60 practice questions on Basis of Accounting. Revise definitions regularly and use flashcards for quick recall before the exam.

Sources & Official References

Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.

More resources for Basis of Accounting

All ICSE Class 11 Accountancy Chapter Summary

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