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Basis of Accounting

ICSE · Class 11 · Accountancy

Flashcards for Basis of Accounting — ICSE Class 11 Accountancy. Quick Q&A cards covering key concepts, definitions, and formulas.

60 questions28 flashcards5 concepts

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28 Flashcards
Card 1Bases of Accounting

What are the two bases of accounting used for calculating profit or loss?

Answer

The two bases of accounting are Cash Basis of Accounting and Accrual Basis of Accounting.

Card 2Cash Basis of Accounting

Cash Basis of Accounting: what does it mean?

Answer

Cash basis is a method of accounting in which expenses are recorded only when they are paid in cash, and incomes are recorded only when they are received in cash. Credit items are not recorded until c…

Card 3Cash Basis of Accounting

Why is cash basis called a simple method of accounting?

Answer

It is simple because only cash transactions are recorded. It does not require estimates or personal judgements, so it is easy to follow in businesses where most dealings are in cash.

Card 4Cash Basis of Accounting

Which type of businesses or professionals usually follow cash basis?

Answer

Cash basis is followed by professional persons like Doctors, Lawyers, and Chartered Accountants. It is also mostly used in the Government system of accounting.

Card 5Cash Basis of Accounting

What happens to outstanding expenses, prepaid expenses, accrued income, and income received in advance under cash basis?

Answer

Under cash basis, no adjustments are made for outstanding expenses, prepaid expenses, accrued income, or income received in advance. These items are ignored.

Card 6Cash Basis of Accounting

What is the main limitation of cash basis regarding profit calculation?

Answer

Cash basis does not calculate true profit or loss because all transactions are not taken into consideration. It records only cash items, so it does not show the full picture.

Card 7Cash Basis of Accounting

Why can cash basis lead to manipulation of profit?

Answer

There is more possibility of manipulation and frauds of profits in cash basis because profit depends only on cash receipts and payments, not on all incomes and expenses of the period.

Card 8Cash Basis of Accounting

Is cash basis recognized under the Indian Companies Act, 2013?

Answer

No. Cash basis of accounting is not recognized under the Indian Companies Act, 2013.

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Frequently Asked Questions

What are the important topics in Basis of Accounting for ICSE Class 11 Accountancy?
Basis of Accounting covers several key topics that are frequently asked in ICSE Class 11 board exams. Focus on the core concepts listed on this page and practise related questions to build confidence.
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Understand the core concepts first, then work through the 60 practice questions available for this chapter. Revise formulas and definitions regularly, and use flashcards for quick recall before the exam.
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There are 28 flashcards for Basis of Accounting covering key definitions, formulas, and concepts. Use them daily for 10–15 minutes for best results.

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