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Basis of Accounting

ICSE · Class 11 · Accountancy

Quick revision notes for Basis of Accounting — ICSE Class 11 Accountancy. Key concepts, formulas, and definitions for last-minute revision.

60 questions28 flashcards5 concepts

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Key Topics to Revise

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1. Meaning of Cash Basis of Accounting

  • Under cash basis, expenses are recorded only when they are paid in cash.
  • Under cash basis, incomes are recorded only when they are received in cash.
  • Only cash transactions are recorded; credit transactions are not recorded until cash changes hands.
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2. Meaning of Accrual Basis of Accounting

  • Under accrual basis, incomes are recorded when they are earned or accrued, whether cash is received or not.
  • Expenses are recorded when they are incurred or become due, whether cash is paid or not.
  • Credit sales are included in total sales of the period.
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3. Difference Between Cash Basis and Accrual Basis

  • Cash basis records only cash transactions; accrual basis records both cash and credit transactions.
  • Cash basis records incomes when received and expenses when paid; accrual basis records incomes when earned and expenses when incurred.
  • Cash basis ignores outstanding expenses, prepaid expenses, accrued income, and income received in advance; accrual basis does not ignore them.
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4. Which Basis Should Be Followed?

  • The basis of accounting depends on the attitude and outlook of the organization.
  • Conservative organizations may adopt the hybrid system of accounting.
  • The hybrid system combines features of cash basis and accrual basis.

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Full Notes

Key Concepts

Under cash basisUnder accrual basisThe matching principle means that expensesTrue profit or loss is calculatedSome conservative organizations may adopt

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.
How to score full marks in Basis of Accounting — ICSE Class 11 Accountancy?
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.

Sources & Official References

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

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