Class 11 Accountancy - ODISHA
Financial Statements - II
Financial Statements - II builds upon the basics of final accounts by introducing necessary adjustments required at the end of the accounting year. For Class 11 students under the Odisha (BSE) board, this chapter is crucial as it teaches how to account for unadjusted items like closing stock, outstanding expenses, prepaid expenses, depreciation, and provision for doubtful debts. Mastering these adjustments ensures that the Trading, Profit and Loss Account, and Balance Sheet reflect the true and fair financial position of a business, carrying significant weight in board examinations.
Start Learning FreeKey Concepts
Closing Stock
The value of goods remaining unsold at the end of the accounting period, shown on the credit side of the Trading Account and the asset side of the Balance Sheet.
Outstanding Expenses
Expenses that have been incurred during the current accounting period but remain unpaid, which must be added to the respective expense and shown as a liability.
Prepaid Expenses
Expenses paid in advance for a future accounting period, which are deducted from the related expense and recorded as a current asset.
Depreciation
The permanent decrease in the value of fixed assets due to wear and tear or obsolescence, treated as an operating expense and deducted from the asset value.
Provision for Bad and Doubtful Debts
An estimated amount kept aside for debtors who may fail to pay their dues, debited to the Profit and Loss Account and deducted from sundry debtors.
Important Formulas
Board Exam Info
In the Odisha (BSE) Class 11 Accountancy board exams, this chapter typically carries 12 to 15 marks. Questions usually consist of a comprehensive long-answer problem requiring the preparation of a Trading Account, Profit and Loss Account, and Balance Sheet with 4 to 6 adjustments, along with short objective or numerical questions.
Frequently Asked Questions
Why are closing stock adjustments given outside the trial balance?
Because closing stock is valued at the end of the accounting period after the trial balance has already been prepared, requiring it to be recorded in two places to follow the dual-aspect principle.
How do we treat provision for doubtful debts in the final accounts?
It is shown on the debit side of the Profit and Loss Account (or deducted from bad debts) and subtracted from Sundry Debtors on the asset side of the Balance Sheet.
What is the difference between accrued income and income received in advance?
Accrued income is earned but not yet received (treated as an asset), whereas income received in advance is collected for a future period without being earned yet (treated as a liability).
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