Introduction to Accounting — Account STD 11 Commerce — Question

Assertion: Bank overdraft is an asset while bank balance is a liability.
Reason: When Bank gives interest free loan to their customer it is called bank overdraft.

Assertion - Depreciation is the loss of value of fixed assets in use because of normal wear and tear.
Reason - Because of depreciation, fixed assets are to be replaced after certain period. So a provision of fund called depreciation reserve fund is created to meet the replacement cost of fixed assets.

Assertion (A): Unfavourable balance as per Pass Book is Debit Balance.
Reason (R): Favourable Balance as per Cash Book is Debit Balance.

Assertion - Under diminishing balance method of depreciation, the charge for depreciation keeps on diminishing year after year in all subsequent years.
Reason - Under diminishing balance method, the rate per cent at which depreciation is written off goes on diminishing year after year in all subsequent years.

Assertion (A): Interest collected by bank is recorded on the credit side of Cash Book in Bank column.
Reason (R): Customer can give instruction to the bank to collect interest on behalf of customer

Assertion: Ledger is called Principal Book of accounts as any accounting information can be extracted from it.
Reason: Ledger are essential to complete a system of accounting.

Assertion (A) : Provisions are created by crediting the profit and loss account.
Reason (R) : The amount of provision for expense and loss is a charge against the revenue of the current period.

Assertion (A) : Accounting information must be reliable. Reliability implies that the information should be presented in such a simple and logical manner that they are understood easily by their users.
Reason (R): Accounting is influenced by personal judgements

Assertion (A): Trial balance is prepared to check the arithmetical accuracy of books of accounts.
Reason (R): Any wrong recording in the book of original entry andwrong posting in the principal book will lead to mismatch of trial balance.

Assertion (A) – Accounting process is carried out on the basis of the rules and principles framed by accountancy.
Reason (R) – Thus, it may be said that accountancy is knowledge of accounting and accounting is the application of accountancy.