# Theory Base of Accounting, Class 11 Accountancy | SwaVid Theory Base of Accounting, NCERT Class 11 Accountancy: notes with key ideas, formats, common mistakes and 3 quick checks with worked answers. Canonical: https://www.swavid.com/cbse/class-11/accountancy/chapter/theory-base-of-accounting Source: https://www.swavid.com/cbse/class-11/accountancy/chapter/theory-base-of-accounting # Theory Base of Accounting ## Definitions, formats and formulas ## Key ideas ## Common mistakes ## Quick checks ## Keep going ## Questions parents ask ## Class 11 Accountancy on SwaVid ### Generally accepted accounting principles ### Basic accounting concepts ### Dual aspect and accounting equation ### Bases of accounting ### Accounting standards and IFRS ### Next chapter ### Related chapter ### Related chapter ### All chapters SwaVid › CBSE › Class 11 › Accountancy › Theory Base of Accounting Notes written by SwaVid from the NCERT textbook. Class 11 Accountancy, Chapter 2. Key ideas, definitions and common mistakes. CBSE does not print marks for a single chapter. Short answer. This chapter explains Generally Accepted Accounting Principles, basic accounting concepts, bases of accounting, and accounting standards. It teaches students the underlying rules, standards, and accounting equation needed to record financial transactions consistently. Source: NCERT Financial Accounting I (Reprint 2026-27) , Chapter 2, Theory Base of Accounting GAAP refers to the standard rules and guidelines adopted by accountants to ensure uniformity and consistency in financial statements. These principles are shaped by legal requirements, custom, and professional bodies over time. Core concepts include business entity, money measurement, going concern, accounting period, cost concept, dual aspect, revenue recognition, matching, full disclosure, consistency, conservatism, and materiality. They provide the fundamental foundation on which accounting records are structured. Every transaction affects at least two accounts under the dual aspect concept. This fundamental rule forms the basis of the accounting equation, which states that total assets must always equal total liabilities plus capital. Under the cash basis, transactions are recorded only when cash is received or paid. Under the accrual basis, revenues and expenses are recognised in the period in which they occur, regardless of when cash settlement takes place. Accounting standards are written policy documents issued by expert accounting bodies to standardise diverse accounting policies. International Financial Reporting Standards represent global principles issued by the IASB to harmonise financial reporting across countries. Try each question first. Then tap it to see the answer. Assets = Liabilities + Capital 5,00,000 = 1,80,000 + Capital Capital = 5,00,000 - 1,80,000 = 3,20,000 ₹ 3,20,000 Total revenue = 1,20,000 + 80,000 = ₹ 2,00,000 Total expenses = 90,000 + 20,000 = ₹ 1,10,000 Net profit = 2,00,000 - 1,10,000 = ₹ 90,000 ₹ 90,000 Rule: Value stock at lower of cost or net realisable value Compare ₹ 45,000 and ₹ 40,000 Selected value = ₹ 40,000 under the conservatism concept ₹ 40,000 (Conservatism concept) Recording of Transactions - I . Introduction to Accounting . Financial Statements - I . The 9 chapters of Class 11 Accountancy . CBSE does not give marks to one chapter. It prints marks for units or parts, and the chapter list page shows them all. No. They are written by SwaVid from the NCERT textbook. The CBSE curriculum is the reference for what is assessed. Recording of Transactions - I. SwaVid is an AI tutor for Indian students in Classes 6 to 12. It finds the earlier ideas a child missed, then teaches today’s chapter. Start free to see how it works. - Ch 2 NCERT book - 80 marks, theory paper - 3 quick checks - Recording personal expenses of the owner as business expenses . Apply the business entity concept. Deduct personal expenses of the owner from capital as drawings rather than charging them to business expenses. - Recognising revenue on cash receipt instead of on sale under accrual accounting . Apply the revenue recognition concept. Record sales revenue when the title or risk passes to the buyer, not when the cash is received. - Valuing closing stock at market price when it exceeds cost . Apply the conservatism or prudence concept. Value closing stock at cost or net realisable value, whichever is lower. - Recording non-monetary events in the financial books . Apply the money measurement concept. Exclude qualitative events, such as a change in management or staff morale, because they cannot be stated in monetary terms. ## Key Links - [CBSE](https://www.swavid.com/cbse) - [Class 11](https://www.swavid.com/cbse/class-11) - [Accountancy](https://www.swavid.com/cbse/class-11/accountancy/chapters) - [Start free →](https://www.swavid.com/signup) - [All 9 chapters](https://www.swavid.com/cbse/class-11/accountancy/chapters) - [NCERT Financial Accounting I (Reprint 2026-27)](https://ncert.nic.in/textbook.php) - [Open notes](https://www.swavid.com/cbse/class-11/accountancy/chapter/recording-of-transactions-i) - [Open notes](https://www.swavid.com/cbse/class-11/accountancy/chapter/introduction-to-accounting) - [Open notes](https://www.swavid.com/cbse/class-11/accountancy/chapter/financial-statements-i) - [Class 11 Accountancy](https://www.swavid.com/cbse/class-11/accountancy/chapters) - [Start free →](https://www.swavid.com/signup)