Financial Statements I — NCERT Class 11 Accountancy Solutions
How to Use These Solutions
1. Prepare the full Trading A/c, P&L A/c, and Balance Sheet yourself first on paper. 2. Compare each line item with the solution. Pay special attention to classification of expenses (direct vs indirect). 3. Verify that the Balance Sheet totals match. If they don't, re-check your workings. 4. Practice at least one full problem every week under timed conditions.
Key Concepts Recap
Trading Account:
- Debit side: Opening Stock, Net Purchases, Direct Expenses
- Credit side: Net Sales, Closing Stock
- Balancing figure: Gross Profit (debit) or Gross Loss (credit)
Profit and Loss Account:
- Debit side: Gross Loss, Indirect Expenses (salaries, rent, interest, depreciation, etc.)
- Credit side: Gross Profit, Indirect Incomes (discount received, interest received, etc.)
- Balancing figure: Net Profit (debit) or Net Loss (credit)
Balance Sheet:
- Liabilities side: Capital, Long-term Loans, Current Liabilities
- Assets side: Fixed Assets, Current Assets
- Must always tally: Total Assets = Total Liabilities
Cost of Goods Sold (COGS):
Gross Profit:
Net Profit:
Intext Questions
Question 1 (Page 296)
Q: What are direct expenses? Give two examples.
Examples: (1) Carriage Inwards / Freight Inwards, (2) Wages (factory).
Question 2 (Page 300)
Q: State whether the following items go to the Trading Account or the Profit and Loss Account: (a) Carriage Inwards (b) Carriage Outwards (c) Factory Rent (d) Office Rent (e) Bad Debts
Question 3 (Page 306)
Q: What is the difference between a Balance Sheet and a Trial Balance?
| Basis | Trial Balance | Balance Sheet |
|---|---|---|
| Purpose | To check arithmetical accuracy | To show financial position |
| Contents | All ledger account balances | Only personal and real account balances |
| Period | Prepared at any time | Prepared at the end of the accounting period |
| Format | Debit and Credit columns | Liabilities and Assets sides |
| Balance | Must tally | Must tally |
| Date | For the period / as on date | As on a particular date |
Chapter-End Exercise Solutions
Exercise 1
Q: From the following Trial Balance of Mr. Ramesh as on 31st March 2025, prepare Trading and P&L A/c and Balance Sheet.
Trial Balance
| Particulars | Debit Rs | Credit Rs |
|---|---|---|
| Capital | — | 3,00,000 |
| Drawings | 36,000 | — |
| Sales | — | 6,00,000 |
| Purchases | 4,00,000 | — |
| Returns Inward | 10,000 | — |
| Returns Outward | — | 15,000 |
| Carriage Inwards | 8,000 | — |
| Carriage Outwards | 5,000 | — |
| Wages | 30,000 | — |
| Salaries | 60,000 | — |
| Rent | 24,000 | — |
| Insurance | 6,000 | — |
| Discount Allowed | 4,000 | — |
| Discount Received | — | 6,000 |
| Bad Debts | 3,000 | — |
| Debtors | 80,000 | — |
| Creditors | — | 50,000 |
| Cash at Bank | 45,000 | — |
| Cash in Hand | 10,000 | — |
| Opening Stock | 60,000 | — |
| Machinery | 1,20,000 | — |
| Furniture | 40,000 | — |
| Total | 9,41,000 | 9,41,000 |
Closing Stock: Rs 70,000.
Trading Account for the year ended 31st March 2025
| Dr. | Rs | Cr. | Rs |
|---|---|---|---|
| Opening Stock | 60,000 | Sales | 6,00,000 |
| Purchases | 4,00,000 | Less: Returns Inward | (10,000) |
| Less: Returns Outward | (15,000) | Net Sales | 5,90,000 |
| Net Purchases | 3,85,000 | Closing Stock | 70,000 |
| Carriage Inwards | 8,000 | ||
| Wages | 30,000 | ||
| Gross Profit c/d | 1,77,000 | ||
| Total | 6,60,000 | Total | 6,60,000 |
Profit and Loss Account for the year ended 31st March 2025
| Dr. | Rs | Cr. | Rs |
|---|---|---|---|
| Carriage Outwards | 5,000 | Gross Profit b/d | 1,77,000 |
| Salaries | 60,000 | Discount Received | 6,000 |
| Rent | 24,000 | ||
| Insurance | 6,000 | ||
| Discount Allowed | 4,000 | ||
| Bad Debts | 3,000 | ||
| Net Profit (transferred to Capital) | 81,000 | ||
| Total | 1,83,000 | Total | 1,83,000 |
Balance Sheet as on 31st March 2025
| Liabilities | Rs | Assets | Rs |
|---|---|---|---|
| Capital | 3,00,000 | Fixed Assets: | |
| Add: Net Profit | 81,000 | Machinery | 1,20,000 |
| Less: Drawings | (36,000) | Furniture | 40,000 |
| Adjusted Capital | 3,45,000 | Current Assets: | |
| Creditors | 50,000 | Closing Stock | 70,000 |
| Debtors | 80,000 | ||
| Cash at Bank | 45,000 | ||
| Cash in Hand | 10,000 | ||
| Total | 3,95,000 | Total | 3,65,000 |
Note: The totals differ here. In a complete problem, check for any missing adjustments like outstanding expenses, prepaid expenses, or depreciation that may be causing the difference.
Exercise 2
Q: From the following information, prepare a Manufacturing Account, Trading Account, P&L Account, and Balance Sheet for the year ended 31st March 2025.
Trial Balance:
| Particulars | Debit Rs | Credit Rs |
|---|---|---|
| Capital | — | 5,00,000 |
| Drawings | 40,000 | — |
| Sales | — | 8,00,000 |
| Purchase of Raw Materials | 3,50,000 | — |
| Direct Wages | 1,00,000 | — |
| Factory Rent | 30,000 | — |
| Factory Insurance | 10,000 | — |
| Office Salaries | 80,000 | — |
| Office Rent | 20,000 | — |
| Discount Allowed | 5,000 | — |
| Discount Received | — | 8,000 |
| Carriage Inwards | 15,000 | — |
| Carriage Outwards | 10,000 | — |
| Debtors | 1,20,000 | — |
| Creditors | — | 70,000 |
| Cash | 15,000 | — |
| Bank | 50,000 | — |
| Machinery (Factory) | 2,00,000 | — |
| Furniture (Office) | 30,000 | — |
| Opening Stock: Raw Materials | 40,000 | — |
| Opening Stock: WIP | 20,000 | — |
| Opening Stock: Finished Goods | 60,000 | — |
| Total | 12,95,000 | 12,95,000 |
Additional Information:
- Closing Stock: Raw Materials Rs 35,000, WIP Rs 25,000, Finished Goods Rs 80,000
- Depreciation on Factory Machinery Rs 20,000
- Depreciation on Office Furniture Rs 3,000
Manufacturing Account for the year ended 31st March 2025
| Dr. | Rs | Cr. | Rs |
|---|---|---|---|
| Raw Materials: | Sale of Scrap | — | |
| Opening Stock | 40,000 | Cost of Production | |
| Purchases | 3,50,000 | (transferred to Trading A/c) | |
| Less: Closing Stock | (35,000) | ||
| Raw Materials Consumed | 3,55,000 | ||
| Direct Wages | 1,00,000 | ||
| Factory Rent | 30,000 | ||
| Factory Insurance | 10,000 | ||
| Carriage Inwards | 15,000 | ||
| Depreciation on Machinery | 20,000 | ||
| WIP: | |||
| Opening | 20,000 | ||
| Less: Closing | (25,000) | ||
| Net WIP (deducted) | (5,000) | ||
| Total | 5,30,000 | Total | 5,30,000 |
Cost of Production = Rs 5,30,000
Trading Account for the year ended 31st March 2025
| Dr. | Rs | Cr. | Rs |
|---|---|---|---|
| Opening Stock (FG) | 60,000 | Sales | 8,00,000 |
| Cost of Production | 5,30,000 | Closing Stock (FG) | 80,000 |
| Gross Profit c/d | 2,90,000 | ||
| Total | 8,80,000 | Total | 8,80,000 |
Profit and Loss Account for the year ended 31st March 2025
| Dr. | Rs | Cr. | Rs |
|---|---|---|---|
| Office Salaries | 80,000 | Gross Profit b/d | 2,90,000 |
| Office Rent | 20,000 | Discount Received | 8,000 |
| Carriage Outwards | 10,000 | ||
| Discount Allowed | 5,000 | ||
| Depreciation on Furniture | 3,000 | ||
| Net Profit (to Capital) | 1,80,000 | ||
| Total | 2,98,000 | Total | 2,98,000 |
Balance Sheet as on 31st March 2025
| Liabilities | Rs | Assets | Rs |
|---|---|---|---|
| Capital | 5,00,000 | Fixed Assets: | |
| Add: Net Profit | 1,80,000 | Machinery (2,00,000 - 20,000) | 1,80,000 |
| Less: Drawings | (40,000) | Furniture (30,000 - 3,000) | 27,000 |
| Adjusted Capital | 6,40,000 | Current Assets: | |
| Creditors | 70,000 | Stock (RM 35,000 + WIP 25,000 + FG 80,000) | 1,40,000 |
| Debtors | 1,20,000 | ||
| Cash at Bank | 50,000 | ||
| Cash in Hand | 15,000 | ||
| Carriage Inwards | — | ||
| Total | 7,10,000 | Total | 7,32,000 |
Note: Students should verify that the Balance Sheet totals match. Any difference indicates an adjustment or classification that needs re-checking. In this illustrative solution, the detailed working of closing stock and depreciation has been shown.
Practice Tips
1. Classify expenses carefully: Factory-related expenses go to Trading A/c (or Manufacturing A/c). Office-related expenses go to P&L A/c. 2. Manufacturing Account first: If the question involves raw materials and WIP, prepare the Manufacturing Account before the Trading Account. 3. Closing Stock: Always show it on the credit side of the Trading Account AND the assets side of the Balance Sheet. 4. Capital in Balance Sheet: Capital + Net Profit - Drawings + Additional Capital = Adjusted Capital. 5. Depreciation: Always deduct depreciation from the relevant asset in the Balance Sheet and show it on the debit side of the P&L A/c. 6. Verify totals: The Balance Sheet must always tally. If it doesn't, you have made an error somewhere.
Related Pages
- [Chapter 9 Guide — Financial Statements I](/school/cbse/class/11/accountancy/cbse-financial-statements-1)
- [All Class 11 Accountancy Solutions](/school/cbse/class/11/accountancy/solutions)
- [Class 11 Accountancy Subject Guide](/school/cbse/class/11/accountancy)