Chapter 2 of NCERT Class 11 Accountancy is titled Theory Base of Accounting. This chapter explains the rules, principles, and concepts that form the foundation of how accounting is done. It introduces students to the basic accounting concepts like business entity, going concern, matching principle, and accounting conventions like conservatism and consistency. Understanding this theory base is necessary before moving on to actual accounting procedures like journal entries and preparation of ledgers.
I’m writing about this chapter because many students tend to ignore the theory part in accountancy and jump straight into problems. But that’s where they get stuck later. Without knowing why certain rules are followed or what each term means, solving questions becomes confusing. That’s why I feel Chapter 2 is one of the most important chapters in Class 11 Accountancy. It builds the logical reasoning behind every action we take in practical accounting. I’ve also added the PDF download link here so students can access it anytime on phone or laptop. Going through the chapter again using the NCERT book helps with revisions before exams and improves your conceptual clarity.
Theory Base of Accounting – Summary and Key Points
In simple words, this chapter explains the why of accounting. It’s like learning grammar before writing essays. The rules and assumptions we follow in all future accounting chapters are discussed here.
Key Elements in Chapter 2
1. Accounting Principles
These are the rules that all accountants follow to ensure uniformity. They include:
- Business Entity Concept – Business and owner are separate
- Going Concern Assumption – Business will continue to run in the future
- Money Measurement Concept – Only financial transactions are recorded
- Accounting Period Concept – Accounts are prepared for a specific time, usually a year
- Cost Concept – Assets are recorded at their original purchase price
2. Accounting Concepts vs Accounting Conventions
| Basis | Accounting Concepts | Accounting Conventions |
|---|---|---|
| Meaning | Basic assumptions in accounting | Customs or traditions in accounting |
| Example | Matching concept | Conservatism convention |
| Mandatory | Yes | Not always mandatory |
3. System of Accounting
- Cash Basis – Only actual receipts and payments are recorded
- Accrual Basis – Transactions are recorded when they occur, not when cash is exchanged
4. Basis of Accounting
- Single Entry System – Incomplete and used by small businesses
- Double Entry System – Complete system used worldwide
Download PDF
Click Here to Download NCERT Class 11 Accountancy Chapter 2: Theory Base of Accounting PDF
