CBSE
Basic Accounting Terms: Class 11 Practice in TS Grewal Chapter 2 Style
In the 2025-26 TS Grewal Class 11 book, Chapter 2 is Basic Accounting Terms: assets, liabilities, capital, drawings, expenses, revenue, debtors, creditors and expenditure. Below are original practice questions on those exact terms with full worked answers. They are not copied from the book; they cover the same ground at the same difficulty, free.
TS Grewal is the book almost every commerce student uses for Class 11 Accountancy, and its questions are copyrighted, so I have not reproduced them here. What I have done instead is write my own questions that test the same terms Chapter 2 tests, at the same level, and solve each one fully. I sit Cambridge exams myself, not CBSE, so everything on this page comes from the 2025-26 edition's contents and CBSE's own syllabus documents rather than from memory of the paper. Work through the seven questions with a notebook, then try the variant under each solution before you check the bracketed answer.
What Chapter 2 actually covers in the 2025-26 edition
The 2025-26 edition keeps Basic Accounting Terms as Chapter 2, straight after the introduction chapter. The terms it defines and tests: business transaction, capital, drawings, liabilities split into non-current and current, assets split into non-current and current with tangible, intangible and fictitious types, expenditure split into capital and revenue, expense, income, profit, gain, loss, purchases and purchases return, sales and sales return, stock, trade receivables including debtors and bills receivable, trade payables including creditors and bills payable, goods, cost, vouchers, and discount split into trade and cash. That list looks long, but nearly every question is one of three moves: define a term, classify an item into a category, or compute a small figure such as capital or cost of goods sold. The seven questions below cover all three moves.
How CBSE marks these questions
Class 11 papers are set by schools on the CBSE pattern rather than by the board itself, so the exact split varies, but the format is consistent: terms show up as 1-mark objective items, as 3-mark classify-with-reason questions, and hidden inside longer problems where using the wrong term costs presentation marks. From the sample papers I worked through while writing this page, two habits reliably earn full marks. First, answer classification questions with the category plus a because clause, since the reason usually carries its own mark. Second, when a question involves a rupee figure, state the relationship in words before substituting numbers, the way the solutions below do. Definitions should use the key phrase examiners look for: drawings needs for personal use, capital expenditure needs benefit beyond one accounting year.
The distinctions students actually lose marks on
Three pairs cause most of the damage. Expense versus expenditure: expenditure is any amount spent or liability incurred, while expense is only the portion consumed in earning this year's revenue; buying a machine is expenditure but not an expense, though its depreciation is. Profit versus gain: profit arises from normal operations, gain from incidental events like selling a fixed asset above book value. Debtor versus creditor: the firm's debtor owes the firm, while the firm's creditor is owed by the firm, and swapping them reverses the whole answer. If you can talk through these three pairs without hesitating, Chapter 2 is essentially banked. Questions 3, 4 and 7 below drill exactly these pairs, and each variant swaps the angle so you cannot answer from memory.
Worked questions, step by step
Classify each item as a non-current asset, current asset, non-current liability or current liability: machinery, stock of goods, bank overdraft, a loan repayable after five years, debtors, furniture, creditors and cash in hand.
- Ask two questions of every item: does the business own it (asset) or owe it (liability), and will it convert to cash or fall due within one year (current) or after one year (non-current).
- Machinery and furniture are bought to use for years, not to sell, so both are non-current assets.
- Stock, debtors and cash in hand are held to convert into cash within the operating cycle, so all three are current assets.
- A bank overdraft and creditors are repayable within a year, so both are current liabilities.
- The five-year loan falls due after more than a year, so it is a non-current liability.
Answer: Non-current assets: machinery, furniture. Current assets: stock, debtors, cash in hand. Current liabilities: bank overdraft, creditors. Non-current liability: the five-year loan.
Where marks slip: CBSE classification questions usually award half a mark or one mark per item, and reasons are not needed unless asked, but write the category clearly against each item rather than in a jumbled list.
Try one yourself: Classify: computer software bought for office use, prepaid insurance, outstanding salaries. (Answer: non-current intangible asset, current asset, current liability)
A firm's position on 31 March 2026 shows total assets of Rs 8,60,000. It owes Rs 1,40,000 to creditors and Rs 2,20,000 on a bank loan. Work out the owner's capital.
- Capital is what remains for the owner after outsiders are paid, so rearrange Assets = Liabilities + Capital into Capital = Assets minus External Liabilities.
- External liabilities are creditors Rs 1,40,000 plus bank loan Rs 2,20,000, which is Rs 3,60,000.
- Capital = Rs 8,60,000 minus Rs 3,60,000 = Rs 5,00,000.
Answer: Capital is Rs 5,00,000.
Where marks slip: Write the equation in words before substituting numbers. In a 3-mark question the stated relationship typically carries a mark on its own, so it is free credit even if the subtraction slips.
Try one yourself: Total assets are Rs 6,40,000 and capital is Rs 4,10,000. Find the external liabilities. (Answer: Rs 2,30,000)
The owner of a stationery shop takes home goods that cost Rs 12,000 for family use and also pays Rs 8,000 rent for the shop from the till. Which of these is drawings and which is an expense, and why?
- Drawings means value taken out of the business by the owner for personal use, whether in cash or in goods.
- The goods worth Rs 12,000 went to the owner's family, not towards earning revenue, so they are drawings and reduce capital.
- The shop rent of Rs 8,000 was paid to keep the business running and earning revenue, so it is an expense of the business.
Answer: Goods taken home, Rs 12,000, are drawings; shop rent, Rs 8,000, is an expense.
Where marks slip: The reason is worth as much as the label here. Say who received the benefit: the owner personally means drawings, the business means expense.
Try one yourself: The owner pays her home electricity bill of Rs 3,000 from the business bank account. Drawings or expense? (Answer: drawings, because the benefit is personal)
During April, a trader sells goods on credit worth Rs 45,000 to Mohan and buys goods on credit worth Rs 30,000 from Sohan. State who is a debtor and who is a creditor of the firm, with amounts.
- A debtor owes money to the firm because the firm sold to them on credit.
- Mohan received goods worth Rs 45,000 and has not yet paid, so Mohan is a debtor for Rs 45,000.
- A creditor is someone the firm owes money to because the firm bought from them on credit.
- Sohan supplied goods worth Rs 30,000 that remain unpaid, so Sohan is a creditor for Rs 30,000.
Answer: Mohan is a debtor for Rs 45,000; Sohan is a creditor for Rs 30,000.
Where marks slip: The direction of the debt decides everything. Money owed to the firm makes a debtor; money owed by the firm makes a creditor. Mixing them up usually costs the full mark, not half.
Try one yourself: The firm borrows Rs 50,000 from Priya and lends Rs 20,000 to Aman. Who is the firm's creditor? (Answer: Priya for Rs 50,000; Aman is a debtor for Rs 20,000)
A courier business buys a delivery van for Rs 3,50,000, spends Rs 6,000 on its routine servicing during the year, and spends Rs 40,000 building a permanent shed for it. Classify each amount as capital expenditure or revenue expenditure.
- Capital expenditure buys or improves an asset whose benefit lasts beyond one accounting year; revenue expenditure keeps the business running for the current year only.
- The van, Rs 3,50,000, will be used for several years, so it is capital expenditure.
- The shed, Rs 40,000, is a new lasting structure, so it is also capital expenditure.
- Routine servicing of Rs 6,000 only maintains the van in working order for the current year, so it is revenue expenditure.
Answer: Van Rs 3,50,000 and shed Rs 40,000 are capital expenditure; servicing Rs 6,000 is revenue expenditure.
Where marks slip: Use the benefit test in your reason: benefit beyond one year means capital, benefit this year only means revenue. Examiners look for that phrase, not just the label.
Try one yourself: Rs 15,000 spent repainting the shop and Rs 90,000 spent adding a new storeroom. Classify both. (Answer: repainting is revenue expenditure, the storeroom is capital expenditure)
A shop began the year with stock of Rs 40,000, bought goods for Rs 2,10,000 during the year, and counted closing stock of Rs 35,000. What was the cost of goods sold?
- Cost of goods sold = opening stock + purchases minus closing stock.
- Goods available for sale were Rs 40,000 plus Rs 2,10,000, which is Rs 2,50,000.
- Of these, Rs 35,000 remained unsold at the year end, so cost of goods sold = Rs 2,50,000 minus Rs 35,000 = Rs 2,15,000.
Answer: Cost of goods sold is Rs 2,15,000.
Where marks slip: Write the formula line first. If the subtraction slips, the formula and the goods-available subtotal still collect the method marks.
Try one yourself: Opening stock Rs 25,000, purchases Rs 1,80,000, closing stock Rs 30,000. Find the cost of goods sold. (Answer: Rs 1,75,000)
A furniture dealer sells furniture from its showroom for Rs 60,000 and separately sells an old delivery truck at Rs 9,000 above its book value. Which amount is revenue and which is a gain?
- Revenue comes from the normal, recurring operations of the business, which for a furniture dealer means selling furniture.
- So the Rs 60,000 of showroom sales is revenue.
- A gain is an incidental profit arising outside normal operations, such as selling a fixed asset above its book value.
- So the Rs 9,000 made on the truck is a gain, not revenue.
Answer: Rs 60,000 is revenue; the Rs 9,000 profit on the truck sale is a gain.
Where marks slip: Anchor your reason to the nature of the business. The same truck sale would be revenue for a truck dealer, and an answer that notices this reads as understanding rather than recall.
Try one yourself: A bakery earns Rs 4,000 interest on a fixed deposit. Is this revenue from operations or other income? (Answer: other income, because it is incidental to baking)
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Are these the actual TS Grewal Chapter 2 solutions?
No. TS Grewal is a copyrighted commercial textbook, so its questions cannot be republished here. These are original questions written to cover the same terms at the same difficulty as Chapter 2 of the 2025-26 edition, each with a full solution. Use them as extra practice alongside the book itself.
Which chapter is Basic Accounting Terms in the 2025-26 edition?
Chapter 2, immediately after Chapter 1, Introduction of Accounting. Several solution websites still follow older editions where the numbering differs, so if a site's chapter list looks shifted, match by topic name rather than by chapter number.
How many marks do basic terms carry in the CBSE Class 11 exam?
Class 11 papers are set by individual schools on the CBSE pattern, so there is no fixed allocation. Typically the terms appear as 1-mark objective questions and 3-mark classification questions, and they quietly affect longer answers too, because using the wrong term in a journal or equation question costs presentation marks.
What is the quickest way to remember debtor versus creditor?
Follow the direction of the debt. A debtor owes the firm because the firm sold to them on credit. A creditor is owed by the firm because the firm bought on credit. Fix one concrete example in your head, like Mohan the customer and Sohan the supplier from question 4, and rebuild the rule from it whenever you hesitate.