DK Goel Class 11 Accountancy Solutions: Chapter 10 Overview
FAQs on DK Goel Class 11 Accountancy Solutions: Chapter 10 Overview
1. How do you correctly solve a problem involving the purchase of goods with GST as per DK Goel's Class 11 solutions?
To solve a problem for the purchase of goods with GST, follow this step-by-step journal entry method: Debit the Purchases Account with the cost of goods, Debit the Input CGST Account and Input SGST Account (for intra-state purchases) or the Input IGST Account (for inter-state purchases) with the respective tax amounts. Finally, Credit the supplier's account (Creditor) or Bank/Cash Account with the total invoice value. This ensures the cost and the recoverable tax are recorded separately.
2. What is the step-by-step method for recording an inter-state sales transaction involving IGST?
The correct method for recording an inter-state sale is:
Debit the Debtor's Account or Bank/Cash Account with the total amount received or receivable (sale value + IGST).
Credit the Sales Account with the net value of the goods or services sold.
Credit the Output IGST Account with the amount of IGST charged on the sale. This Output IGST represents a liability to be paid to the government.
3. Why is Input GST considered an asset and not an expense in the books of accounts?
Input GST is treated as an asset because it represents a tax paid by the business that can be recovered in the future. This recovery happens through a mechanism called Input Tax Credit (ITC), where the Input GST paid is set off against the Output GST collected on sales. Since it provides a future economic benefit by reducing the final tax liability, it qualifies as an asset (e.g., 'Input CGST') rather than a non-recoverable cost or expense.
4. How is the set-off of Input GST against Output GST correctly recorded as per the CBSE 2025-26 syllabus?
The set-off of GST is recorded by passing a journal entry that debits the Output GST accounts and credits the Input GST accounts, following a specific priority order. The primary steps are:
1. Debit Output IGST and Credit Input IGST.
2. If any Input IGST remains, use it to set off against Output CGST and then Output SGST.
3. Debit Output CGST and Credit Input CGST.
4. Debit Output SGST and Credit Input SGST.
Any remaining balance in Output GST accounts is paid to the government.
5. What is the conceptual difference in accounting for a transaction within the state (intra-state) versus outside the state (inter-state)?
The main conceptual difference lies in the tax ledgers used. For an intra-state transaction (e.g., within Delhi), the tax is split into two components: Central GST (CGST) and State GST (SGST). Therefore, you use 'Input/Output CGST' and 'Input/Output SGST' accounts. For an inter-state transaction (e.g., from Delhi to Mumbai), a single tax, Integrated GST (IGST), is levied. Consequently, you only use the 'Input/Output IGST' account. The fundamental debit/credit rules remain the same, but using the correct accounts is crucial for proper tax compliance.
6. What is the correct journal entry for recording a business expense like 'Commission Paid' with GST applicable?
When recording a business expense on which GST is paid, the entry should segregate the expense from the tax credit. The correct method is: Debit the Commission Account with the basic expense amount, Debit the Input CGST and Input SGST accounts with the tax amounts, and Credit the Bank/Cash Account with the total amount paid. This ensures the expense is correctly reflected in the Profit & Loss Account, while the GST portion is claimed as ITC.
7. What are some common errors to avoid when solving practical problems from DK Goel's Chapter 10 on GST?
When solving GST practical questions, students should avoid these common mistakes:
Incorrect Tax Application: Using IGST for local transactions or CGST/SGST for inter-state ones.
GST on Discounts: Calculating GST on the list price before deducting the trade discount. GST is always calculated on the net price after the trade discount.
Wrong Set-off Order: Not following the prescribed priority for setting off Input GST against Output GST (e.g., not using Input IGST first).
Applying GST on Exempt Transactions: Incorrectly levying GST on transactions like cash deposited into a bank, payment to creditors, or payment of salaries, where GST is not applicable.
