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Depreciation, Provisions and Reserves for Class 11: The Complete CBSE Guide (2026-27)

Every CBSE Class 11 Accountancy student encounters depreciation, provisions and reserves Class 11 as a critical building block for financial accounting. These three concepts address how businesses handle value erosion of assets, prepare for known liabilities, and retain profits for future stability. The 2024-25 NCERT textbook for Class 11 Accountancy dedicates an entire chapter to methods of depreciation (Straight Line and Written Down Value), the rationale behind creating provisions, and the classification of reserves into capital and revenue categories. Understanding these topics is non-negotiable: board exams routinely test depreciation calculations through 4-6 mark numericals, while the conceptual distinction between provisions and reserves appears in 3-4 mark theory questions. This guide walks you through every formula, every journal entry format, and every CBSE exam trend for 2026-27, ensuring students can confidently tackle any question on depreciation, provisions and reserves Class 11.

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Key takeaways

  • ✓Depreciation accounts for permanent, gradual decline in asset value due to usage, time, or obsolescence—it is NOT a provision for asset replacement.
  • ✓SLM charges a fixed amount annually (Cost minus Scrap ÷ Useful Life), while WDV applies a fixed percentage to the diminishing book value each year.
  • ✓Provisions are created for known liabilities of uncertain amount (e.g., Provision for Doubtful Debts) and are charged to the Profit & Loss Account before arriving at net profit.
  • ✓Reserves are appropriations of profit, created after computing net profit, to strengthen financial position or meet specific future needs (e.g., General Reserve, Dividend Equalisation Reserve).
  • ✓Under CBSE 2026-27 marking scheme, depreciation numericals typically carry 4-6 marks, while theory questions on reserves vs. provisions fetch 3-4 marks.
  • ✓Journal entries for depreciation differ: under SLM and WDV, debit Depreciation Account and credit Asset Account (or Provision for Depreciation Account if maintaining asset at cost).
  • ✓Capital reserves (from capital profits like profit on sale of fixed assets) cannot be distributed as dividends, whereas revenue reserves (from trading profits) can be distributed after meeting legal requirements.

What is Depreciation in Class 11 Accountancy and Why Does It Matter?

Depreciation is the systematic allocation of the cost of a tangible fixed asset (like machinery, buildings, vehicles, furniture) over its estimated useful life. According to NCERT Class 11 Accountancy, depreciation recognises that most fixed assets lose value due to constant use, passage of time, or technological obsolescence. For instance, a delivery van purchased for ₹5,00,000 will not retain that value after five years of daily operations; its market worth declines annually. Depreciation ensures the Profit & Loss Account reflects this decline, preventing overstatement of profit and asset values. CBSE defines depreciation as a non-cash expense—no money leaves the business when depreciation is recorded, yet it reduces reported profit and the book value of the asset. The two methods CBSE Class 11 prescribes are Straight Line Method (SLM) and Written Down Value Method (WDV), each with distinct computational logic and applicability. Students must grasp that depreciation is NOT a provision for replacing the asset; it is simply an accounting technique to match cost against revenue over time. Questions like 'Calculate depreciation for three years on machinery costing ₹2,00,000 at 10% p.a. under WDV' are standard in board exams, making this topic a sure-shot scoring area if formulas and journal entries are practiced thoroughly.
  • Depreciation is a charge against profit, shown on the debit side of Profit & Loss Account.
  • It reduces the book value of the asset in the Balance Sheet year after year.
  • Depreciation applies only to tangible fixed assets; intangible assets are amortised, not depreciated.
  • The accumulated depreciation over an asset's life cannot exceed its depreciable amount (Cost minus Scrap Value).
  • CBSE examiners often ask students to prepare the Asset Account for three consecutive years, showing annual depreciation and closing balance.

Straight Line Method (SLM) of Depreciation: Formula, Journal Entry and Worked Example

Under the Straight Line Method, a fixed and equal amount of depreciation is charged every year throughout the useful life of the asset. The annual depreciation is calculated as: (Original Cost of Asset − Estimated Scrap Value) ÷ Estimated Useful Life in years. For example, if a machine costs ₹1,00,000, has a scrap value of ₹10,000 after 9 years, annual depreciation = (1,00,000 − 10,000) ÷ 9 = ₹10,000 per year. This ₹10,000 remains constant each year. The journal entry is: Debit Depreciation Account ₹10,000; Credit Machinery Account ₹10,000. At year-end, Depreciation Account is transferred to Profit & Loss Account, and the Machinery Account shows a reducing balance. In the Balance Sheet, Machinery appears at (Cost − Accumulated Depreciation). SLM is simple, systematic, and ideal for assets that provide uniform benefits over time, such as buildings, furniture, and patents. CBSE Class 11 students should note that under SLM, the rate of depreciation can also be expressed as a percentage: if useful life is 10 years, rate = 100 ÷ 10 = 10% per annum on original cost. Practice questions often mix rate-based and amount-based SLM, so fluency with both formats is essential for scoring full marks in the 2026-27 board exam.

Written Down Value Method (WDV) of Depreciation: Formula, Computation and Key Differences from SLM

The Written Down Value Method (also called Reducing Balance Method or Diminishing Balance Method) charges depreciation at a fixed percentage on the diminishing book value of the asset each year. Unlike SLM, the depreciation amount decreases annually. Formula: Depreciation for Year n = Opening Book Value at start of Year n × Rate of Depreciation (%). For instance, machinery worth ₹2,00,000 depreciated at 20% WDV: Year 1 depreciation = ₹2,00,000 × 20% = ₹40,000; closing value = ₹1,60,000. Year 2 depreciation = ₹1,60,000 × 20% = ₹32,000; closing value = ₹1,28,000. Year 3 depreciation = ₹1,28,000 × 20% = ₹25,600, and so on. Journal entry: Debit Depreciation Account; Credit Asset Account (or Provision for Depreciation Account). WDV is preferred for assets that lose value rapidly in early years or require higher maintenance as they age (e.g., vehicles, computers, plant & machinery). Income Tax Act in India typically favours WDV for tax purposes, hence many companies adopt it for financial reporting as well. CBSE examiners love WDV numericals because students often confuse the base: always apply the rate to the book value at the start of the year, not the original cost. A common 6-mark question format is: 'Prepare Machinery Account for 3 years under WDV at 15% p.a., given purchase on 1st Jan 2023 for ₹5,00,000.' Mastery of WDV calculations is non-negotiable for scoring in depreciation, provisions and reserves Class 11.

Journal Entries for Depreciation: Asset Account vs. Provision for Depreciation Account

CBSE Class 11 Accountancy prescribes two methods of recording depreciation in the books. Method 1 (Direct Method): Debit Depreciation Account; Credit Asset Account. Under this, the asset appears in the Balance Sheet at its net book value (original cost minus accumulated depreciation). For example, if Machinery originally ₹1,00,000 has ₹30,000 accumulated depreciation, Balance Sheet shows Machinery ₹70,000. Method 2 (Indirect Method or Provision Method): Debit Depreciation Account; Credit Provision for Depreciation Account. Here, the asset continues to appear at original cost, and a separate contra account 'Provision for Depreciation' accumulates all depreciation. Balance Sheet presentation: Machinery ₹1,00,000 less Provision for Depreciation ₹30,000 = ₹70,000. This method is particularly useful when you want to see both the original cost and total depreciation at a glance, which aids in asset management and replacement planning. NCERT Class 11 Accountancy recommends the Provision method for learning purposes, though both are acceptable in exams. Typical board question: 'Pass journal entry for depreciation of ₹15,000 on Furniture using (a) direct method (b) provision method.' Students must write both entries accurately to secure full marks. Remember, at year-end, Depreciation Account is always closed by transfer to Profit & Loss Account (Debit P&L, Credit Depreciation Account), regardless of which method you used to record it initially.
  • Direct method reduces the asset account balance directly; simpler but loses visibility of original cost.
  • Provision method keeps asset at historical cost and shows accumulated depreciation separately in Balance Sheet.
  • In exams, if the question is silent, you may use either method—just be consistent and label your accounts clearly.
  • When an asset is sold, under the provision method, you transfer the accumulated provision to the Asset Account before computing profit/loss on sale.
  • Journal entry at year-end: Debit Profit & Loss Account; Credit Depreciation Account (to close depreciation into P&L).

Depreciation on Additions and Disposals of Assets During the Year

A favourite CBSE exam scenario is when an asset is purchased or sold partway through the financial year. NCERT guidelines state that depreciation on additions is charged proportionately for the period the asset was in use. For example, if a vehicle costing ₹3,60,000 is purchased on 1st October 2023 and the company's year-end is 31st March 2024, depreciation at 20% p.a. SLM for 6 months = (₹3,60,000 × 20% × 6/12) = ₹36,000. Similarly, if an old machine (WDV ₹80,000) is sold on 1st July 2023 for ₹75,000, you charge depreciation from 1st April 2023 to 1st July 2023 (3 months) before calculating profit or loss on sale. Suppose depreciation rate is 15% p.a. WDV: 3-month depreciation = ₹80,000 × 15% × 3/12 = ₹3,000. Book value at date of sale = ₹80,000 − ₹3,000 = ₹77,000. Sale proceeds ₹75,000 < ₹77,000, hence Loss on Sale = ₹2,000. The journal entries are: (1) Debit Depreciation ₹3,000; Credit Machinery ₹3,000. (2) Debit Bank ₹75,000 and Loss on Sale ₹2,000; Credit Machinery ₹77,000. This multi-step logic appears in 5-6 mark questions and tests both depreciation calculation and disposal accounting. Practice is key: time-proportion the depreciation, adjust the book value, then compute gain or loss. CBSE Class 11 students often lose marks by forgetting the time adjustment or by applying the annual rate without proration.

What Are Provisions in Accountancy? Definition, Purpose and Examples

A provision is an amount set aside out of profits to meet a known liability or loss, the exact amount of which is uncertain. NCERT Class 11 Accountancy defines provisions as charges against profit, meaning they are deducted BEFORE arriving at net profit in the Profit & Loss Account. Common examples include Provision for Doubtful Debts (to cover expected bad debts), Provision for Discount on Debtors (anticipated cash discounts), Provision for Depreciation (if using the indirect method), and Provision for Tax. The key characteristic of a provision is certainty of obligation but uncertainty of amount. For instance, a business knows it will have some bad debts, but cannot predict the exact figure until year-end analysis. Provisions are mandatory under the prudence concept (also called conservatism)—accountants must anticipate losses but not anticipate profits. Legally, provisions must be created even if the business is running at a loss; they cannot be postponed or skipped. In the Balance Sheet, provisions appear as deductions from the related asset (e.g., Provision for Doubtful Debts deducted from Debtors) or as current liabilities (e.g., Provision for Tax). CBSE examiners test this through theory questions like 'Distinguish between provision and reserve' (3-4 marks) and numerical adjustments in final accounts. Understanding provisions is essential for depreciation, provisions and reserves Class 11, as all three concepts interplay in the preparation of financial statements.
  • Provisions are created to cover known liabilities (e.g., warranty claims, legal disputes, bad debts).
  • They are charged to Profit & Loss Account on the debit side, reducing net profit.
  • Creation of provision is NOT optional—it is required by accounting standards and the Companies Act for true and fair reporting.
  • Provisions can never be used to distribute dividends; they are liabilities or deductions, not retained profits.
  • If actual loss is less than provision, the surplus is written back to Profit & Loss as income in the next year.
  • Journal entry to create provision: Debit Profit & Loss Account; Credit Provision for [Liability] Account.

What Are Reserves in Accountancy? Types, Purpose and Classification

Reserves are appropriations of profit, retained in the business to strengthen financial position, meet future contingencies, or comply with legal requirements. Unlike provisions, reserves are created AFTER computing net profit and are shown on the liabilities side of the Balance Sheet under 'Reserves and Surplus'. NCERT Class 11 Accountancy classifies reserves into two broad categories: Revenue Reserves and Capital Reserves. Revenue reserves are created out of revenue profits (normal trading profits) and can generally be distributed as dividends, subject to legal provisions. Examples: General Reserve, Dividend Equalisation Reserve, Debenture Redemption Reserve. Capital reserves arise from capital profits (non-trading gains such as profit on sale of fixed assets, profit prior to incorporation, share premium, forfeiture of shares) and legally CANNOT be distributed as dividends except in specific cases like issuing bonus shares. The purpose of reserves includes: equalising dividend payments across years, providing funds for business expansion, meeting unforeseen losses, and complying with statutory mandates (e.g., Companies Act requires creation of Debenture Redemption Reserve before redeeming debentures). Reserve creation journal entry: Debit Profit & Loss Appropriation Account; Credit Reserve Account (e.g., General Reserve Account). Reserves increase shareholders' equity and signal financial prudence. CBSE questions often ask: 'State two differences between capital reserve and revenue reserve' or 'Give four examples of revenue reserves.' Mastery of reserve classification is critical for scoring in theory sections of depreciation, provisions and reserves Class 11.

Provisions vs. Reserves: 8 Key Differences Every CBSE Class 11 Student Must Know

CBSE board exams routinely feature a 3-4 mark question: 'Distinguish between provisions and reserves.' Students must articulate the differences clearly. (1) Nature: Provision is a charge against profit (expense); Reserve is an appropriation of profit (retained earnings). (2) Timing: Provisions are created before calculating net profit; Reserves after net profit. (3) Obligation: Provisions are mandatory (required by law/accounting standards); Reserves are generally voluntary (except specific reserves like DRR). (4) Purpose: Provisions meet known liabilities or cover asset value decline; Reserves strengthen financial position or equalise dividends. (5) Distribution: Provisions can NEVER be distributed as dividends; Revenue reserves CAN be (capital reserves cannot, except as bonus shares). (6) Impact on profit: Provisions reduce profit; Reserves do NOT reduce profit (they redistribute it). (7) Balance Sheet presentation: Provisions are deducted from assets or shown as liabilities; Reserves appear under 'Reserves & Surplus' on liabilities side. (8) Example: Provision for Doubtful Debts vs. General Reserve. Understanding these distinctions is foundational for accountancy beyond Class 11—topics like financial statement analysis, company accounts, and ratio analysis in Class 12 all assume fluency with provisions and reserves. Practice writing the differences in a two-column table format, as examiners award marks for structure and clarity. CBSETUTOR.ai includes interactive quizzes on provisions vs. reserves that adapt to student responses, ensuring concept retention before the board exam.
  • Provision = charge against profit; Reserve = appropriation of profit.
  • Provision is compulsory; most reserves are optional (except statutory ones).
  • Provision meets a known liability of uncertain amount; reserve is a profit retention strategy.
  • Provisions appear as deductions or liabilities; reserves appear under equity/capital.
  • If a provision is no longer needed, the surplus is transferred back to Profit & Loss as income; unused reserves remain in the business.
  • Creating a reserve does not involve setting aside cash—reserves are accounting entries, not bank balances (though some reserves like Sinking Fund may be invested).

Secret Reserves and Their Treatment in CBSE Class 11 Accountancy

Secret reserves (also called hidden reserves or internal reserves) are reserves not disclosed in the Balance Sheet. They arise when assets are deliberately undervalued or liabilities overvalued, resulting in undisclosed profit retention. For example, if a company writes off the entire cost of a patent in one year instead of amortising it over its useful life, the Balance Sheet understates assets and net profit, creating a secret reserve. NCERT Class 11 Accountancy introduces secret reserves conceptually but does not require detailed numerical treatment at this level. Secret reserves are NOT illegal, but they violate the principle of full disclosure and can mislead stakeholders about the company's true financial health. They were historically common in banking (to present a conservative image during downturns) but modern accounting standards (Ind AS, IFRS) discourage them. CBSE examiners may ask a theory question: 'What are secret reserves? State two methods of creating them.' Answer: Secret reserves are undisclosed reserves created by (1) charging capital expenditure to revenue (overstating expenses), (2) undervaluing stock or assets, (3) overstating provisions or liabilities, (4) not showing contingent assets. Students should note that secret reserves reduce reported profit and tax liability in the short term, but can distort trend analysis and investor decisions. In the context of depreciation, provisions and reserves Class 11, secret reserves illustrate how accounting choices (like accelerated depreciation or excessive provisioning) can hide true profitability.

How to Solve CBSE Depreciation Numericals: Step-by-Step Problem-Solving Framework

CBSE Class 11 Accountancy depreciation questions follow predictable patterns. Master this five-step framework and you will handle any numerical. Step 1: Identify the method (SLM or WDV) and the rate or useful life. If rate is given as % and no method specified, assume WDV unless question mentions 'fixed instalment' (SLM). Step 2: Note the date of purchase and year-end date. Calculate the proportion of the year the asset was in use if purchased mid-year. Step 3: Calculate depreciation. For SLM: (Cost − Scrap) ÷ Life × (months used / 12). For WDV: Opening Book Value × Rate% × (months used / 12). Step 4: Pass the journal entry: Debit Depreciation Account; Credit Asset or Provision for Depreciation Account. Step 5: Prepare the Asset Account (or Provision Account) in ledger format for the number of years asked, showing opening balance, depreciation, and closing balance each year. Always cross-check: under SLM, annual charge is constant; under WDV, it decreases. A worked example: 'On 1st April 2023, bought Plant for ₹10,00,000. Depreciation 15% p.a. WDV. Prepare Plant Account for 3 years.' Year 1: Dep = ₹10,00,000 × 15% = ₹1,50,000; Closing = ₹8,50,000. Year 2: Dep = ₹8,50,000 × 15% = ₹1,27,500; Closing = ₹7,22,500. Year 3: Dep = ₹7,22,500 × 15% = ₹1,08,375; Closing = ₹6,14,125. Practice 10-15 such problems before the exam, varying purchase dates, methods, and asset types, to build automaticity. CBSETUTOR.ai provides instant step-by-step solutions with photo upload: snap your textbook problem, get a worked solution in under 60 seconds, available 24×7 for ₹999/month across all subjects and classes 6-12.
  • Always write the formula before calculating—examiners award method marks even if final answer is wrong.
  • Show workings clearly: if computing WDV for 3 years, write each year's opening value, rate, depreciation, and closing value in a column.
  • If the question says 'accounts to be prepared', draw proper T-accounts with Dr. and Cr. sides; if it says 'calculate', a simple statement suffices.
  • For partial-year depreciation, use the formula: Annual Depreciation × (number of months / 12). Never prorate WDV by days—always use months.
  • When disposal of asset is involved, calculate depreciation up to date of sale, adjust book value, then find profit/loss on sale. Write three separate journal entries: (1) depreciation, (2) bank/sale proceeds, (3) profit/loss transfer to P&L.

Common Mistakes Students Make in Depreciation, Provisions and Reserves Class 11 and How to Avoid Them

Even strong students lose marks due to recurring errors in depreciation, provisions and reserves Class 11. Mistake 1: Confusing SLM and WDV. Students apply a percentage on original cost and assume it is WDV, or vice versa. Solution: Always check the question wording—'fixed rate on diminishing balance' means WDV; 'fixed amount each year' means SLM. Mistake 2: Forgetting to prorate depreciation for assets purchased mid-year. A vehicle bought on 1st October should have 6 months' depreciation if year-end is 31st March, not full-year. Solution: Underline purchase date and year-end date, calculate months in use, multiply by (months/12). Mistake 3: In provision method, crediting Asset Account instead of Provision for Depreciation Account. This mixes the direct and indirect methods. Solution: Decide upfront which method you are using and stick to it throughout the answer. Mistake 4: Treating reserves as expenses and debiting Profit & Loss Account. Reserves are appropriations, debited to Profit & Loss Appropriation Account. Solution: Remember the sequence—Profit & Loss Account gives net profit; P&L Appropriation Account then distributes that profit into reserves and dividends. Mistake 5: Writing incomplete journal entries (e.g., only one side, or forgetting narration). In CBSE marking, narration and proper account names carry marks. Solution: Practice 20 journal entries in standard format with narration before the exam. Mistake 6: Not showing accumulated depreciation in Balance Sheet when using provision method. Presentation marks matter. Solution: In vertical Balance Sheet format, write: Plant & Machinery ₹X,XX,XXX, Less: Provision for Depreciation ₹XX,XXX, Net ₹X,XX,XXX. Avoiding these pitfalls can boost your score by 5-8 marks in a single paper.
  • Always read whether the rate is per annum or total; CBSE sometimes tricks students with a 5-year total rate that must be divided by 5.
  • If question asks for 'journal entries only', do NOT prepare ledger accounts—you will waste time and may confuse the examiner.
  • Do NOT write 'Depreciation is an expense' in theory answers about reserves—depreciation can be a provision (Provision for Depreciation) when using indirect method.
  • When comparing SLM and WDV, never say one is 'better' absolutely—explain suitability for different asset types and tax contexts.
  • In 6-mark numericals, show all steps even if you use a calculator—examiners award process marks.

How CBSETUTOR.ai Helps Class 11 Students Master Depreciation, Provisions and Reserves in Half the Time

Parents across India trust CBSETUTOR.ai because it transforms how students tackle depreciation, provisions and reserves Class 11. The platform has ingested every NCERT Accountancy textbook for Classes 11 and 12, including worked examples, theory passages, and exercise solutions. When a student asks, 'Explain the difference between SLM and WDV with an example,' the AI tutor delivers an NCERT-grounded answer in seconds, then generates a similar practice problem and checks the student's solution step-by-step. Photo upload is a shift: snap a homework question from any reference book (TS Grewal, DK Goel, NCERT Exemplar), and CBSETUTOR.ai parses the image, solves it in journal-entry and ledger-account format, and explains the logic. For depreciation numericals—where students often get stuck on partial-year proration or WDV multi-year calculations—the AI tutor walks through each year, showing opening balance, rate application, depreciation, and closing balance in a clear table. Theory questions on provisions vs. reserves are answered with structured point-by-point distinctions, formatted exactly as CBSE examiners expect. The platform adapts to the student's learning pace: if you struggle with WDV, it generates 5 more WDV problems of increasing difficulty until mastery. All of this runs 24×7 at a flat ₹999 per month for every CBSE class from 6 to 12, with a 3-day free trial and no credit card required to start. For a Class 11 student preparing for pre-boards in January, having an AI tutor that never sleeps and never loses patience is the difference between 70% and 90% in Accountancy. Parents searching for high-quality depreciation, provisions and reserves Class 11 notes and doubt-clearing support find CBSETUTOR.ai delivers both speed and depth—two things traditional tuition often cannot combine.
  • Instant doubt resolution: Ask 'Why does WDV depreciation decrease each year?' and get a conceptual explanation plus a numerical illustration in under 10 seconds.
  • Auto-generated practice sets: Request 'Give me 5 SLM problems with mid-year purchase' and receive unique, exam-standard questions.
  • Mistake diagnosis: Upload your solved answer sheet; the AI identifies calculation errors, missing journal narrations, or incorrect ledger postings and suggests corrections.
  • Voice mode for hands-free revision: Listen to explanations of reserves vs. provisions while commuting or during breakfast.
  • Progress tracking: The AI logs every topic you have mastered (e.g., SLM, WDV, provision entries) and flags weak areas before your school exam.

CBSE Class 11 Accountancy 2026-27 Exam Pattern and Weightage for Depreciation, Provisions and Reserves

For the 2026-27 board exam, CBSE Class 11 Accountancy follows a theory (80 marks) plus project (20 marks) structure. Within the 80-mark theory paper, Part A contains Financial Accounting (55-60 marks) and Part B covers Computerised Accounting (20-25 marks). Depreciation, provisions and reserves Class 11 falls under Financial Accounting—specifically within the unit 'Financial Statements'. Typically, this chapter contributes 8-12 marks through a mix of: (1) One long numerical (6 marks) on SLM or WDV calculation, ledger account preparation, or asset disposal accounting. (2) One short numerical (3-4 marks) on depreciation with mid-year purchase or comparison of SLM vs. WDV. (3) One theory question (3-4 marks) distinguishing provisions from reserves, or explaining types of reserves, or stating objectives of creating reserves. The 2024-25 and 2025-26 sample papers released by CBSE included questions like: 'Machinery was purchased for ₹8,00,000 on 1st July 2023. Depreciation is charged at 15% p.a. on WDV. Prepare Machinery Account for two years ending 31st March' (6 marks). Another common format: 'State four differences between Capital Reserve and Revenue Reserve' (4 marks). CBSE marking schemes award full marks for correct method even if there is a minor arithmetic slip, so showing formula and step-by-step working is crucial. Students should allocate 20-25 hours of focused practice to this chapter alone—10 hours for SLM/WDV numericals, 5 hours for provisions vs. reserves theory, 5 hours for journal entries and ledger accounts, and 5 hours for disposal and partial-year scenarios. Time yourself: a 6-mark numerical should be solved in 12 minutes during the exam. Mock tests and previous year question papers (2020-2025) are available on CBSETUTOR.ai with instant grading and performance analytics.

Frequently asked questions

Which depreciation method should my child focus on for CBSE Class 11 Accountancy—SLM or WDV?+
Both Straight Line Method (SLM) and Written Down Value Method (WDV) are equally important for CBSE Class 11. The 2024-25 NCERT syllabus prescribes both methods, and board exams test them with equal frequency. About 50% of depreciation numericals ask for SLM, 50% for WDV. Students must practice ledger account preparation, journal entries, and partial-year calculations for each method. CBSETUTOR.ai generates method-specific practice sets so your child masters both before the exam.
How is depreciation different from a provision in Class 11 Accountancy?+
Depreciation is the systematic allocation of asset cost over its useful life, recognising value decline due to use or time. A provision is an amount set aside for a known liability of uncertain amount (e.g., Provision for Doubtful Debts). Depreciation can be recorded either as a direct expense (charging asset account) or as a provision (Provision for Depreciation account). The key distinction: all depreciation relates to fixed assets; provisions can relate to assets (bad debts) or liabilities (taxes, warranties). Both are charges against profit, deducted before arriving at net profit.
Can reserves be created even if the company has made a loss this year?+
No. Reserves are appropriations of profit, so they can only be created if there is net profit available after all expenses and provisions. If a company reports a net loss, there is no profit to appropriate, hence no new reserve can be created. Existing reserves from prior years remain on the Balance Sheet, but no addition can be made in a loss-making year. Provisions, however, are mandatory even in a loss year if the liability exists (e.g., tax provision, depreciation provision).
My child's school uses a different textbook than NCERT for Accountancy. Will that affect board exam preparation?+
No. CBSE board exams are set strictly according to the NCERT syllabus and learning outcomes for Class 11 Accountancy. Reference books like TS Grewal, DK Goel, or Sandeep Garg offer additional practice problems and alternative explanations, but the theory, definitions, and methods must align with NCERT. Ensure your child reads the NCERT textbook at least once and solves all NCERT exercise questions. CBSETUTOR.ai is anchored to NCERT content, so any doubt or concept your child asks is answered using NCERT terminology and examples, ensuring 100% board-exam relevance.
What is the best way to remember the formula for SLM vs. WDV depreciation?+
Use this mnemonic: SLM = Straight, so Same amount Line-by-line (fixed charge). Formula: (Cost − Scrap) ÷ Life. WDV = Written Down (reducing), so rate applied on Written-down balance each year. Formula: Book Value × Rate%. Practice 5 problems of each type in one sitting, writing the formula before each calculation. Muscle memory from repeated writing helps recall in exams. CBSETUTOR.ai offers spaced-repetition quizzes that resurface formula-based questions until your child can write them confidently under timed conditions.
Is it compulsory to show narration in every journal entry for depreciation?+
Yes. CBSE marking schemes explicitly allocate 0.5 to 1 mark for correct narration in journal entries. A typical narration for depreciation: 'Being depreciation charged on Machinery for the year ended 31st March 2024' or 'Being provision for depreciation created on Furniture.' Even if your calculation and debit/credit are correct, omitting narration can cost you marks. Practice writing full journal entries with dates, accounts, amounts, and narration in every homework problem.
How do I present depreciation in the Balance Sheet if I used the Provision for Depreciation method?+
In the vertical Balance Sheet format (Assets = Liabilities + Capital), under Non-Current Assets, show: Fixed Asset (e.g., Machinery) at original cost ₹X, then immediately below write 'Less: Provision for Depreciation ₹Y', followed by Net Block ₹(X−Y). In horizontal format, on the Assets side, write Machinery ₹X, less Provision ₹Y, Net ₹(X−Y). This presentation reveals both the historical cost and accumulated depreciation, which is valuable for stakeholders. CBSE examiners award 1-2 marks for correct Balance Sheet presentation, so practice drawing neat, labelled financial statements.
What happens if the actual bad debts are less than the Provision for Doubtful Debts we created?+
If actual bad debts are ₹8,000 but you had created a Provision for Doubtful Debts of ₹10,000, the surplus ₹2,000 is no longer needed. You write back this surplus to the Profit & Loss Account as income in the following year. Journal entry: Debit Provision for Doubtful Debts ₹2,000; Credit Profit & Loss Account ₹2,000. This adjustment ensures the provision reflects the realistic liability. Conversely, if actual bad debts exceed the provision, you create an additional provision or charge the shortfall directly to Profit & Loss.
Can a Capital Reserve ever be used to pay dividends to shareholders?+
Under the Companies Act 2013 and accounting principles, Capital Reserves (arising from capital profits like share premium, profit on sale of fixed assets) generally CANNOT be distributed as cash dividends. However, they CAN be used to issue fully paid bonus shares to existing shareholders. The rationale: capital profits are windfalls, not recurring income, so they should not be treated as distributable profit. Revenue reserves, created from normal trading profits, can be distributed as dividends subject to legal and Articles of Association provisions.
If I make a mistake in choosing SLM instead of WDV in the exam, will I lose all marks?+
If the question specifies the method (e.g., 'using WDV at 20% p.a.') and you use SLM, you will likely score zero for the numerical part, because the answer will be entirely incorrect. However, if the question is ambiguous or only gives a rate without specifying method, and you clearly state your assumption ('Assuming WDV method…'), examiners may award method marks for correct working within your chosen method. Best practice: read the question twice, underline method keywords ('diminishing balance' = WDV, 'fixed instalment' = SLM), and if unsure, write your assumption at the start.
How much time should my child spend daily on Depreciation, Provisions and Reserves for Class 11 Accountancy?+
During regular term (Sept–Dec), allocate 30-45 minutes twice a week: one session for theory (reading NCERT, making notes on provisions vs. reserves, types of reserves), one session for numericals (solving 2-3 SLM/WDV problems). During revision phase (Jan–Feb before pre-boards), increase to 1 hour daily for 10 days: solve 5 numericals per day, write 3 theory answers, and revise journal entry formats. During final board prep (March), focus on previous year questions and CBSE sample papers. Consistent, spaced practice beats last-minute cramming. CBSETUTOR.ai tracks your child's daily practice time and nudges them if a topic like depreciation has not been revised in over a week.
Are there any mobile apps or tools specifically for practicing depreciation calculations for CBSE Class 11?+
CBSETUTOR.ai is the most comprehensive 24×7 AI tutor for CBSE Classes 6–12, covering every Accountancy topic including depreciation, provisions, and reserves. You can ask the AI tutor to generate unlimited practice problems ('Give me 10 WDV problems with varying rates and mid-year purchases'), upload photos of textbook questions for instant solutions, and get concept explanations in text or voice mode. At ₹999/month with a 3-day free trial (no credit card needed), it is far more affordable than hiring a private tutor and available anytime your child studies—early morning, late night, or weekends. No other app offers NCERT-aligned, exam-focused AI tutoring with photo-based doubt solving for Accountancy at this scale and price point.

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