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These NCERT Solutions for Class 9 Social Science Economics Chapter 2 People as Resource Questions and Answers are prepared by our highly skilled subject experts to help students while preparing for their exams.

People as Resource NCERT Solutions for Class 9 Social Science Economics Chapter 2

Class 9 Economics Chapter 2 People as Resource InText Questions and Answers

Lets’s Discuss, NCERT Textbook Page 17

Question 1.
Looking at the photograph can you explain how a doctor, a teacher, engineer, and a tailor are an asset to the economy?

Answer:
These people provide different services to the people of the country. A doctor treats the patients, a teacher gives education to the children and plays a valuable role in moulding them into good citizens, an engineer, a tailor, and many other people in different professions serve the society and the country in their own way. Therefore, they are an asset to the economy of the nation.

Lets’s Discuss, NCERT Textbook Page 18

Question 2.
Do you notice any difference between the two friends? What are those?
Answer:
Story of Sakal
There were two friends Vilas and Sakal living in the same village Semapur. Sakal was a twelve-year-old boy. His mother Sheela looked after domestic chores. His father Buta Chaudhary worked in an agricultural field. Sakal helped his mother with domestic chores. He also looked after his younger brother Jeetu and sister Seetu. His uncle Shyam had passed the matriculation examination, but, was sitting idle in the house as he had no job. Buta and Sheela were eager to teach Sakal. They forced him to join the village school which he soon joined.

He started studying and completed his higher secondary examination. His father persuaded him to continue his studies. He raised a loan for Sakal to study a vocational course in computers. Sakal was meritorious and interested in studies from the beginning. With great vigour and enthusiasm, he completed his course. After some time he got a job in a private firm. He even designed a new kind of software. This software helped him increase the sale of the firm. His boss acknowledged his services and rewarded him with a promotion.

Story of Vilas
Vilas was an eleven-year-old boy residing in the same village as Sakal. Vilas’s father Mahesh was a fisherman. His father passed away when he was only two years old. His mother Geeta sold fish to earn money to feed the family. She bought fish from the landowner’s pond and sold it in the nearby mandi. She could earn only Rs 150 a day by selling fish. Vilas became a patient of arthritis. His mother could not afford to take him to the doctor. He could not go to school either. He was not interested in studies. He helped his mother in cooking and also looked after his younger brother Mohan. After some time his mother fell sick and there was no one to look after her. There was no one in the family to support them. Vilas, too, was forced to sell fish in the same village. He like his mother earned only a meager income.

• Vilas had lost his father at his early age whereas Sakai was living with his parents.
• Sakai was interested in studies and went to school but Vilas was too poor to go to school.
• Sakai completed a course in computers and got a nice job in a private firm whereas Vilas remained illiterate and so never got any proper employment. He sold fish in the village market and earned a meager income.
• Since Sakai earned a good income, he was able to improve his family’s condition but Vilas could not do so. He and his family were bound to live in extreme poverty.

Lets’s Discuss, NCERT Textbook Page 21

Question 3.
Study the graph given below and answer the following questions:

Source: Economic Survey, 2012.
1. Has the literacy rates of the population increased since 1951?
2. In which year India has the highest literacy rates?
3. Why literacy rate is high among the males of India?
4. Why are women less educated than men?
5. How would you calculate literacy in India?
6. What is your projection about India’s literacy rate in 2020?
Answer:
1. Yes, the literacy rates of the population have increased since 1951. It was 18% in 1951. The figure rose to 74% in 2010-2011.
2. India has the highest literacy rate in 2011.
3. It is because, in our country, men’s education is considered more important than women’s.
4. India is a country where males dominate. They are given all privileges and are always seen at the forefront. Hence, their education is considered of utmost importance whereas women’s education is undermined. This is the reason why women are less educated than men.
5. The literacy rate can be calculated on the basis of the number of literate people divided by the population multiplied by 100. This formula is expressed in the following way;
Literacy Rate = \(\frac{\text { Number of literate people in India }}{\text { Population of India } \times 100}\)
6. India’s literacy rate would be 80% by 2020.

Lets’s Discuss, NCERT Textbook Page 23

Question 4.
Discuss this table given below in the classroom and answer the following questions.
1. Is the increase in the number of colleges adequate to admit the increasing number of students?
2. Do you think we should have more Universities?
3. What is the increase noticed among the teachers in the year 1998-99?
4. What is your idea about future Colleges and Universities?
Table 1: Number of Institutions of Higher Education, Enrolment and Faculty

Source: UGC Annual Report 1996-97 and 1998-99 and Selected Educational Statistics, Ministry of HRD, Draft Report of Higher Educational for 11th Five Year Plan, the working group on Economic Survey 2011-12, 2012-13.
Answer:
1. No, the increase in the number of colleges is not adequate to admit the increasing number of students because the number of students is increasing at a faster rate compared to the colleges being established in the country.
2. Yes, there should have more Universities to keep pace with the increasing number of students.
3. There was an increase of 21 thousand teachers in the year 1998-99 compared to 1996-97.
4. Future Colleges and Universities should focus on increasing access, quality, adoption of state-specific curriculum modification, vocationalisation, and networking on the use of information technology.

Lets’s Discuss, NCERT Textbook Page 23

Question 5.
Study the table given below and answer the following questions:
Table 2: Health infrastructure over the years

1. What is the percentage increase in dispensaries from 1951 to 2011?
2. What is the percentage increase in doctors and nursing personnel from 1951 to 2011?
3. Do you think the increase in the number of doctors and nurses is adequate for India? If not, why?
4. What other facilities would you like to provide in a hospital?
5. Discuss the hospital you have visited.
6. Can you draw a graph using this table?
Answer:
1. The percentage increase in dispensaries and hospitals from 1951 to 2011 is = \(\frac{28472-9201}{9201 \times 100}\) = 209.17%

2. The percentage increase in doctors from 1951 to 2011 is = \(\frac{816629-61800}{61800 \times 100}\) = 1221.40%

The percentage increase in nursing personnel from 1951 to 2011 is = \(\frac{1702555-18054}{18054 \times 100}\) = 9330.34%

3. For a country like India where the population is so huge, the increase in the number of doctors and nurses is not adequate. We need more number of them.

4. Facilities that should be provided in a hospital are:

• Hospitals should be neat and clean.
• Doctors should be available 24 hours.
• Emergency wards should be made more efficient.
• Poor patients should be given treatment at a subsidized rate.
• At least one ATM should be there in every hospital.
• Chemist shops should also be available in hospitals.

5. Recently I visited Max Super Speciality Hospital located in Vaishali, Ghaziabad. It is India’s first truly integrated healthcare system, providing three levels of clinical service e.g. primary, secondary, and tertiary within one system. It has all the features of a world-class hospital. It has a team of highly qualified and trained doctors, nurses, and patient care personnel to provide the highest standard of care. This hospital is equipped with the latest medical equipment. Great care is taken on cleanliness. It has fully computerized health records. 24-hour chemist, ambulance, patient diagnostic, and emergency services are available here. The hospital is centrally air-conditioned.

Class 9 Economics Chapter 2 People as Resource Textbook Questions and Answers

Question 1.
What do you understand by ‘people as a resource?
Answer:
‘People as a resource’ is a way of referring to a country’s working people in terms of their existing productive skills and abilities. If we look at the population from a productive aspect, it emphasizes its ability to contribute to the creation of the Gross National Product. Like other resources population also is a resource—which is called a human resource. When the existing human resource is further developed by becoming more educated and healthy, we call it human capital formation that adds to the productive power of the country.

Question 2.
How are human resources different from other resources like land and physical capital?
Answer:
Human resource is different from other resources in the following ways:

• Human capital is in one way superior to other resources like land and physical capital. Human resources can make use of land and capital. Land and capital cannot become useful on their own.
• Human resources need investment through education, training, and medical care, etc. to develop. On the other hand, land and physical capital need money and physical inputs to develop.
• Land and physical capital are useless without human resources. Thus we can say that human resource is the most important resource because it helps to utilize natural resources.

Question 3.
What is the role of education in human capital formation?
Answer:
Education plays a very significant role in human capital formation. It is an important input for the growth of an individual. It enables humans to realize their full potential and achieve success in life in the form of higher incomes through better jobs and higher productivity. Education helps individuals to make better use of the economic opportunities available before them.

Education and skill are the major determinants of the earning of any individual in the market. We have seen that a majority of women are paid low compared to men because they have meager education and skill formation. But women with high education and skill formation are paid at par with the men. So, education is important and it should be imparted to children with great care.

Question 4.
What is the role of health in human capital formation?
Answer:
Not only education but health also plays a vital role in human capital formation. The health of a person helps him to realize his potential and the ability to fight illness. A healthy person can do the work in a more effective manner. He or she can contribute to the growth and development of the economy by doing productive work. On the contrary, an unhealthy person becomes a liability for the family and society. So health is an indispensable basis for realizing one’s well-being. Our government has been very serious on this point. The improvement in the health status of the population has been the priority of the country.

Question 5.
What part does health play in the individual’s working life?
Answer:
An individual’s working life is directly associated with his or her health. If he or she is healthy, he or she will work enthusiastically and efficiently. If not, doing work will be a burden for him or her. In that case, no firm or organization will induce to employ him or her. So health should be given priority because only a healthy person can become an asset to society and the nation.

Question 6.
What are the various activities are undertaken in the primary sector, secondary sector, and tertiary sector?
Answer:
The various activities have been classified into three main sectors i.e., primary, secondary, and tertiary.

• The primary sector includes agriculture, forestry, animal husbandry, fishing, poultry farming, mining, and quarrying.
• Manufacturing is included in the secondary sector.
• Trade, transport, communication, banking, education, health, tourism, services, insurance, etc. are included in the tertiary sector.

Question 7.
What is the difference between economic activities and non-economic activities?
Answer:
Economic activities: Activities that come under the tertiary sector result in the production of goods and services. These activities add value to the national income and are called economic activities. These activities involve remuneration or money.

Non-economic activities: These activities are not performed for money and so do not add value to the national income. In fact, these activities are performed for self-consumption or to satisfy emotional needs.

Question 8.
Why are women employed in low-paid work?
Answer:

• A majority of women have meager education and low skill formation. This is the main reason why they are paid low compared to men.
• Less education means less awareness as a result of which most of the women work in the unorganized sector and face job insecurity and earn a meager income.
• In our male-dominated society, women are considered physically inferior and therefore they are paid less than men for the same work.

Question 9.
How will you explain the term unemployment?
Answer:
The state of being without any work both for an educated and uneducated person, for earning one’s livelihood is meant by unemployment. Unemployment is said to exist when people who are willing to work at the going wages cannot final jobs.

Question 10.
What is the difference between disguised unemployment and seasonal unemployment?
Answer:
The difference between disguised unemployment and seasonal unemployment is given below:

Question 11.
Why is educated unemployed, a peculiar problem of India?
Answer:

• Educated unemployment has become a common problem in urban areas. Many youths with matriculation, graduation, and post-graduation degrees are not able to find jobs.
• A study showed that unemployment of graduates and post-graduate has increased faster than among matriculates. This is really a peculiar phenomenon.
• A paradoxical manpower situation is witnessed as a surplus of manpower in certain categories coexists with a shortage of manpower in others.
• There is unemployment among technically qualified people on one hand, while there is a dearth of technical skills for economic growth. Educated unemployment is, thus, a peculiar problem in India.

Question 12.
In which field do you think India can build the maximum employment opportunity?
Answer:
India can build the maximum employment opportunity in the tertiary sector, also called the service sector. This sector in India employs many different kinds of people. There are a number of services such as biotechnology, information technology, etc. that employ highly skilled and educated workers. At the same time, there are a very large number of workers engaged in services such as small shopkeepers, repairpersons, transport persons, etc.

Question 13.
Can you suggest some measures in the education system to mitigate the problem of the educated unemployment?
Answer:
In order to mitigate the problem of the educated unemployed, the following measures can be suggested:

• The focus should be given to increasing access, quality, adoption of states-specific curriculum modification, vocationalisation, and networking on the use of information technology.
• There should be a focus on distant education, the convergence of formal, non-formal, distant, and IT education institutions.
• More opportunities should be made available in the service sector such as biotechnology, information technology, etc. so that educated unemployed can find jobs easily.
• The number of universities and institutions of higher learning in specialized areas should be increased in order to increase the enrolment of students. At the same time recruitment of teachers should also be increased.

Question 14.
Can you imagine some village that initially had no job opportunities but later came up with many?
Answer:
1. Ratanpura was a very backward village a few decades ago. The only occupation of the villagers was agriculture which was dependent on rainfall. If rainfall was sufficient, there was no problem but if it was poor, the villagers would face problems because there were no other job opportunities.

2. Then electricity came there which changed the system of irrigation. People could now irrigate much larger areas more effectively with the help of electric-run tube wells. They could now grow more than one crop in a year and get work almost all the year.

3. By and by small-scale industries were set up which opened the door of employment. These industries provided both skilled and unskilled jobs to the village people.

4. With the passage of time people became aware of education and acknowledged the government for the need for schools in the village. The government set up a primary and a secondary school where village people got an education which ultimately enabled them to find jobs outside the village.

5. Then computer centers were set up which opened the door of vocational courses to the young enthusiastic villagers. These villagers after completing the course got jobs in private firms.

Question 15.
Which capital would you consider the best—land, labour, physical capital, and human capital? Why?
Answer:
Land, labour, physical capital, and human capital—all play important roles in the growth of an economy. All these are resources and we cannot undermine the value of one over the other. But it is also a fact that human capital is the best of all because human resources can make use of land and capital. It is noteworthy that land and capital cannot become useful on their own. They can be utilized only by humans. If humans do not make these resources usable they would remain unutilized. This very fact establishes the superiority of human capital over others.

Investment in human resources through education and medical care can give high rates of return in the future. Several years of education adds to the quality of labor. This enhances total productivity which further adds to the growth of the economy. Countries like Japan are rich and developed in spite of not having natural resources. The reason is that these countries have invested in human resources.

These NCERT Solutions for Class 9 Social Science Economics Chapter 1 The Story of Village Palampur Questions and Answers are prepared by our highly skilled subject experts to help students while preparing for their exams.

The Story of Village Palampur NCERT Solutions for Class 9 Social Science Economics Chapter 1

Class 9 Economics Chapter 1 The Story of Village Palampur InText Questions and Answers

Lets’s Discuss, NCERT Textbook Page 3

Question 1.
The following Table given on textbook page 4 shows the land under cultivation in India in units of million hectares. Plots this on the graph provided. What does the graph show? Discuss in class. (Textbook Page 3)
Answer:
(i) Is it important to increases the area under irrigation? Why?
(ii) You have read about the crops grown in Palampur. Fill the following table based on information on the crops grown in your region.

Table: Cultivated area over the years

Source: Economic Survey 2013-2014

Answer:
The graph shows that the land under cultivation in India was 120 million hectares in 1950 which rose to 140 million hectares in 1970 and remained constant at this figure (140 million hectares) till 2010.
(i) Yes, it is important to increase the area under irrigation because it will help farmers do multiple cropping and grow more than one crop in a year. Also, the use of HYV seeds need plenty of water to
(ii)

Lets’s Discuss, NCERT Textbook Page 5

Question 1.
(i) What is the difference between multiple cropping and modern farming method?
(ii) The following table shows the production of wheat and pulses in India after the Green revolution in units of million tonnes. Plot this on a graph. Was the Green revolution equally successful for both crops? Discuss.
(iii) What is the working capital required by the farmer using modern farming methods?
Table 1.2: Production of Pulses and wheat (Million Tones)

Source: Directorate of Economics and Statistics, Department of Agriculture and Cooperative, 2010-11, 2013 Pocketbook on agricultural statistics.
(iv) Modern farming methods require the farmer to start with more cash than before. Why?
Answer:
(i) To grow more than one crop on a piece of land during the year is known as multiple cropping. It is the most common way of increasing production on a given piece of land. The other way of increasing production from the same land is to use modern farming methods. In this method, yield is measured as a crop produced on a given piece of land during a single season. Farmers of Punjab, Haryana, and Western Uttar Pradesh used the modern farming method for the first time. The farmers in these regions set up tubewells for irrigation and made use of HYV seeds, chemical fertilizers, and pesticides in farming. They also used tractors and threshers to make ploughing and harvesting faster.

(ii) The Table shows that between 1965 and 2013, the production of pulses has increased negligibly whereas the production of wheat increased greatly. On this basis, we can say that the Green revolution was not equally successful for both crops.

(iii) The working capital required by the farmer using modern farming methods includes money, HYV seeds, pesticides, chemical fertilizers, and water.

(iv) Modern farming methods require HYV seeds which are more expensive than those of traditional seeds. HYV seeds need plenty of water and also chemical fertilizers and pesticides to produce the best results. For buying all these inputs, a lot of money is required. So, farmers require more cash for carrying out modern farming methods.

Lets’s Discuss, NCERT Textbook Page 7-A

Question 1.

• In picture 1.5, on textbook page 6 can you shade the land cultivated by the small farmers?
• Why do so many families of farmers cultivate such small plots of land?
• The distribution of farmers in India and the amount of land they cultivate is given in the following Graph 1.1. Discuss in the classroom.

Graph 1.1 Distribution of Cultivated Area and Farmers

Source: Agricultural statistics at glance 2006: Dept, of Agriculture and Cooperation, Ministry of Agriculture, Govt, of India.
Answer:

• See Picture 1.5 on Textbook page 6. The shaded rectangles with boundaries show the land cultivated by small farmers.
• The reason is that land in Palampur is fixed and 75 percent of the people who are working are dependent on farming for their livelihood. They could be farmers or farm labourers.
• Do it yourself.

Lets’s Discuss, NCERT Textbook Page 7-B

Question 1.
Would you agree that the distribution of cultivated land is unequal in Palampur.? Do you find a similar situation for India? Explain.
Answer:
Yes, the distribution of cultivated land is highly unequal in Palampur. About one-third of the 450 families are landless there. These 150 families are mostly Dalits who have no land for cultivation. Of the remaining families who own land, 240 families cultivate small plots of land less than 2 hectares in size. Cultivation of such plots doesn’t bring adequate income to the farmer’s family.

On the other hand, 60 medium and large farmers cultivate more than 2 hectares of land. A few of the large farmers have land extending over 10 hectares or more. This shows that medium and large farmers have more land though their number is very small.

A similar situation can be found in India also. About 80% of farmers are small who cultivate only 36% of the cultivated areas whereas 20% of the large farmers cultivate 64% of the cultivated area. This shows that there is inequality in the distribution of cultivated areas in village Palampur as well as in India.

Lets’s Discuss, NCERT Textbook Page 7-C

Question 1.

Work on the fields: Wheat crop— ploughing by bullocks, sowing, spraying of insecticides, cultivation by the traditional method, cultivation by modern method, and cutting of crops.
Identify the work being done on the field in the pictures 1.6 and arrange them in a proper sequence.
Answer:
The proper sequence of the activities is:

• Ploughing by bullocks
• Sowing
• Spraying of insecticides
• Cultivation by the traditional method
• Cultivation by modern method
• Cutting of crops.

Lets’s Discuss, NCERT Textbook Page 9

Question 1.
1. Why are farm labourers like Dala and Ramkali poor?
2. Gosaipur and Majauli are two villages in North Bihar. Out of a total of 850 households in the two villages, there are more than 250 men who are employed in rural Punjab and Haryana or in Delhi, Mumbai, Surat, Hyderabad, or Nagpur. Such migration is common in most villages across India. Why do people migrate? Can you describe (based on your imagination) the work that the migrants of Gosaipur and Majauli might do at the place of destination?
Answer:
1. Both Dala and Ramkali are poor farm labourers who work on daily wages in Palampur. This means they must regularly look for work. Although the minimum wages for a farm labourer set by the government is ₹ 115 (April 2011) per day, Dala and Ramkali get only ₹ 80. Also, there is heavy competition for work among the farm labourers in Palampur, So they agree to work for lower wages. Dala and Ramkali are under the burden of past debt which forces them to work for lower wages. They also have to look after a large family, which is a measure cause of their poverty.

2. Most people migrate to big cities like Delhi, Punjab, Haryana, etc., in search of employment or better job opportunities. People also migrate for higher education. The migrants from Gosaipur and Majauli who went to cities will probably find work as casual labourers, industrial workers, rickshaw pullers, or headload workers.

Lets’s Discuss, NCERT Textbook Page 12-A

Question 1.

1. What capital did Mishrilal need to set up his jaggery manufacturing unit?
2. Who provides the labour in this case?
3. Can you guess why Mishrilal is unable to increase his profit?
4. Could you think of any reasons when he might face a loss?
5. Why does Mishrilal sell his jaggery to traders in Shahpur and not in his village?

Answer:
1. To set up his manufacturing unit Mishrilal needed fixed capital in the form of the sugar cane crushing machine, working capital in the form of money for buying sugar cane from other farmers for crushing, and for paying the electricity bill of running the crushing machine.

2. The labour is provided by Mishrilal himself and his family members.

3. Mishrilal has set up a small-scale unit. He has to pay for the electricity to run the machine. As a result, he is unable to increase his profit.

4. If his crushing machine becomes defective or if there is a drought, he might face a loss.

5. Shahpur is a town where traders come from different nearby villages to buy things and there is more demand for jaggery there. So, Mishrilal sells his jaggery to traders in Shahpur and not in his village where he might get a low price for his product.

Lets’s Discuss, NCERT Textbook Page 12-B

Question 1.

1. In what ways are Kareem’s capital and labour different from Mishrilal’s?
2. Why didn’t someone start a computer centre earlier? Discuss the possible reasons.

Answer:

1. Unlike Mishrilal, Kareem has a larger fixed capital in the form of computers. Computers are more expensive than Mishrilal’s sugar cane crushing machine. The labour employed by Kareem is also different from that of Mishrilal’s. Kareem has employed educated and qualified computer teachers whereas Mishrilal’s labour is unskilled.
2. There may be several reasons behind it. A few of them are:
   • Educated people did not want to stay in the village.
   • People in the village were not aware of the employment potential of computer courses. So nobody thought that such a business could be successful.

Lets’s Discuss, Textbook Page-13

Question 1.

1. What is Kishora’s fixed capital?
2. What do you think would be his working capital?
3. In how many production activities is Kishora involved?
4. Would you say that Kishora has benefited from better roads in Palampur?

Answer:

1. Kishora’s fixed capital is the buffalo and wooden cart which he has purchased with the bank loan.
2. The money that he earns from selling the milk and transporting goods on his bullock cart minus his own living expenses is his working capital.
3. Kishora is involved in four production activities:
   • Selling of buffalo’s milk.
   • Transporting of various items.
   • Bringing clay from the river Ganga for the potter.
   • Going to Shahpur with a load of jaggery or other commodities.
4. Kishora has definitely benefited from better roads in Palampur because he is involved in the transport business. Better roads would enable him to carry on his business more successfully and more comfortably. There may be fair chances of earning good profit.

Class 9 Economics Chapter 1 The Story of Village Palampur Textbook Questions and Answers

Question 1.
Every village in India is surveyed once in ten years during the census and some of the details are presented in the following format. Fill up the following based on information on Palampur.
(a) Location
(b) Total Area of the Village
(c) Land Use (In Hectares)

(d) Facilities:

Answer:
(a) Location: Palampur is located 3 km from Raiganj which is a big village. The nearest town is Shahpur. It is well-connected with neighbouring villages and towns. An all-weather road connects the village to Raiganj and further on to the nearest small town of Shahpur.

(b) The Total Area of the Village: The total area of village Palampur is 246 hectares.

(c) Land Use (in hectares):

(d) Facilities:

Question 2.
Modern farming methods require more inputs which are manufactured in industry. Do you agree?
Answer:
Yes. I agree with the statement.

• In modern farming, farmers use HYV seeds, insecticides, pesticides, and chemical fertilizers which are manufactured in industries.
• Farmers also use various types of farm machinery like tractors, combine harvesters, threshers, etc., which are also manufactured in industries.
• Whenever there is not adequate rainfall, farmers take the help of tubewells and water pumps for irrigating their fields. These machines are also manufactured in industries.

Question 3.
How did the spread of electricity help farmers in Palampur?
Answer:

• The spread of electricity helped the farmers of Palampur to irrigate their lands in a far better way. Earlier they used to irrigate their lands with the help of Persian wheels, which was not so effec¬tive. But now with the help of electricity, they could irrigate much larger areas in lesser time.
• With the improved irrigation system as a result of the use of electricity, farmers could grow different crops around the year. They did not have to depend on the monsoon which is so uncertain.
• Farmers of Palampur as a result of the use of electricity got rid of much manual labour, anxieties, etc. They were now more empowered than before.

Question 4.
Is it important to increase the are an under irrigation? Why?
Answer:
Yes, it is very important to increase the area under irrigation. There are several reasons behind it:

• Monsoon in India is highly uncertain and therefore farmers cannot depend on it. They have to make alternative arrangements to carry on their agricultural activities. This they do by developing a system of irrigation.
• In our country, rainfall is not evenly distributed. There are many areas which receive scanty rainfall. In these areas, production will be low if there is no facility for irrigation.
• A well-developed system of irrigation will enable farmers to grow more than one crop in a year. This will improve their financial condition.

Question 5.
Constructs a table on the distribution of land among the 450 families of Palampur.
Answer:
Here is the distribution of land among the 450 families of Palampur:

Question 6.
Why are the wages for farm labourers in Palampur less than minimum wages?
Answer:
The minimum wage for a farm labourer set by the government is ₹ 115 (April 2011) per day. But in Palampur, the poor farm labourers usually get less than this because there is heavy competition for work among them. So they agree to work for lower wages.

Question 7.
In your region, talk to two labours. Choose either farm labourers or labourers working at construction sites. What wages do they get? Are they paid in cash or kind? Do they get work regularly? Are they in debt?
Answer:

1. One day I came across two labourers namely Babulal and Ramjilal who are brothers working as casual labourers at a construction site. They came to the new place in search of employment.
2. They get approximately 90 to 100 rupees per day which they are paid in cash.
3. They do not get work regularly because the number of workers seeking employment is so great.
4. They are under the burden of huge debt because firstly they get low wages and secondly their work is not regular.

Question 8.
What are the different ways of increasing production on the same piece of land? Use examples to explain.
Answer:
1. To grow more than one crop on a piece of land during the year is known as multiple cropping. It is the most common way of increasing production on a given piece of land. All farmers in Palampur grow at least two main crops. Many are growing potatoes as the third crop in the past fifteen to twenty years.

2. The other way is to use modern farming methods for higher yield. Yield is measured as a crop produced on a given piece of land during a single season.

3. Farmers of Punjab, Haryana, and Western Uttar Pradesh were the first to try out the modern farming method in India. The farmers in these regions set up tubewells for irrigation and made use of HYV seeds, chemical fertilizers, and pesticides in farming.

4. Some of them bought farm machinery like tractors and threshers, which made ploughing and harvesting faster. They were rewarded with high yields of wheat.

Question 9.
Describe the work of a farmer with 1 hectare of land.
Answer:
1. A farmer with 1 hectare of the land finds it difficult to provide food for his family. He works hard in his own field and also works on the field of the rich farmers for additional income. Sometimes he has to work as a casual labourer to survive.

2. Since he lacks money, so he faces many problems in carrying out his job. He has no irrigation facilities which badly affects the productivity of his land.

3. He has no working capital as a result of which he fails to buy modern machinery, HYV seeds, or insecticides, and pesticides.

4. In order to manage the capital, he has to borrow money from large farmers or village moneylenders, or traders who supply various inputs for cultivation. The rate of interest on such loans is very high. He is put in great distress to repay the loan. Sometimes he falls into a debt trap.

Question 10.
How do the medium and large farmers obtain capital for farming? How is it different from the small farmers?
Answer:
The medium and large farmers are capable enough to use their own savings from production to arrange for capital during the next season. They might also use the savings to buy cattle, trucks, or to set up shops. These constitute the capital for non-farm activities.

The small farmers, on the other hand, find it difficult to obtain capital. They constitute about 80 percent of total farmers in India. Because of the small size of their plots, their production is not enough. The lack of surplus means that they are unable to obtain capital from their own savings and to borrow. Besides the debt, many of the small farmers have to do additional work as farm labourers to feed themselves and their families.

Question 11.
On what terms did Savita get a loan from Tejpal Singh? Would Savita’s condition be different if she could get a loan from the bank at a low rate of interest?
Answer:
1. Savita is a small farmer. She plans to cultivate wheat on her one hectare of land. Besides seeds, fertilizers, and pesticides, she needs cash to buy water and repair her farm instruments.

2. Since she doesn’t have money, so she decides to borrow from Tejpal Singh, who is a big farmer. Tejpal Singh agrees to give Savita the loan at an interest rate of 24 percent for four months, which is a very high-interest rate.

3. Savita also has to promise to work on his field as a farm labourer during the harvest season at ₹ 35 per day. Obviously, this wage is quite low. If Savita had taken the loan from the bank, the interest rate would have been lower and she could have easily repaid the loan and her condition would have been far better. But Savita knows getting a loan from the bank is difficult for a small farmer like her. So she agrees to Tejpal’s tough conditions and is bound to face difficulties.

Question 12.
Talk to some old residents in your region and write a short report on the changes in irrigation and changes in production methods during the last 30 years. (Optional)
Answer:
Recently I met some old residents in my region and talked to them about the changes in irrigation and changes in production methods during the last 30 years. They told me that earlier they were totally dependent on rainfall as there were no other means of irrigation.

Later on, they started to use the Persian wheels to draw water from the wells and irrigate small fields. Eventually, several technological developments took place as a result of which electric run tubewells came into existence. These tube wells could irrigate much larger areas of land more effectively. The first few tubewells were installed by the government. Soon, farmers started setting up private tubewells.

In the farming methods, traditionally they ploughed the field with ploughs drawn by bullocks which were time-consuming. They used cow-dung and other natural manure as fertilizers. However, with changes in technology, they started using HYV seeds, chemical fertilizers, and pesticides to produce the best results. Some of them bought modern farm machinery like tractors and threshers, which made ploughing and harvesting faster. They were rewarded with high yields, which eventually improved their lives.

Question 13.
What are the non-farm production activities taking place in your region? Make a shortlist.
Answer:

1. Dairy is a common activity in many families in our region.
2. Some people are engaged in manufacturing which involves very simple production methods and is done on a small scale. They are carried out mostly at home or in the fields with the help of family labour.
3. Some people have engaged in trade also. The traders of our region are shopkeepers who buy various goods from wholesale markets in the cities and sell them in the villages.
4. Transport has become a fast developing sector in our region. People engaged in this sector ferry people and goods from one place to another, and in return get paid for it.
5. There is also a computer class centre in our region providing employment to young men and women who have completed a diploma in computer application.

Question 14.
What can be done so that more non-farm production activities can be started in villages?
Answer:
In order to start more non-farm production activities in villages, the following measures can be taken up:

1. The government should start employment generating schemes.
2. Vocational training should be given to the villagers.
3. Banks should provide loans at cheap interest rates in order to enable the poor villagers to start some business.
4. Industries should be set up in the villages so that people there get engaged in various activities to earn their livelihood.
5. There should be effective transportation facilities so that the goods manufactured by the villagers are easily transported to the city markets.

Detailed, Step-by-Step NCERT Solutions for 11 Accountancy Chapter 14 Structuring Database for Accounting Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Structuring Database for Accounting NCERT Solutions for Class 11 Accountancy Chapter 14

Structuring Database for Accounting Questions and Answers Class 11 Accountancy Chapter 14

Test Your Understanding

A. Indicate against each of the following statements, True or False :
(a) Every relation has at least one super key by default, which is the combination of all its attributes.
(b) Data transformation is called information.
(c) Referential integrity constraint arises because of relationships between various entities.
(d) The complete absence of WHERE clause in SELECT statement implies that no tuples of a relation shall be selected.
(e) ER model is an example of representational data model.
Answer:
(a) True
(b) True
(c) True
(d) False

B. Fill in the blanks, an appropriate word(s) :
(a) A ………. does not have key attributes of its own.
(b) The ………. for binary relationship specifies the number of relationship instances that an entity can participate in.
(c) Each simple attribute of an entity type is associated with a value set called ………. of values.
(d) When structure of AIS is based on both human and computer resources. It is called ………. AIS.
(e) A ………. is a collection of all entities of a particular entity type.
(f) A weak entity type always has a ………. constraint with respect to its identifying relationship.
(g) When a relation has more than one attribute with unique values, each such attribute is called ……….
Answer:
(a) weak entity
(b) computer based
(c) timeware
(d) liveware
(e) total participation
(f) multi-valued
(g) full functional

Short Answer Type Questions

Question 1.
State main categories of data models.
Answer:
Data models is a collections of concepts used to describe the structure of database. The main categories of data models are following :
(i) Reality
(ii) Data
(iii) Database
(iv) Information
(v) DBMS

(i) Reality-It consists of different components of an organisation such as people, facilities and other resources. It also includes that environment in which the organisation exists and operates. The continuous interaction with the environment in which organisation operates result in real world transaction. These transaction are analysed to identify the data

(ii) Data – Data can be anything such as number, a person’s name, image, account-name, entities, places, objects, events or even concepts. So, it is a set of isolated and unrelated raw facts, represented by values, which have little or no meaning. They have little or no meaning because they lack a content for evaluation. Data may be quantitative or qualitative and they may be of financial or non-financial character.

(iii) Database – Database is a collection of related data. A database is an integrated and logically collection of data. Data is collected and stored in such a way that a common and controlled approach is sufficient in adding new data and modifying and retrieving existing data with in the database.

Characteristics of Database :
(a) Integrated Property
(b) Shared Property
(a) Integrated Property – Database is integrated because in it distinct data tables have been logically organised to reduce or eliminate duplicity and better access.

(b) Shared Property – Database is shared i.e., all those who are authorised to use data have access to relevant data.
Accounting database is a collection of related accounting data to represent some aspect of an accounting information system.

(iv) Information – When data is processed and converted into a meaningful and useful form, it is known as information. It is a set of organised and validated collection of data. Information is a data that have processed and reined and then presented in a format that is important for decision making. Following diagram shows that information may be viewed as data at one level. But when it is processed it becomes information at another level.

— Producing ledger accounts
— Generating trial balance
— Prepare Profit & Loss Account and Balance Sheet

(v) Database Management System (DBMS)-DBMS is essentially a collection of interrelated data and a set of programs to access this data. This collection of data is usually called the database. It can be regarded as an electronic filing cabinet. Database system are designed to maintain large volume of data.

Management of data involves :

• Defining the structure for the storage of data.
• Providing the mechanisms for the manipulation of the data.
• Providing for the security of the data against unauthorized access.

The DBMS is a general purpose software system that facilitates the process of defining, constructing and maintaining data bases for various applications. A database management system is a collection of programs that enables user to create and maintain a database.

Defining a database involves specifying the data type, structure and constraints for the data to be stored in a database. Constructing the database is the process of storing two data itself on same storage medium that is controlled by the DBMS.

Manipulating a database includes some functions as querying the data base to retrieve specific data. Updating the data base to reflect changes in the reality and generating the reports from the date.

Question 2.
How are computers useful in processing the accounting data?
Answer:
The computerised accounting system is based on the concept of database. It does involve the process of creativity and maintaining journals, ledgers etc. It is one of the database-oriented applications wherein the transaction data is stored in a well-organised database.

The user operates on such database using the required and desired interface and also takes the desired reports by suitable transformation of shared data into information. Computers plays a very significant role in processing accounting data. Thiseliminates duplication of data, improves the flow of information and facilitates proper inventory- control, cost control, cash flow etc.

The computer makes the job of accounting department very simple and interesting. Maintaining subsidiary books, ledger, preparation of trial balance and preparation of financial statements etc. can be performed by computers quickly and very efficiently. Computers are very useful in processing the accounting data.

It becomes clear from the following :
(1) Processing with high speed – Computer require far less time than human beings in performing a task that is why it process accounting data very fast.

(2) Accurate Processing – Computer system eliminates duplication of data because the primary accounting data is entered once for all subsequent usage. This eliminates the possibility of error.

(3) Reliable Processing – Computers are immune to tiredness, boredom or fatigue. So, it is well-adapted to performing repetitive operations. The extent of reliability of processing accounting data by a computer is immense.

(4) Up-to-date Processing – All the related records in a computer get automatically update once the data is entered and stored.

(5) Efficiency in Processing – The computer based accounting system ensure better use of resources and time.

(6) Automate Document Production – Computer have standardised, user defined format of accounting report that generates automatically. The accounting report such as Cash Book, Trial Balance etc. are obtained just by click.

(7) Quality Processing – The input checks and untouchable features of data handling facilitate hygienic and true accounting processing that provides true accounting reports that are highly objectives and can be relied upon.
So, it is clear from the above points that computer is an electronic device which calculates, compares, modifies, stores and retrieves fact and figures, is being widely used in the field of accounting.

It has an inbuilt system of making calculations, collecting and processing accounting data and present the result in the form reports useful in decision making. It performs the functions of recording storing, posting, classification summarisation the accounting data.

Question 3.
What do you understand by accounting data? Discuss the stages through which it is finally transformed for being presented as information in financial statements?
Answer:
Data are facts and figures that $re not currently being used an a decision process and usually take the form of historical records that are recorded and field without immediate intext to retrieve for decision-making. Data are raw facts about a business and its business transactions.

So, we can say that accounting data are known facts that  can be recorded and which have implicit meaning. It may represent facts concerning people, places, objects, entities, events or even concepts. It may be quantitative and qualitative or they may be of financial character or non-financial character.

For example, consider the transaction :
April 01,2006 Ravi started business with Cash Rs. 1,00,000. This transaction has various data context like, ‘01’, 01-Apr-2006, Ravi Capital, Rs. 1,00,000 but these are not useful for decision making unless they are processed to suit to the requirements of decision making situations.

Accounting data is data related to the accounting transactions and used for making the financial statements. Anything which facilitates the accounting process is called accounting data. It may be people,  business transaction, environment, events etc. Accounting data therefore processed to get accounting information which is used for accounting processes i.e., to prepare vouchers, ledger, financial statements which ‘s, are very helpful in the decision making process.

Data Processing involves the techniques of collecting sorting, relating, interpreting and computing accounting data in such a manner as to provide meaningful and useful information or presenting financial statements. Data capturing, inputing, processing and generating information are the necessary steps involved in data processing cycle.

(1) Source Documents – The first step is to capture accounting data from accounting transactions so as to prepare voucher, that expresses and documents an accounting transactions. Vouchers are so designed as to permit the recording of a data in to a systematic manner.

(2) Input of Data – By using a pre-designed Data Entry Form, accounting data contained in vouchers is to be entered in a computer storage device. Data entry, form is designed in a manner that is similar to physical voucher document.

(3) Data Storage – A suitable data storage structure is required to provide for a blank data record. The above blank record is used for storing the input of data pertaining code of account, name of the account and category type to which it belongs.

(4) Manipulation of Data – The stored data is manipulated for necessary transformation to generate final reports. Such transformed data may be stored separately and subsequently used for generating final reports.

(5) Output of Data – The accounting reports such as ledger, trial balance etc. are obtained in a pre-designed format by accessing the transformed data.

Question 4.
What do you understand by database? How does it differ from DBMS?
Answer:
A database is a collection of related data. It is a collection of data flies integrated and organised into single comprehensive file system, which is arranged to minimum duplication of data and to provide conveninent access to information within that system to satisfy’ a variety of user needs. The data is collected and stored in such a way that a common and controlled approach is sufficient in adding new data and modifying and retriving existing data within the database. It is a shared collection of interrelated data tables, files or structure which are designed to meet the varied informational need of an organisation.

Database has two important properties :
(i) Integrated Property
(ii) Shared Property
(iii) Integrated Property – Database is integrated because in it distinct data tables have been logically organised to reduce or eliminate duplicity and better access.
(iv) Shared Property – Database is shared i.’e., all those who are authorised to use data have access to relevant data.

“A database is a computer file system that uses a particular for organisation to facilitate rapid updating of individual records, simultaneously updating of related records, easy access to all records, by all applications programs and rapid access to all stored data which must be brought together for a particular routine report or inquiry or a special purpose report inquiry. ” – GM. Scott

However, a database management system (DBMS) is a software system that allows access to data contained in database. It’s objective is to provide a convenient and effective method of defining, storing and retrieving the information contained in database. This is DBMS who makes possible to share data in the database among the multiple applications or users. DBMS is essentially a collection of inter-related data and a set of programs to access of this data. This data is collected in a database. DBMS are designed to maintain large volume of data.

Management of data involves :

• Defining the structure for the storage of data in database.
• Providing the mechanisms for the manipulation of the data stored in database.
• Providing for the security of the data against unauthorized access.

Database is different from DBMS because DBMS is a general purpose software system that facilitates the process of defining, constructing and maintaining data bases for various applications. A DBMS is a collection of programs that enables user to create and maintain a database.

Question 5.
What is meant by entity type? How is it different from entity set? Illustrate by giving suitable example from accounting reality.
Answer:
Entity – A “Thing” in the real world with an independent existence is called entity. An entity may be an object with a physical existence (for example, a particular person, car, house or employee) or it may be an object with a conceptual existence (for example : a company, a job etc.)

Entity Types and Entity Sets – A database usually contains groups of entities that are similar. An entity type defines a set of entities that have the same attributes. Each entity type in the database is described by its name and attributes.

In other words, an entity type is defined as a collection of entities, which share a common definition in terms of their attributes. Each entity type is assigned a name for its subsequent identification. The attributes of entity type are used to describe it in the data base. The value of attributes of an entity belonging to entity type are known as Entity Instance.

The collection of all entities of a particular entity type in the database at any point of time is called as entity set. The entity set is usually referred to using the same name as the entity type. An entity set is a collection of all entity instances of a particular entity type.

An entity set is a collection of all entity instances of a particular entity type. The set of entities pertaining to a particular entity type share the same set of attributes.
For example:
Entity Type : Accounts
Structure of entity type

Entity Set : Collection of entity instances of an entity type “Accounts”.

Question 6.
What do you understand by relationship type? How is it different from relationship instance and relationship set?
Answer:
Relationship among two or more entity types represents an interaction among their respective entities. In fact, whenever an attribute-” of are entity type refers to an other entity type, some relationship exists. Whenever an attribute (say debit) of are entity type (say vouchers) refers to another entity type (say accounts), there exists a relationship between these entities (voucher and accounts).

Relationship Type,- Whenever entities from different entity types are related to one another in a particular manner, they constitute a relationship type. In ER diagrams, relationship types are displayed as diamond shaped boxes, connected by straight lines to be rectangular boxes, which represent the participating entity types. A collection of relationships of the same type is called a relationship set.

A relationship type R among n entity types E₁, E₂, E_n defines a set of associations – or a relationship set – among entities from these entity types. As for the case of entity type, entity sets, a relationship . type and its corresponding relationship set are customarily referred to by the some name, R. Mathematically, the relationship set R is a set of relationship instance r₁ where each r. associates n individual entities (e₁, e_2, e_n) and entity e₁ in r is a member of entity type E_i ≤ 1 ≤ n.

Question 7.
What do you understand by multi-valued attribute? How is it different from complex and composite attribute? Illustrate by giving suitable example.
Answer:
Attributes are some properties of interest or characteristics that further describe the entity such as height, weight and date of birth in case of a person and code and name in case of accounts.

Multi-valued attribute – Most attributes have a single value for a particular entity, such attributes are called single valued. For example, age is a single-valued attribute of a person, in some cases an attribute can have a set of values for the some entity – For example, education of person, colour of car etc. Such attributes are called multi-valued attribute. A multi-valued attribute may have lower and upper bounds to constrain the number of values allowed for each individual entity.

Composite attributes – The composite attributes can be divided into smaller sub-parts to represent some more basic attributes with independent meanings. For example, name of a person that is normally sub-divided into First Name, Middle Name and Last Name is a composite attribute.

Complex Attributes – The multi-valued and composite attributes may be grouped to constitute complex ones. The parenthesis () are used for showing grouping of components of composite attributes. The braces {} are used for showing the multi-valued attributes.

For example, if a person can have more than one residence and each residence can have multiple phone, an attribute address phone for a person can be shown as :
(Address Phone ({Phone (Area Code, Phone Number)}, Address (Street Address(Number, Street, Apartment Number) City, State, Zip)} A complex attribute, Address Phone

Question 8.
What do you understand by the concept of weak entity used in data modelling? Explain the relevance of owner entity type, partial key and identifying relationship in the context of such modelling.
Answer:
Entity types, which do not have key attributes of their own are, called weak entity types. Such entity types are identified by being related to specific entities from another entity type in combination with some of their attribute value. Entities belonging to a weak entity type are identified by being related to specific entities from another entity type in combination with one of their attribute values.

We call this other entity type the identifying or owner entity type and we call the relationship type that relates a weak entity type to its owner the identifying relationship of the weak entity type.

A weak entity type always has a total participation constraints (existence depency) with respect to its identifying relationships, because a weak entity cannot be identified without an owner entity. A weak entity type normally has a partial key, which is the set of attributes that can uniquely identify weak entities that are related to the same owner entity.

Consider the entity type Dependent, related to Employee which is used to keep track of the dependents of each employee via 1 : N relationship. The attributes of Dependent are Name (the first name of the dependent), Birth Date, Sex and Relationship (to the employee), Twp dependents of two distinct employees may, by chance, have the same value for Name, Birth date.

Sex and Relationship, but they are still distinct entities. They are identified as distinct entities only after determining the particular employee entity to which each dependent is related. Each employee entity is said to own the dependent entities that are related to it.

In ER diagrams, both a weak entity type and its identifying relationship are distinguished by surroundings their boxes and diamonds with double lines. The partial key attribute is underlined with a dashed or dotted line.

Question 9.
What is a participation role? State the circumstances under which the use of role name becomes necessary in description of relationship types.
Answer:
Each entity type that participates in a relationship type plays a particular role in the relationship. The role name signifies the role* that a participating entity from the entity type plays in each relationship instance and helps to explain what the relationship means. For example, in the works .

For relationship type, Employee plays the role of employee or workers and Department plays the role of department or employer. The participation role specifies the existence of an entity depends on its being related to another entity via the relationship type.

Role name are not technically necessary in relationship types where all the participating entity types are distinct, since each participating entity type name can be used as the role name. However, in some case entity type participates more than once in a relationship type in different roles. In such cases the role name becomes essential for distinguishing the meaning of each participation.

Such relationship types are called recursive relationships. The supervision relationship type relates an employee to a supervisor, where both employee and supervisor entities are members of the same Employee entity type. Hence, the Employee entity type participates twice in Supervision. Once in the role of supervisor and once in the role of supervisory.

Question 10.
Define foreign key. How is this concept useful in relational data model? Illustrate with suitable example.
Answer:
Relational data model represents the database of collection of tables comprising different volumes.. It consists of rows and columns. The table name and column name are used to help in interpreting the meaning of volumes of each row. Each row of table is called a data record.

A key is a part of table that uniquely distinguishes it from other tables in a given relation. Keys will typically be used as links, i.e. Key value will appear in other relation to represent their associated table.

Foreign key – An attribute or combination of attribute in one table whose values must either match the parimary key in another table or be null. For example :
Table name: Employees
Primary key: EMPID
Foreign key:

Table name: Vouchers
Primary Name : V. No.
Foreign key : Prep. By and Auth. By

While referencing Employees, the vouchers relations makes use of its other attributes Prep By and Auth By. These attributes act as foreign keys to reference the topics of relation. Employees through its key attribute Empld. The values of Prep By and Auth By cannot be null because of total participation of vouchers in Prep By and Auth By relationship.

Question 11.
What is meant by NULL value? What are the reasons that lead to their occurrence in database relations?
Answer:
NULL values – Absence of a data item is represented by a special value called NULL value. There are three situation which may require the use of NULL value.

• When a particular attribute does not apply to an entity.
• Unknown because4t does not exist.
• Value of an attribute is unknown, although it exists.

In some cases a particular entity may not have an applicable value for an attribute. For such situation, a special value called NULL value is created. NULL can also be used if we do not know the value of an attribute for a particular entity.

An important is that of nulls, which are used to represent the value of attributes that may be unknown or may not apply to a tuple. A special value, called null, is used for these cases. In general, we can have several meanings for NULL values, such as :

• Value unknown.
• Value exists but is not available.
• Attribute does not apply to this tuple.

From the above discussion about the NULL value, it is clear that why it occurs in database relations.

Question 12.
Why are duplicate tuples not allowed in a relation?
Answer:
Each data record, which corresponds to a tuple of a relation, in a table must be distinct. That means no two tuples in a relation can have the same combination of values for all their data items. This is because that a relation, as set of tuples, has to have aH its tuples distinct by definition.

Every relation has at least one key by default, which is the combination of all its attributes. This is called super key. Any such ’ super key, therefore, specifies uniqueness constraint. Such combination, representing super key, may have redundant attributes, implying there by that a more useful concept is that of a key which has no redundancy. This can be shown by following diagram :

Question 13.
For which operations such compatibility is required and why?
Answer:
Relation Data Model represents the database as collection of relations (table) comprising different volumes. It consists of rows and columns. The table name and column name are used to help in interpreting the meaning of volumes of each row. Each row of a table is called a data record. Relational model is concept of an entity and attribute. An entity is like a noun and attribute is a property of an entity, in a relation a table is also called ‘relation’. Each table is made up of records.

Horizontal rows, known as tuple and vertical columns also known as attribute. A domain is a collection of all possible Values from which values for a given column are drawn. The number of attribute determine the degree of relation. The number of tuples in a relation are known as cardinality of the relation. Each relation can be identified by a unique name.

RDBMS organizes the data in the form of table (relation) and primary key field are identified. All the data manipulation are carried out on those relations. Related information may be derived from the user perspective in a meaningful way as new relation from these base relations. The final fundamental of term in relational DB is relationship.

All the entries in relation are single valued. Entries in column are all of the same kind, each column here has unique name. No two tuples in a relation are identical. Order of tuples does not matter. A relation is a set of tuples where in each tuple is an ordered list of values corresponding to attributes of relation. A relation scheme may be interpreted as a declaration in the nature of an assertion. Some relations represents facts about entries while other might represent facts about relationships.

Question 14.
What is the need for database normalisation?
Answer:
Normalisation is the process of refining the data model built by the ER diagram. The normalization technique, logically groups the data over a number of tables, with minimum redundancy of data. The entities or tables resulting from normalisation certain data items with relationship being represented by replication of key data items. The goal of a relational data base design is to generate a set of relation schemes that allow us to store information with minimum redundancy of data and allow us to retrieve information easily and efficiently. The approach followed is to design schemes that are in an appropriate form, one of the so called Normal Form.

Need for Normalisation :

• Improve database design.
• Ensures minimum redundancy of data.
• Reduces need to reorganise data when design is modified/ enhanced.
• Remove anomalies for data base activities.

Long Answer Type Questions

Question 1.
Discuss the basic concepts of Entity Relationship (ER) Model. Illustrate as to how an ER model is diagrammed.
Answer:
ER design is a formal blue print, with a pictorial presentation, in which Entity Relationship (ER) Model concepts are used to represent description of reality.

ER model is a popular conceptual data model, which is mostly used in database-oriented applications. The major elements of ER Model are entities attributes, identifiers and relationships that are used to express a reality for which database is to be designed.

While preparing an ER diagram the following symbols are used to represent different types of entities, attributes, identifier and relationships.


E – R model is commonly used for the following purpose :
(1) To translate different views of data among managers user and programmers to fit into a common framework.
(2) To define data processing and constraint requirements for meeting the different views.
(3) To help in the implementation of the database.
Entities – Anything in the real world with independent existence is called entity. For example, Accounts, Vouchers, Employees, Account type etc. are entities.

Attributes – Attributes are the characteristics which describes the entities. An entity has a value for each of its attributes which is the data stored in the database.

Identifier or Key Attributes – Normally every entity type has one of its attribute, which contain unique values for identifying instance. For example, code is the key attribute of entity type account because its data value are required to be unique.

Relationships – Relationship among two or more entity types represents an interaction among their respective entities. For example, whenever an attribute (say Debit) of one entity type (say Voucher) refers to another entity type (say Account), there exists a relationship between these entities (Voucher and Account).

Weak Entity Types – Entity Types which do not have identifier of their own are, called weak entity type. Such entity type are identified by being related to specific entities from another entity type in combination with some of their attributes value.

By using a hypothetical example of an accounting system following initial design based on ER Model concepts becomes the starting point.

Entities – Voucher, Accounts, Employees, Support Document and Account Type.

Vouchers : Voucher No., Serial No., Voucher Data, Debit A/c, Credit A/c, Amount, Narration, Authorized By, Prepared By, are the attributes.

• Debit and Amount are multi-valued attribute.
• Credit and Amount are multi-valued attribute.
• Voucher No. and Serial No. are key attribute.

Accounts: Code Name, Type are attributes.

• Code and Name are key attributes.

Employees: Employee ID, Name, Address, Phone, ID of Immediate Boss are the attribute.

• Name is a composite attribute.
• Employee ID is the key attribute.

Account Type : Cat ID and Category are the attributes.

• Cat ID is key attribute.

Support : S.No. and Name are the attributes.

• S.No. is a key attribute.

ER Model Representation:
(i) Accounting Database:

(ii) Account Type :

(iii) Employee

(iv) Account :

(v) Vouchers :

(vi) support:

Question 2.
What integrity constraints are specified on database schema? Why is each considered important?
Answer:
There are two integrity constraints which are specified on database schema.
(i) Entity Integrity Constraint
(ii) Referential Integrity Constraint

(i) Entity Integrity Constraint – The entity integrity constraint states that no primary key value can be null. This is because the primary’ key value is used to identity individual tuples in a relation. Having NULL value for the primary key implies that we cannot identify some tuples. For example, if two or more’tuples had null for their primary keep, we might not be able to distinguish them if we tried to reference them from other relations.

(ii) Referential Integrity Constraint – Key constraint and entity integrity constraint are specified an individual relations. The referential integrity constraint is specified between two relations and is used to maintain the consistency among tuple in the two relations. Informally, the referential integrity constraint states that tuple in one relation that refers to another relation must refer to an existing tuple in that relation.

In referencing Account Type, Accounts relation uses its attribute Type, which acts as foreign key to reference the tuples of relations. Account type cannot be null because of total participation of Accounts in classify relationship. Similarly, consider another example in which the relation Vouchers (V.No., S.No., V. date, Debit Amount, Credit Amount, Prep. By, Auth. By, Narration) reference two other relations as shown in figure.

First, it reference. Accounts (Code, Name, Type). In referencing Accounts the Voucher relation uses its attributes Debit and Credit, which act as a Foreign key to reference the tuples of relation. Accounts through its primary key, Code. The value of Debit and Credit cannot be null because of total participation of vouchers in debit and credit relationship.



Second, it references Employees (Emp ID, FName, MName, LName, Address, Phone No. Super ID) while referencing Employees, the Vouchers relation makes use of its other attributes Prep. By and Auth. By. These attributes act as foreign keys to reference the tuples of relation Employees through its key attribute Emp ID. The vaiue of Prep. By and Auth. By cannot be null because of total participation of vouchers in Prep, by and Auth. by relationships.

All integrity constraints should be specified on the relational database scheme if we want to enforce these constraints on the database states. Hence, the DDL includes provisions for specifying the various types of constraints so that the DBMS can automatically enforce them.

Most relational DBMS’s support key and entity integrity constraints and make provisions to support referential integrity. These constraints are specified as a part of data definition. That is why each integrity constraints are important.

Question 3.
Discuss the different types of update operations in relation to the integrity constraints which must be satisfied in a relational database model.
Answer:
The operation of the relational model can be categorized into retrievals and updates.
There are three basic update operations on relations :
(i) Insert,
(ii) Delete
(iii) Modify

(i) Insert – Insert is used to insert a new tuple or tuples in a relation. For example, an attempt to insert another record of an account with data values corresponding to Code, Name and its Type to Accounts relation shall be made by performing Insert Operation. The insert operation is capable of violating the integrating constraints.

(ii) Delete – Delete is used to delete tuples from relation. A particular data record from a table can be removed by performing such an operation. The delete operation can violate only referential integrity, if the tuple being removed is referenced by foreign key from other tuples in the database.

(iii) Update or Modify –  Update is used to change the value of some attributes in existing tuple. This is useful in modifying existing values of an accounting record in a relation. Usually this operation does not cause problems provided the modification is directed or neither primary key nor foreign key. Whenever these operations are applied, the integrity constraints specified on the relational database scheme should not be violated. We must enforce integrity constraints specified on the relational data scheme.

Question 4.
Discuss the steps you would take to transform on ER ‘ Model into various relations of Relational Data Model. Give suitable examples.
Answer:
The guidelines required to design the relational database schema attempt to provide a step-by-step procedure that transforms ER design into Relational Data Model design to constitute the desired database. In the context of ER Model given below, the following steps are required to cause its transformation into relational data model :

(i) Creating a relation for every strong entity – For each strong entity type in ER Model, a separate relation that includes all the simple attribute of that entity is created. Choose Primary Key from Key attributes Separate Relation for strong entities have created with primary key shown below’:

• Employee
  (Emp Id, Fname, Lname, Address, Phone No., Super ID)
• Accounts
  (Code, Name, Type)
• Vouchers
  (Vno, V Date, Debit, Amount, Credit, Narration, Prep. By, Auth. By)
• Accounts Type
  (Cat ID, Category)

(ii) Create a separate relation for each weak entity type –  For every weak entity type, a separate relation is created by including its attributes. The Primary Key of this relation is the combination of its unique attribute(s) for a particular tuple of the owner relation along with Primary Key attribute of such owner relations.

For example, Supprt Entity, with Vouchers as its owner entity, does not have a primary key of its own. It has partial key which is the Sno assigned to each document. Therefore, the primary key of voucher, Vno along with Sno is designed as composite key for support entity and the relation so formed is given below :

• Support
  (Vno, Sno, D. Name, S. Date)

(iii) Identify entity types participating in binary 1: N relationship type – Identify, the first relation on n-side of relationship and second on 1 – side of such relationship. The primary key of second should be included in first relation as its foreign key.

(iv) Identify entity type participating in binary M: N relationship type – For each binary M : N relationship type, create a new relation to represent such relationship. This new relation should include as foreign keys, the primary keys of the relations that represents the participating entity types.
Finally, the following relations have been formed to constitute the relational data model for one example reality.

• Employee
  (Emp Id, F name, L name, Address, Phone No., Super ID)

Project Work

Question 1.
Consider the following reality in a business enterprise, which is engaged in trading activity.
* It buys and sells a given number of items each of which is uniquely identifiable. Each unit of item is expressed in numbers or Kilograms.
* It procures its supplies from a given number of suppliers who can supply any number of items at a time. Each transaction is on credit for a particular period of time expressed in days.
* It sells various items to its customers on credit for a definite period of time expressed in days.
* Each purchase is made through a regular invoice, which has its distinct number for the supplier. It is duly dated, mentions the items being transacted, their quantities and prices and total amount of invoice.
* Design an ER schema for a database application for purchase and sales accounting and also show as to how it shall be transformed into various relations of a relational data model.
Answer:
ER Schema
Entities – Items, Suppliers, Customer, Purchase Invoice

Attributes
Items – Item Code, Item Name are the attribute.
* Item Code is the Key attribute.

Suppliers – Vendor Code, Vendor Name, Address, Phone
Item Supplied, Credit period are the attribute.

* Vendor Code is the Key attribute.
Customers – Customers Code, Customer Name, Address, Phone
Item Purchase, Credit period are the attributes.

* Customer Code is the Key attribute.
Purchase Invoice – Invoice No., Invoice Date, Quantity, Rate, Amount
* Invoice No. is the Key attribute.
Answer:

Question 2.
Following transactions of M/s Soumya Enterprises are given to you for the period ending March 31,2002.

All these transactions have been stored in database tables as shown below under (Model-I of database design). Data in Accounts table appears as follows :

Show how will these transactions appear as accounting data in following vouchers table.

V no. – identify of a transaction stored through a voucher
V date – to date of transaction
Debit – to code of account being debited
Amount – Amount of transaction
Credit – Code of account being credited
Narration – Narration of transaction.
Answer:

Question 3.
M/s Soumya Exports set up a garment export business on March 1,2002. Their transactions for the month ending March 31,2002 are given below :


All these transactions have been stored in database tables as shown below under (Model-I of database design). Data in Accounts table appears as follows :

Show how will these transactions appear as accounting data in following accounting data tables

V. no: Identify of a transaction stored through a voucher
V date : Date of transaction
Acc_code : Code of account, being debited or credited
Code : Codes of accounts being credited or debited, depending on value of Vtype (= 0, means codes being debited, 1 means codes being credited)
S.no.: Serial number of accounts being debited in debit voucher and those being credited in credit voucher
Vtype: 0 = means debit voucher, 1 = credit voucher
Amount : Amount of transaction
Narration : Narration of transaction.
Answer:

Question 4.
Write relational operation expressions and relevant SQL statements for following queries using Database Design Model-I and Model-II:
(a) Retrieve the voucher details and type of voucher authorised by a particular employee.
(b) Retrieve every bank payment voucher details, account name, amount. You are given that bank account code = “632001”.
(c) Find details of cash vouchers pertaining to an expense account whose account code = “711003”. You are given that cash account code = “631001”. ’
(d) Make a list of accounts and amount with respect to which a voucher has been either prepared or authorised by a particular employee.
(e) Retrieve details of vouchers without support documents.
(I) List details of documents with at least one support documents.
(g) Find all vouchers with total amounts raised during a particular month.
(h) Retrieve all vouchers prepared by an employee whose First name is “Smith”.
Ans.
(a) Relational Operation expression SELECT MAJOR = “A001” from the relation (table) VOUCHERS SQL Statement SELECT* .
FROM VOUCHERS WHERE Auth By = ‘A001’

(b) Relational Operation expression
JOIN VOUCHER table and ACCOUNTS table > Over Credit = “632001”
SQL Statement SELECT Details, Name FROM VOUCHERS, ACCOUNTS WHERE Credit = “632001”

(c) Relational Operation expression
JOIN VOUCHER fcjble and ACCOUNTS table Over Debit = “711003” and Credit = “631001” SQL Statement SELECT*
FROM VOUCHERS, ACCOUNTS
WHERE Debit = “711003” and Credit = “632001”

(d) Relational Operation expression
JOIN VOUCHERS table and ACCOUNTS table
Over Prep. By = “S001” and Auth. By = “A001”
SQL Statement
SELECT Name, Amount
FROM VOUCHERS, ACCOUNTS
WHERE Prep. By = “S001” or Auth. By = “A001”

(e) Relational Operation expression
JOIN VOUCHERS table, and ACCOUNTS table Over Vno ^ Vno SQL Statement SELECf*
FROM VOUCHERS, SUPPORTS WHERE Vno * Vio ‘

(f) Relational Operation.expression
JOIN VOUCHERS table and SUPPORT table Over Vno = Vno SQL Statement
SELECT!*
FROM VOUCHERS, SUPPORTS WHERE Vno = Vno

(g) Relational Operation expression PROJECT Vno, Amount > *
from the relation (Table) VOUCHERS SQL Statement SELECT Vno, Amount > *
FROM VOUCHERS

(h) Relational Operation expression
JOIN VOUCHER table and EMPLOYEES table Over Name = “Smith”
SQL Statement
SELECT Vno, V date, Amount, Narration , FROM VOUCHERS, EMPLOYEES WHERE F Name = “Smith”.

Question 5.
Write relational operation expression and relevant SQL statements for following queries using Database Design Model-l and Model-II:
(a) Retrieve all vouchers pertaining to a particular account with amounts ranging between Rs. 10,000 to Rs:20,000.
(b) Retrieve details of each voucher whose support docu ment has the same date as that of the voucher itself,
(c) Retrieve details of voucher authorised by employees who do not have supervisors.
(d) Find sum of cash payments, maximum payments, minimum payments and average.
(e) Find sum of cash payment, maximum and minimum amount with respect to a particular account code.
(f) Retrieve every bank payment voucher details, account name, amount pertaining to a particular period pertaining to a particular expense account.
(g) Find details of cash vouchers pertaining to a particular expense account.
(h) Make a list of accounts and amount with respect to which a voucher has been either prepared or authorised raised during a particular month.
(i) Find all vouchers with total amounts raised during a particular month.
(j) Retrieve all vouchers prepared by an employee whose last name is Dev.
(k) Retrieve details of each voucher whose support document has the same date as that of the voucher itself.
Answer:
(a) Relational Operation expression
SELECT MAJOR = “Amount” between Rs. 10,000 to Rs. 20,000
from the relation (tables) VOUCHERS SQL Statement SELECT Vno Amount FROM Vouchers .
WHERE Amount between Rs. 10,000 and Rs. 20,000

(b) Relational Operation, expression
JOIN VOUCHERS table and SUPPORT table Over V Date = V date * SQL Statement SELECT * ‘
FROM Vouchers, Supports WHERE V Date = V date

(c) Relational Operation expression SELECT MAJOR = “Auth. By = A001” from the relation (table) VOUCHERS SQL Statement
SELECT *
FROM Vouchers WHERE Auth. By = “A001 ”

(d) Relational Operation expression
SELECT Debit As Code, SUM (Amount) As Total Min (Amount) As Minimum Arg (Amount) As Average, Max. (Aifiount) As Maximum From the table VOUCHERS
SQL Statement
SELECT Debit as Code, Sum (Amount) As Total, Min (Amount). As Minimum, Max (Amount). As Maximum, Avg. (Amount) As Average.
FROM Vouchers .
WHERE Debit like “631”
Group By Debit

(e) Relational Operation expression
‘ SELECT Debit As Code = “711001”, Sum (Amount) As Total, Min. (Amount) As Minimum, Avg. (Amount) Average, Max. (Amount) As Maximum from the table Vouchers SQL Statement
SELECT Debit As Code, Sum (Amount) As Total, Min. (Amount) As Minimum, Max. (Amount) As Maximum, Avg. (Amount) As Average.
FROM Vouchers WHERE Debit like “631”

(f) Relational Operation expression
JOIN VOUCHERS table and ACCOUNTS table Over V Date between I and 2 SQL Statement
SELECT V No, V Date, Amount, Name, Code FROM Vouchers, Accounts
WHERE Code = “632001 ” and V date between Date 1 and Date 2

(g) Relational Operation expression
JOIN VOUCHERS table and ACCOUNTS table over Debit = “711” and Credit = “631 ”
SQL Statement SELECT *
FROM Vouchers, Accounts WHERE Debit = “711*” and “631 *”

(h) Relational Operation expression
JOIN VOUCHERS table and ACCOUNTS table
Over Prep, by = “S001 ” or Auth. by = “A001 ”
SQL Statement
SELECT Name, Amount
FROM Vouchers, Accounts
WHERE Prep. By = “S001” or Auth. By = “A001”

(i) Relational Operation expression PROJECT Vno. Amount > * from the relation (table) Vouchers SQL Statement
SELECT V No, Amounts > *
FROM Vouchers

(j) Relational Operation expression
JOIN VOUCHERS table and EMPLOYEES table Over L Name = “Dev”
SQL Statement
SELECT Vno, V date, Amount, Narration, L Name FROM Vouchers, Employees WHERE L Name = “Dev”

(k) Relational Operation expression
JOIN VOUCHERS table and SUPPORTS tabie Over V date = S date SQL Statement
SELECT V No, V Date, S No, S Date, Amount FROM Vouchers, Supports WHERE V Date = S Date.

Detailed, Step-by-Step NCERT Solutions for 11 Accountancy Chapter 13 Computerised Accounting System Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Computerised Accounting System NCERT Solutions for Class 11 Accountancy Chapter 13

Computerised Accounting System Questions and Answers Class 11 Accountancy Chapter 13

Test Your Understanding

I. Fill in the blanks :
(i) The framework of storage and processing of data is called as ……………..
(ii) Database is implemented using ………….
(iii) A sequence of actions taken to transform the data into decision useful information is called ……………..
(iv) An appropriate accounting software for a small business organisation having only one user and single office location would be ……………..
Answer:
(i) Operating Environment
(ii) DBMS
(iii) Data Processing
(iv) Ready to use

Short Answer Type Questions

Question 1.
State the four basic requirements of a database applications.
Answer:
A computerised accounting system is an accounting system that records and process the accounting transactions and events and produces the reports as per requirement of the user, according to Generally Accepted Accounting Principles (GAAP).

Modern accounting system uses the concept of database. It is implemented using a DBMS i.e Data Base Management System. A Database is a collection of related information stored so that it is available to many users for different purposes. The management of data in a database system is done by means of a general purpose software package which is called Data Base Management System.

Computerised accounting system based on database application is a system where data is collected, stored, processed and interpreted to generates the report for decision-making purpose of management.

The use of computer in any database-oriented application has four basic requirements which are following :
(1) Front-end Interface
(2) Back-end Database
(3) Data Processing
(4) Reporting System.

(1) Front-end Interface – It is an interactive link between the user and the database-oriented software, through which the user communicates to the back-end database.
(2) Back-end Database – It is the data storage system that stores data hidden from the user, it responds to the requirement of the user only to the extent he is authorised to access.
(3) Data Processing – It is a sequence of action that makes data an information. In other words, it is the process of transaction of data into information useful for taking decision by sequence of actions.
(4) Reporting System – It is the system which helps in composing all the information in some integrated form that constitute the report.

Question 2.
Name-the various categories of accounting package.
Answer:
Today, there are number of readymade software accounting packages that are available in the market. Since the application in the area of accounting are standard, difference is in the number of features provided by an individual package. Every accounting package is implemented to perform, recording, classifying, storing and summarising of accounting data and generates reports according to requirement of the user.
The accounting package are classified into following categories:
(1) Ready to use
(2) Customised
(3) Tailored.
(1) Ready-to-use – Ready-to-use software package is suited to small organisation who have low volume of transaction. The cost of installation is low and the number of user is also limited. Ready- to-use package is relatively easier to learn, so its training need less time and sometimes even the vendor of this package offer free training. The level of secrecy of this software is low thus the software is highly prone to data frauds. This type of software offer very little scope of linking to other information system. Some of the ready-to-use accounting softwares available in the market are Tally, Ex., Busy and The Professional Accountant.

(2) Customised – Accounting software may be customised to meet , the special requirement of the customer. It means making changes in the ready-to-use software package to suit the specific requirement of the user.
Customised software packages is suited to large and medium organisations. The cost of installation and maintenance is relatively high because a high cost is to be paid to vendor for customisation.

It is relatively difficult to learn as it include modification and addition to the software contents. It is important to train software user, so the training cost are high. The level of secrecy of data and software can be better maintained in customised software. This software can be linked to the other information systems.

(3) Tailored – It refers to designing and developing user specific software. These are developed on the basis of discussions between the user and developers. This type of software packages are usually required in large business organisation. The cost of installation and maintenance is very high. It requires special training because it is difficult to learn. They involves sophisticated application so their training cost are very high. The level of secrecy and authenticity checks are robust in such software. They can be effectively linked to some specific information systems.

Question 3.
Give examples of two types of operating systems.
Answer:
Operating system is an organised collection of software that controls the overall operations of a computer. It is a very complex and intricated programme that basically supervise and direct the operations of the computer for the user. Operating system isolates the user of the computer from the technicalities of the actual working of the computer.

They are rather like the secretaries in the office who isolate the manager from having to worry about where the various files are stored or wasting time in making phone calls or fixing appointments etc. The user of the computer then has to only concentrate on providing instruction for the specific application to be performed.

The nitty-gritty of how the instruction will actually be executed are handled by operating system. So, the operating system is a powerful software that handle programme execution, processes commands and manages the various devices attached to the computer.

There are two types of operating systems :
(1) Single-User Operating Systems
(2) Multi-User Operating Systems.

(1) Single-User Operating Systems – The Personal Computer (PC) is small, general purpose system that can execute programmes to perform in a wide variety of tasks. The PC, however, was designed for use by one person at a time, that is, it is single-user oriented with MS-DOS as the de facto standard operating system for this range of machines. Single-user operating systems became very popular d’ e to the low cost hardware and wide range of software available ; K these machines.

(2) Multi-User Operating System – As opposed to single-user systems, there are also larger system, which more than one person can use at any time. Such systems are referred to as multi-user operating systems. Multi-user systems would be required when a number of applications have to run simultaneously, or common resources, like printers and disks, are to be shared by a number of users.

Multi-user operating systems are expected to handle multiple user as well as multiple peripheral devices concurrently. Such operating systems have to be more efficient and sophisticated than simpler single-user operating systems. Unix, Linux were designed for a multi-user system

Question 4.
List the various advantages of computerised accounting systems.
Answer:
Advantages of Computerised Accounting System – The computerised accounting system of accounting has various advantages which are following :

(1) High speed – Computer system process accounting data at a very high speed and consume less time.

(2) Accurate – If the data entered in computer is correct then the possibility of error in processing is eliminated.

(3) High reliability – Computers are immune to tiredness, boredom or fatigue. It is well-adapted to performing repetitive operations. So, this system is highly reliable.

(4) Up-to-date information – All the related accounting records in a computerised accounting system get automatically updated when any data is entered and stored. So, it always produces the up-to-date information.

(5) Large volume of transactions – The computerised accounting system can store and process large volume of transactions with great speed and accuracy.

(6) Realtime user interface – Most of the modern computerised accounting system are inter-linked through the network of computer. It facilitates the availability of information to different user at the same time.

(7) Less paper work – In computerised accounting system, paper work is very less.

(8) Automated document production – Computerised accounting system have standardised user-defined format of accounting reports that are. generated automatically.

(9) Efficiency – Computerised accounting system ensure better and efficient use of resources and time.

(10) Scalability – Computerised accounting system is scalable to handle the growing transactions.

(11) Legibility-The data, information and reports displayed on computer monitor is legible.

(12) Quality reports – Inbuilt checks and untouchable features of data handling features produce true and quality reports by the computerised accounting system.

(13) MIS reports – The computerised accounting system facilitates the generation of management information reports at a very high speed, which will help the management to control the organisation effectively.

(14) Lower cost-The cost of maintaining the books of accounts is low in computerised accounting system.

(15) Storage and retrieval – Computerised accounting system does not need large amount of space for storing the data , because it stores data in CDs. hard disks etc. This system also permits fast and accurate retrieval of data as and when required.

(16) Queries – Replies of queries is very fast under the computerised accounting system.

Question 5.
Give two examples each of the organisations where ‘ready-to-use’, ‘customised’ and ‘tailored’ accounting packages respectively and suitable to perform the accounting activity.
Answer:
The suitability of accounting package depends upon the various factors, i.e.,
(1) Size and nature of the business
(2) Volume of transactions
(3) Special requirements of organisation
(4) Need for online network of information
(5) Training requirement.
For small size, conventional business where volume of transaction is not much and no need of network of information. Ready-to-use accounting package is suited. Its training is also easy and small business V has not any special requirement for accounting. Then only need the standardised accounting package.

Examples – Small departmental stores, sole-tradership business, CAs. school, college, restaurant etc. For medium and large business v where volume of transaction is large and is need of information network requires customised accounting package. For example, big departmental stores, shopping malls, hospitals etc.

For large typical business with geographically scattered locations tailored accounting package is best suited. For example, banking, mobile phone service etc.

Question 6.
Distinguish between a ‘ready-to-use’ and ‘tailored’ accounting software.
Answer:
Ready-to-use accounting software is available off-the-shelf. These are net user-specific but for the large number of users. .It is developed by the group of professionals. It is easy to Seam and cost effective. Tailored accounting software are not available off-the-shelf, ft is user-specific software. It is designed and developed by group of professionals on the basis of discussions with the user.

Difference between a ‘Ready-to-use’and ‘Tailored’ accounting software :

Long Answer Type Questions

Question 1.
Define a computerised accounting system. Distinguish between a manual and computerised accounting system.
Answer:
Accounting is called the language of business. It communicates financial information to variety of users for preparing financial reports. It is considered as a system which collects and. processes financial information of an enterprise and reports that information to user to enable them to make appproriate decisions. Accounting helps to summarise a lot of financial transactions and events and enable the accountants to convey economic information to its user.

It is very important that accounts of different enterprise are prepared on uniform basis and an enterprise maintain consistency in preparation of financial accounts over a period of time. To have uniformity and consistency in preparation and presentation of financial accounts, accounting operates w ithin a framework of ‘Generally Accepted Accounting Principles’ (GAAP).

When the accounts are maintained with the help of computer, it is called Computerised Accounting. Most of the computer programmes help in proper basic recording of business transaction. Now-a-days computer is being w idely used in the field of accounting It, itself can do the calculations, collects, process accounting data and presents the results in the form of proper reports to the management for decision making purpose.

It also performs the function of recording, posting, classification, summarisation and interpretation of results.
A computerised accounting system is an accounting information system that records and process the accounting transactions and events and produces the reports as per requirement of the user, according to Generally Accepted Accounting Principles (GAAP).

The framework of storage and processing of data in computerised accounting system is called the operating environment. Operating environment of computerised accounting system consists of hardware and software of the computer system. They are both dependent to each other. The type of software determines the structure of hardware whereas selection of hardware depends upon the type and number of user, size of organisation, network and working of the organisation, extent of working etc.

Modem computerised accounting system uses the concept of database. It is implemented using a DBMS i.e. Data Base Management System. Computerised accounting system based on database application is a system where data is collected, stored, processed and interpreted to generate the report for decision making purpose of management.

Difference between Manual and Computerised Accounting System – As we know that, accounting is the process of identiying recording, classifying and summarising financial transactions to generate the financial reports. Let us compare manual and computerised accounting system on the basis of above definition.

(1) Identifying Financial Transactions – The identification of financial transaction on the basis of accounting principles are same in both the systems.

(2) Recording of Transaction – The recording of transaction in the proper books of accounts, performing arithmetical functions is carried out manually in manual accounting system. In computerised accounting system only transaction is recorded in the books of accounts and other functions is done automatically. Data is stored in well-designed accounting database.

(3) Classifying Transactions – In the manual system, transactions . from the books of accounts are posted into ledger accounts. It means that data is duplicated. In computerised system data is not duplicated. The stored data is processed by software and produced as classified.

(4) Summarising – In manual system, the transactions in each ledger accounts are summarised i.e. balance of each account is ascertained and prepare the trial balance. Therefore, preparation of ledger is must in manual system.
In computerised system, the transaction stored in well-designed database processed to prepare trial balance. Ledger accounts are not necessary to get the trial balance in this system.

(5) Adjusting Entries – In manual system, these entries make to adhere to cost matching revenue principle. Some other entries are also made to rectifying the errors. In computerised system, there is no need of passing adjusting entries for errors and rectification, except for rectifying an error of priniciple by having wrong recording.

(6) Financial Statements – In manual system, financial statements i.e. Trading Account. Profit & Loss Account and Balance Sheet are prepared on the basis of trial balance. In computerised system, .there is no such requirement of trial balance. The generation of financial statement is independent to trial balance by direct processing of stored data.

(7) Closing the books – After the year-end, preparation is made for the next accounting period by passing the closing entries. The balances of nominal accounts transferred to the Trading and Profit & Loss Account and of other accounts, closing balances transferred as the opening balance for the next accounting period. In computerised system, the process of closing books is performed by computer itself and the opening balances for the next according period are stored in the database.

Question 2.
Discuss the advantages of computerised accounting system over the manual accounting system.
Answer:
The computerised accounting system has several advantages over manual accounting system.

(1) High speed – In computerisec accounting system, accounting data is processed much faster than that of a manual system.

(2) Accuracy – The possibility of error is eliminated once a particular data is fed in computerised system. It is 100% accurate. The results produced by manual system can vary due to carelessness, tiredness etc.

(3) Reliability – The computer system are immune to tiredness, boredom or fatigue. It is well-adapted to performing repetitive operations. So they are more reliable than manual systems.

(4) Up-to-date information – In computerised systems, all accounting records are updated automatically as and when, they are entered and stored. In manual system all the records will have to be altered one by one.

(5) Large volume of transactions – Computerised system can store and process large volume of transactions with great speed and accuracy than manual system.

(6) Realtime user interface – Computerised systems are inter¬linked through a network of computers, which facilitates the availability of information to different user at the same time whereas it is not possible in manual system.

(7) Less paper work – In computerised system paper work is less as compared to the paper work in manual system.

(8) Automated document production – Statement of accounts are obtained in a standardised user-defined format just by click of mouse in computerised accounting system which is not possible in manual system. It takes time.

(9) Efficiency – Computerised system ensures better use of resources .and time as compared to manual system.

(10) Scalability – Computerised accounting system is scalable to handle the growing number of transaction as compared to manual system.

(11) Legibility – In computerised system characters are type written using standard fonts so they are legible.
There is untidy written figures in a manual system.

(12) Quality reports – Reports produced by computerised system are highly objective and reliable because of inbuilt check, which is not possible in manual system.

(13) “MIS reports – The computerised system facilitates the generation of the MIS reports at a very high speed whereas the generation of the same reports manually is very time consuming and less accurate.

(14) Storage and retrieval – The storage of data in computerised system does not require a large amount of physical space, because it stores data in CD-ROMs, hard disks, floppies etc. which requires very few space in comparison to books of accounts prepared under manual system. It also permits the fast and accurate retrieval of accounting data as and when required.

(15) Lowercost – The cost of maintaining the books of accounts under the computerised system is lower than the cost under the manual system.

(16) Queries – Replies of queries under the computerised system is obtained easily.

Question 3.
Describe the various types of accounting softwares along with their advantages and limitations.
Answer:
Today, there are number of ready-made software packages that are available in the market. Since the application in the area of accounting are standard, difference is in the number of features provided by an individual package. An accounting software is an integral part of the computerised accounting system.

Types of Accounting Software
(1) Ready-to-use
(2) Customised
(3) Tailored.

(1) Ready-to-use – Ready-to-use accounting software available off the shelf. They are not user-specific for the large number of users. It is suited to smaU/conventional business organisation where the frequency or volume of transactions is low. The cost of installation and maintenance is low and its user is also limited. It is easierto learn, so training cost is very low. This is prone to data frauds because the level of secrecy is relatively low. It offer little scope of linking to other information systems.

Advantages :

• Ready-to-use software is developed by the group professionals having varied experience.
• It has better after sale maintenance service.
• It is used by number of users, so the accounting persons who have the knowledge of this are easily available.
• It is cost effective.
• It save time in installation and learning.

Limitations :

• It will give misleading results, if the grouping of accounts is incorrect.
• Their software are window based software, the output in physical form is a slow process.
• The level of secrecy is low, as it is prone to data frauds.
• It is not linked with the other information system.

(2) Customised – Ready-to-use software can be customised to meet the special requirement of the user. The developer, to meet the specific user requirement can modify the ready-to-use software. The user bear the cost of modifications. It is suited to large and medium business organ isation. It can be linked to other information
system. Secrecy of data and software can be better maintained in this software. .

Advantages :

• It is user-specific.
• It can be linked to other information system.
• The level of secrecy is good so data and software can be better maintained.
• It has better after sale service.
• It is cost effective.

Limitations:

• Cost of installation and maintenance is high because high cost is paid to developer to modify the ready-to-use software.
• Training cost is also high.

(3) Tailored – Tailored accounting Software are not available off- the-shelf. It is user-specific software, which is designed and developed by group of professionals on the basis of discussion with the user. It is used by large business organisation with multi-user and geographically scattered locations. It requires the special training. The secrecy and authenticity checks are robust in such software.

Advantages :

• It takes care of the accounting reports and MIS.
• The enterprise may have to engage a software engineer to maintain it, so the problems faced can be solved immediately.
• It require well-trained user to use software therefore they can maximum utilization of the software.
• The secrecy and authenticity checks are robust in such software.

Limitations:

• It gives the misleading results, if the grouping of accounts are not correct.
• The development cost is much higher.
• Training requirement is also very high.

Question 4.
Accounting software is an integral part of the computerised accounting system? Explain. Briefly list the generic constitutions before sourcing an accounting software.
Answer:
When the accounts are maintained with the help of computer, it is called computerised accounting. A computerised accounting system is an accounting system that records and process the accounting data and events and produces the reports as per requirement of the user, according to Generally Accepted Accounting Principles (GAAP).

Every accounting system works under a framework of well-defined principles i.e. accounting principles and in user-defined network for maintenance of records and generation of reports. The framework of storage and processing of data in computerised accounting system is called the operating environment.

Operating environment of computerised accounting system consists of hardware and software of the computer system. Hardware and software of computer system are both dependent on each other. The type of software determines the structure of hardware whereas selection of hardware depends upon the type and number of user, size of the organisation etc.

In small business where the number and variety, of transactions are small, a personal computer with standard software may be perfect. But in large organisation, some powerful computer system with sophisticated software is needed to maintain the accounting data. For this purpose multi-user system such as Unix, Linux etc. are used.

So, it is clear from the above discussion that computerised accounting system cannot do anything without the proper software. Hardware becomes idle without the software. It is the software which makes them run. It is the software which perform recording, classifying, storing and summarising of accounting data and generates reports according to the requirement of the user. So’, we can say that accounting software is an integral part of the computerised accounting system.

Today, there are number of software packages available in market. Since the application in the field of accounting are standard, difference is in the number of features provided by an individual package. It is the people, who are responsible for accounting not the computer, so before acquiring the accounting software it is very important to analyses the expertise level of the people who would use it.

Generic consideration before sourcing an accounting software :
(1) The cost of installation and maintenance-A simple cost benefit analysis is done before sourcing an accounting software. The cost of acquiring installation, hardware requirement and its maintenance are the factors which must be considered before sourcing any software.

(2) Flexibility Flexibility of software is an important consideration before sourcing. Software should be easily upgraded and modified, user should be able to run the software on variety of platforms e.g. Window 98/XP etc.

(3) Size of organisation- The choice of software depends upon the size and volume of transaction of the organisation. For siriall organisation, single user operated software is opted. But for a large and geographically scattered organisation multi-user software with complex networks are required.

(4) Adaptability arid training needs – Accounting software should be easy to understand and adaptable. It should not require extensive training.

(5) Utilities/MlS reports – The degree of use and utility of MIS reports also determine the acquisition of software.

(6) Level of secrecy – Security features is another consideration before sourcing the software. The level of secrecy should be high to protect system from unauthorised accessing.

(7) Exporting/Importing data facility – Sometimes, transfer of data or information are also considered before acquiring the software.

(8) Vendor reputation and capability – Vendor reputation and capability to handle software, in software business, after sale service etc. are also considered before sourcing the accounting software.

Question 5.
‘Computerised Accounting Systems are best form of accounting system.’ Do you agree? Comment.
Answer:
‘Computerised Accounting Systems are best form of accounting system.’ I am very much agree with this statement. Computers have increased the efficiency of accounting departments.

The work which was previously done by number of people is done by computer very fast and accurately. Computer has an inbuilt system of making calculation, collecting and processing accounting data and presenting the results in the form of reports to the management for decision-making purpose.

The computerised accounting system is based on the concept of database management system. It does not involves the process of creating and maintaining journal, ledgers etc. which are necessary in the manual accounting system.

A computerised accounting system comprises of the following main features

• On screen input and printout of invoices
• Updating the ledger
• Recording invoices ‘
• Recording bank receipts
• Making payments to suppliers and for expenses
• Automatic updation of ledger
• Automatic adjustment of stock records
• Provide up-to-date reports.

It has the following advantages :

• Saving time
• Saving money
• Being accurate.

In the area of accounting, there is lot of monotonous work, which is required to be done manually. For example, making entries into journal, updating the ledger, writing day book, preparing vouchers etc. Now all these repetitive activities are performed by the computer. Once the data relating to particular transaction is keyed in, the rest of the posting in the appropriate accounts and books is done by the system itself. From the same data voucher are generated.

Computerised accounting system eliminates the substantial manual efforts involved in posting entries in various books of accounts. It provides any information with ease and greater speed. This system provides automatic updation of books of accounts, automatic reconciliation and saves the storage space. All these benefits have made computerised accounting system the best form of accounting system.

Detailed, Step-by-Step NCERT Solutions for 11 Accountancy Chapter 12 Applications of Computers in Accounting Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Applications of Computers in Accounting NCERT Solutions for Class 11 Accountancy Chapter 12

Applications of Computers in Accounting Questions and Answers Class 11 Accountancy Chapter 12

Short Answer Type Questions

Question 1.
State the different elements of a computer system.
Answer:
A computer system consist of the following six elements :
(1) Hardware
(2) Software
(3) People
(4) Procedures
(5) Data
(6) Connectivity.

(1) Hardware – Hardware of computer systems includes Input Devices, C.P.U., Output Devices and Secondary Storage Components. Input devices includes keyboard, mouse, joystick, touch screen, scanner, voice input system, magnetic ink character reader, bar code reader etc.

C.P.U. is Central Processing Unit, which has three units i.e. storage unit, control unit, arithmetic logic unit. Storage unit has two types of memory RAM (Random Access Memory) arid ROM (Read Only Memory).

Output devices includes monitor or Visual Display Unit (VDU), printers and voice response system. Secondary storage devices includes hard disk, floppy disk, compact disk and DVD.

(2) Software – A set of programmes, which is used to work with hardware is called its software. There are six types of software which are following :

• Operating System
• Utility Software
• Application Software
• Language Processors
• System Software
• Connectivity Software

(i) Operating System : It is an important programme to start a computer and make them user interactive. For e.g. Window XP, Unix etc.

(ii) Utility Software : These are pre-written programmes to provide procedures*commonly required by all applications.

(iii) Application Software: These are user oriented programmes designed and developed for performing certain specified tasks.

(iv) Language Processors : It checks for language syntax and finally translate the source programme into machine language.

(v) System Software : It controls the operations of the computer. It helps in controlling the internal functions of a computer.

(vi) Connectivity Software : These are helpful in creating and controlling a connection Between a computer and a server.

(3) People – Those who interact with the computer are called live¬ware of the computer system. They are most important part of the computer system.

• System Analysts : They design the data processing system.
• Operators : Those who operates the computer.
• Programmers : They write programmes to implement the data processing system design.

(4) Procedures- The various operations performed in acertain way in order to‘achieved some desired results.
Types of procedures
(i) Software-oriented : Procedures that provides set of instructions required for using the software of a computer system.
(ii) Hardware-oriented : Procedures that provides a set of information about the various components of the computer system.
(iii) Internal procedure — It helps in sequencing the working or operations of each sub-system of computer system.

(5) Data – Data are facts and may consist of number, text, picture, maps, etc. A computer stores, processes, classifies, organises and retrieves data as and when required, in order to provide information which is required for taking decisions.

(6) Connectivity – It refers to the way in which a computer system is connected to other electronic devices and link-ups such as satellite link, internet, telephone lines etc.

Question 2.
List the distinctive advantages of a computer system over a manual system.
Answer:
Computer is a electronic machine in which a lot of information or data can be stored so that data can be used in future. It has good memory and any part of the information stored in it can be recalled as and when required. It can also perform various calculation at a very high speed. For e.g. if a human being takes say 5 minutes to do some calculations, a computer can easily do it in part of a second.

Advantages of Computer System over a Manual System :

(1) Speed— It refers to the amount of time taken for accomplishing a task. Computer require far less time than human beings in performing a task. Human beings takes second or minute as unit of time whereas computer has such a fast speed that the relevant unit of time is fraction of a second.

(2) Accuracy – Manual system can never be perfect, it can make some mistakes always but the computers are extremely accurate. This operations are error free. Most of the errors in computer system occur because of bad programming, erroneous data and deviation from procedures. These errors are caused by manual system and not by computer system.

(3) Reliability – A man may feel mental and physical fatigue after long working hours but a computer never get tired like a human being. It can work continuously and does not suffer from lack of concentration and can perform the jobs of repetitive nature any number of times, in exactly the same way.

(4) Versatility – Manual system also has the versatile nature but in comparison with computer it is very less. Computer is capable of performing a wide variety of tasks of different nature, at the same time. It can be used in business, industry, scientific, statistical, technological, communication and so on. Human being can do only limited number of tasks.

(5) Storage or Memory – In comparison of manual system, computer system has large memory. It can store any volume of information or data for being processed. It can be stored in it on permanent basis. The information stored in it can also be recalled at any time when required.

(6) Scientific System – A computer operates scientifically and never gets emotional while solving the problems like human being. Thus, it is clear from the above discussion that computer systems out perform the manual system.

Question 3.
Draw block diagram showing the main components of a computer.
Answer:
The main components of a computer system are :
(1) Input Unit
(2) Central Processing System
(3) Output Unit.
These are the essential building blocks of a computer system :

Block diagram of main components of computer system

Question 4.
Give three examples of a transaction processing system.
Answer:
Transaction processing system serves the organisation at the operational level for which it records the daily routine transactions which are very important to conduct business.
Examples of transaction processing system :

(1) Payroll Application – Earlier they were used to run on a computer system with punched card using batch processing. Now-a-days, they are running using terminals and online processings.

(2) ATMs – Automatic Teller Machines use a number of specialised computer programmes to handle bank transactions.

(3) Order Processing – It collects and process order from customer through mail or telephone or staff. Once order taken invoicing, A/c receivable and stock control processing applications are started.

Question 5.
State the relationship between information and decision.
Answer:
An organisation is a collection of various interdependent decision-making units that works to achieve the common organisational goal. Every organisation performs the same function i.e. accepting the input and providing them into output.

Information is one of the most important resources in today’s growing business environment. And most of the growing business houses are heavily investing in information systems. Every organisation depends upon its information system for the purpose of decision making. All organisations pursue same objectives through the process of allocation of resources, which is accomplished through the process of managerial decision-making. Information facilitates decision regarding allocation of resources and assists an organisation to achieve its objectives.

An organisation has various types of information system at various organisational levels :
(i) ESS i.e. Executive Support System – It help in making decisions at the strategic level through advanced graphics and communications.

(ii) MIS i.e. Management Information System – These are the information systems at the management level of an organisation that serve the functions of planning, controlling and decision-making by providing routine summary and exception reports.

(iii) DSS i.e. Decision Support System – This information system is at the organisational management level that combine data and analysis reports to support the decision.

(iv) TPS i.e. Transactions Processing System – These information systems serve at the operational level. They perform and record the daily routine transactions which are necessary to conduct the business.

Question 6.
What is Accounting Information System?
Answer:
Accounting information system is one of the most important information system used by the management in taking decisions. Accounting information when contained in a computerised environment is caifed accounting information system, It is a system that performs the enterprises accounting applications by processing high volume of data.

It is widely used in profit as well as non-profit organizations because the accounting information that it provides is used not only by the accounts department but also by other departments like production department, human resource department, marketing and sales department, manufacturing department etc.

An accounting information system gathers data describing the organisations activities, maintains a detailed financial record of the organisations operations, transforms the data into information and makes the information available to users both inside and outside the organisation. Accounting information system processes the data of the enterprise, ft collects the data, transforms the data into information and makes the information available to the user.

An Accounting Information System is a system of collecting, processing, summarising and reporting information about a business organisation in monetary terms.

Features of Accounting Information System :
1. AIS helps in classifying and manipulating the transaction of an organisation.
2. AIS generates reports for the outsiders for meeting Government requirement, for accounting standard authorities, tax authorities etc.
3. AIS generates reports for the management for decision making.
4. AIS is helpful in producing budget forecasts etc.
5. AIS is helpful in maintaining accounting information as per law.
6. AIS can easily be manipulated, so it is required to keep a highly safe and secure environment to ensure its safety.
Accounting Information System performs four processing tasks :

• Data Collection
• Data Manipulation
• Data Storage
• Document Preparations.
• 

Question 7.
State the various essential features of an accounting report.
Answer:
Data when processed becomes information i.e. firstly data is collected from various sources and then manipulated in such a way as to provide certain information. When the related information is summarised to meet a particular need, it is called as a report. ‘Hie level and extent of report varies according to the level it is submitted and the type of decision to be based upon it. A report must be effective, efficient and helpful in the decision-making.
The essential features of an accounting report are following :
(i) Relevance
(ii) Timeliness
(iii) Accuracy
(iv) Completeness
(v) Summarisation
(i) Relevance – To be useful, report must be relevant to the decision¬making needs of user. Report has the quality of relevance. When it influences the economic decision of the user by helping them to evaluate past, present or future events or confirming or correcting their past evaluation.

(ii) Timeliness – Reports must be finitely to have any usefulness for decision makers. If there is undue delay in reporting, it may lose its relevance. To provide report on timely basis, it may often be necessary to report before al I aspects of transaction or other events are known.

(iii) Accuracy – To be-reliable and useful in decision making process a resort must be accurate i.e. it is free from error or bias or subjectivity. It must represent true and fair description neutrally.

(iv) Completeness – To be reliable, a report must be complete within the bounds of materiality and cost. An omission can cause report to be false or misleading and thus unreliable and deficient in terms of its relevance.

(v) Summarisation – Report must be brief and comprehensive so that user can use its information timely for decision-making purpose.

Question 8.
Name three components of a Transaction Processing System.
Answer:
Transaction Processing System (TPS) serve the organisation at the operational level to perform and record the daily routine transaction which are very important to conduct business. Every transaction processing system has three components :
(1) Input
(2) Processing
(3) Output.

(1) Input includes the data collection and data entry.
(2) Processing includes data editing, data validation, data manipulation and data storage.
(3) Output includes information and reporting.
Information Technology or Computer System works on principle GIGO i.e. Garbage in-Garbage out, so, it is necessary that the input is accurate, complete and authorised. This ca.i be done by automating the input.

Question 9.
Give examples of .the relationship between a Human Resource Information System and MIS.
Answer:
MIS i.e. Management Information System – MIS is a system that provides the information necessary to take decision and manage or control an organisation effectively. This system can be used at many levels by management i.e. Operational, Tactical and Strategic. It has many other sub-systems like Accounting Information System, Human Resource Information System, Manufacturing Information System etc.

Human Resource Information System – People are the most valuable assets and resources of the organisation. Human Resource Information System keeps the records of the manpower that works for the organisation. It keeps the full and complete records of all from owner to worker of the organisation.

Relationship between a Human Resource Information System and MIS – The business process in the Human

Resources Department involve the following activities :

• Details of the worker.
• Number of days they work.
• How long they work.
• Number of workers required.
• Number of workers for promotion.
• Any difficulties in working conditions.
• Particular problem of any worker.
• Training of workers.
• Wages to workers.
• Other facilities required by workers etc.

The MIS therefore includes :

• Give sanctions for the facilities.
• Give sanctions for the wage payment.
• Appoint the workers required.
• Do the promotion.
• Improves the working conditions.
• Arrange the training.
• Try to solve the problems of workers.

Long Answer Type Questions

Question 1.
‘An organisation is a collection of interdependent decision-making units that exists to pursue organisational objectives.’ In the light of this statement, explain the relationship between information and decision. Also explain the role of Transaction Processing System in facilitating the decision-making process in business organisation.
Answer:
‘An organisation is a collection of interdependent decision¬making units that exists to pursue organisational objectives.’ Every organisation performs the same functions i.e. accepting the input and providing them into output.

Information is one of the most important resource in today’s growing business environment. And most of the growing business houses are heavily investing in information systems. Every organisation depends upon its information system for the purpose of decision making.

All organisations pursue some objectives through the process of allocation of resources, which is accomplished through the. process of managerial decision-making. Information system facilitates decision regarding allocation of resources and assists an organisation to achieve its goals.

An organisation has various types of information system at various organisational levels:
(i) ESS Le. Executive Support System – It help in making decisions at the strategic level through advanced graphics and communications.

(ii) MIS Le. Management Information System – These are the information systems at the management level of an organisation that serve the functions of planning, controlling and decision-making by providing routine summary and exception reports.

(iii) DSS Le. Decision Support System – This information system is at the organisational management level that combines data and analysis report to support the decision.

(iv) TPS Le. Transactions Processing System – These information systems serve at the operational level. They perform and record the daily routine transactions which are very important to run the business.

Role of Transactions Processing System in decision-making process in Business Organisation – Transaction Processing System process the transaction The purpose of TPS is to record, process, validate and store transactions this occurs in the various fields of the business organisation for subsequent-retrieval for decision-making purpose. The transactions may be internal or external. Infernal transactions may be occurred when stores supplies materials for production. However, when sales department, sales goods to the market, external transaction occurs. TPS follows six steps in processing a transaction.

• Collection and Entry of Data – Data must be collected and entered into the system through input devices before it is processed.
• Validation of Data – It ensures the reliability and accuracy of input data by comparing with stored data. It checks for correction and if some error are found it corrects.
• Manipulation of Data – It performs the calculations for the transactions.
• Storage of Data – Processed actions are stored in transaction database.
• Information – Stored data is processed using the query facility to produced desired information.
• Output or Report Generation – Lastly reports can be prepared on the basis of the information content according to decision usefulness of report.

TPS accepts complete transaction as input stores and retrieves the accounting data for processing as and when required for generating an accounting report as output.

TPS helps in decision-making of business organisation by processing entire accumulated data to generate the desired results according to decision requirement. As we know that TPS serve the organisation at the operational level and record and process the daily routine transactions.

For decision-making these daily routine transactions are very important. TPS can provide instant report for management for decision-making like Stock Statement, Trial Balance, Trading and Profit & Loss Account, Balance Sheet, Value Added Tax (VAT), Payroll Reports etc.

It becomes very easy for the management to take decision when it has all the reports in its hand. So, we can say the TPS provides great help for’decision-making for business organisation-

Question 2.
Explain using examples, the relationship between the organisational MIS and the other functional information system in an organisation. Describe how AIS receives and provides information to other functional MIS.
Answer:
A management information system is an information system that generates, accurate, timely and organised information to help managers make decision, control process, solve problems, supervise activities and track progress. It provides information necessary’ to take decision and manage an organisation effectively.

Management information system has a link with all the functional information system in an organisation like Accounting Information System, Manufacturing Information System, Human Resource Information System, Financial Information System, Marketing Information System etc.

All the functional information system in an organisation that provides the information regarding their departments to management information system and receives the orders and instructions about the decision taken by the management. The following diagram shows the relationship between organisational was and the other functional information system in an organisation :

The diagram shown above entails the five widely recognised functional areas of management of an organisation. An organisation operates in a given environment surrounded by the Government, society, suppliers and customers. The informational needs emerges from the business processes stratified into functional areas. MIS receives and provide information to the various sub-system of the organisation.

Accounting information system is an important sub-system of the MIS. It provides and receives information to the other functional MIS. Following examples illustrate the relationship and data interface between AIS and various sub-components of MIS.

I. Relationship between AIS, Manufacturing Information System and Human Resource Information System –

The above diagram depicts how these three departments are related to each other. The human resource department sends a list and details of workers to the accounts and manufacturing departments. The manufacturing department send a report of level of production achieved by each worker and other deductions to be made from their wages to the accounts department as well as human resource department.

The accounts department on receiving such reports make its own calculations and make the payment to the workers. It also sends the report of same to both the department i.e. HR department and manufacturing departments to monitor the performance of the workers.

II. Relationship between AIS and Marketing Information
System – Market and Sales Department performs following activities :
(i) Inquiry Process
(ii) Creating Contacts
(iii) Order Taking
(iv) Dispatching Goods
(v) Billing.

Accounting sub-system transaction cycle includes :
(i) Processing of Sales Order
(ii) Credit Authorisation
(iii) Keeping Custody of Goods
(iv) Stock Position
(v) Dispatch Details
(vi) Accounts Receivable etc.

III. Relationship between AIS and Manufacturing Information System – Production department perform following activities:
(i) Preparing plans, schedules
(ii) Issue of material requisition forms
(iii) Issue of job cards
(iv) Issue of stock
(v) Handling of vendor invoices
(vi) Payment to vendors/suppliers.

Accounting sub-system transaction cycle includes :
(i) Processing of purchases order
(ii) Advance payment
(iii) Stock updation
(iv) Accounts payable etc.

Question 3.
‘An accounting report is essential a report which must be able to fulfill certain basic criteria/ Explain. List the various types of accounting reports.
Answer:
Data means facts which may be numeric, textual, pictorial or vocal. On the other hand, information refers to processed data placed in a meaningful context for the users. Processing converts data into information. When all related information is summarised to meet a particular need, it is called as report.

The context and design of the report varies according to the level it is submitted and the type of decision to made on the basis of the report. A report must be efficient, effective, accurate and relevant. It should be helpful in taking decisions. An accounting report is essential a report which must be able to fulfil contain basic criteria, which are following:
(1) Relevance
(2) Completeness
(3) Accuracy
(4) Timeliness
(5) Summarisation.

(1) Relevance – To be useful, report must be relevant to the decision-making needs of user. Report has the quality of relevance. When it influences the economic decision of the user by helping them to evaluate past, present or future events or confirming or correcting their past evaluation.

(2) Completeness – To be reliable, a report must be complete within the bounds of materiality and cost. An omission can cause report to be false or misleading and thus unreliable and deficient in terms of its relevance.

(3) Accuracy – To be reliable and useful in decision-making process, a report must be accurate i.e. it is free from error or bias or subjectivity. It must represent true and fair description neutrally.

(4) Timeliness – Reports must be timely to have any usefulness for decision makers. If there is undue delay in reporting, it may lose its relevance. To provide report on timely basis, it may often be necessary to report before all aspects of transaction or other events are known.

(5) Summarisation – Report must be brief and comprehensive so that user can use its information timely for decision-making purpose.

The following four steps are taken in designing the accounting report:
(1) Defining Objectives – The objectives of the report must be defined clearly. It must specify, who are the user and the decision to be based on the report.

(2) Structure of the Report – The report should be complete and must be presented in a clear style.

(3) Querying with the Database – The report must specify the various information queries which are helpful in interacting with the database.

(4) Finalising the Report – It must have complete ending with proper suggestions of its study.

Various types of accounting reports – The report may be routine report or specific report. For example, ledger is a routine report whereas a report generated to show the accounts of particular customer is a specific reports. Different reports serve different purposes.

(1) Demand Reports – Report generated on the demand of the management. For example, Stock Valuation Report, Bad Debts Reports for a given period etc.

(2) Supplier Reports – Report generated as per the need of the management. Presenting various aspects of the suppliers. For example. Purchase analysis, Vendor analysis report etc.

(3) Customer Reports – Reports generated as per need of the management depicting the top customer, list of faulty customer, list of bulk customer etc.

(4) Exception Reports – Reports generated for some specific condition or exceptions. For example, Stock Status Report, Over-Stocked Status etc.

(5) Responsibility Reports – The various reports prepared by managers responsible. For example, report regarding different aspects of sales to be submitted by the sales manager.

(6) Summary Reports – It is a summarised report of all the activities of an organisation. For example, Balance Sheet, Trial Balance etc.

Question 4.
Describe the various elements of a computer system and explain the distinctive features of a computer system and manual system.
Answer:
The dictionary meaning of computer is “an electronic calculating machine”. This meaning of computer does not reflect upon the true capabilities of a computer. A computer is a very versatile machine capable of performing diversified functions at an incredibly fast speed with accuracy.

It converts raw data into meaningful information. The data is fed into the computer and in case of need it can be retrieved and converted into output.

A computer is an electronic machine which operates on given instruction and processes the input data, to convert it into some output.

Thus, a computer is an electronic device, in which a lot of information or data can be stored so that the data can be used in future. It can also performs various calculations at very high speed.

Elements of Computer System – A computer system is a combination of six elements :

(1) Hardware – Hardware is the physical component of the computer system. It may be classified under the following categories :

(i) Input Devices : Input devices are those devices which are used to enter data into the computer system. It is further classified as follows:

• Keyboard
• Mouse
• Joystick
• Touch Screen
• Scanner
• Magnetic Ink Character Reader (MICR)
• Bar Code Reader (BCR).

(ii) C.P.U. (Central Processing Unit) – It is the main part of the computer hardware. It is referred to as the brain of the computer. This part of the computer enrolls all the functions of the computer.

C.P.U. is divided into three parts :

• Control Unit
• Arithmetical and Logic Unit (ALU)
• Memory Unit.

Control Unit – It controls the working of the computer and ascertains whether or not the computer is functioning as per the commands given to it by the user. It is located in between the Memory Unit and Arithmetic and Logic Unit. The data can be transferred between them through this unit.

ALU – This unit verify the accuracy of data received for the memory unit and to transfer the same back to the main memory of the computer. This unit performs all arithmetical and logical functions.

Memory Unit – This unit stores data, calculations and results into it and in case of need it sends the data to ALU in the form of output. The capacity of memory is measured in terms of bytes, kilobytes, megabytes and gigabytes.

1 Kilobyte KB = 1024 Bytes
1 Megabyte MB = 1024 × 1024 Bytes
1 Gigabyte GB = 1024 × 1024 × 1024 Bytes
1 Terabyte TB = 1024 Gigabyte.

(iii) Output Devices – Output diveces are those devices which are used which produced the processed results in readable and understandable form. It is further classified as follows:

• Monitor or Visual Display Unit (VDU)
• Printers
• Voice Response System.

(iv) Secondary Storage Devices – To avoid the data loss we need to save it on same storage device. Floppy disk or hard disk are generally used as storage mediums. These storage devices are called secondary storage devices.

• Hard Disk
• Floppy Disk
• Compact Disk
• DVD

(2) Software – A set of programmes, which is used to work with hardware is called its software. There are six types of software which are following:
(i) Operating System Software
(ii) Utility Software
(iii) Application Software
(iv) Language Processors
(v) System Software
(vi) Connectivity Software.

(i) Operating System Software-It is an important programme to start a computer and make them user interactive.
For example, Window XP, Unix etc.
(ii) Utility Software : There are pre-written programmes to provide procedures commonly required by all applications.
(iii) Application Software : These are user-oriented programmes designed and developed for performing certain specified tasks.
(iv) Language Processors : It checks for language syntax and finally translate the source programme into machine language.
(v) System Software : It controls the operations of the computer. It helps in controlling the internal functions of a computer.
(vi) Connectivity Software : These are helpful in creating and controlling a connection between a computer and a server.

(3) People – Those who interact with the computer are called live ware of the computer system. They are the most important part of the computer system.
System Analysts : They design the data processing system.
Operators : Those who operates the computer.
Programmers : They write programmes to implement the data processing system design.

(4) Procedures – The various operations performed in a certain way in order to achieved some desired results.
Types of procedures
(i) Software-oriented : Procedures that provides set of instructions required for using the software of a computer system.
(ii) Hardware-oriented : Procedures that provides a set of information about the. various components of the computer system.
(iii) Internal procedure – It helps in sequencing the working or operations of each sub-system of computer system.

(5) Data – Data are facts and may consist of number, text, picture, maps, etc. A computer stores, processes, classifies, organises and retrieves data as and when required, in order to provide information which is required for taking decisions.

(6) Connectivity – It refers to the way in which a computer system is connected to other electronic devices and link ups such as satellite link, internet, telephone lines etc.

Distinctive features of a computer system and manual system – Computers are very fast and accurate in performing the work. Computers have left behind the humans in all fields except in thinking and making self-decisions.

(1) Speed – The speed to perform certain work is very fast in comparison to manual system. It can do millions of calculations in one second.

(2) Decision-Making – Computer system has not any decision¬making power of its own, it can only work on instructions given by human beings whereas manual system has good decision¬making power.

(3) Accuracy – Manual system can never be perfect, it can make some mistake often but the computers are extremely accurate. Their operations are error free.

(4) Memory – In comparison of manual system, a computer system has large memory. It can store any volume of information or data for being processed. It can be stored in it on permanent basis.

(5) Follow-up of Instruction – Computer system can perform only those functions for which it instructed but in manual system follow-up of instruction is not very’ good.

(6) Versatility – Computer system is more versatile than manual system.

(7) Reliability – A man may feel mental and physical fatigue after long working hours but a computer never get tired like a human being. It can work continuously and does not suffer from lack of concentration and can perform the jobs of repetitive nature any number of times in exactly the same way.

Detailed, Step-by-Step NCERT Solutions for 11 Accountancy Chapter 11 Accounts from Incomplete Records Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Accounts from Incomplete Records NCERT Solutions for Class 11 Accountancy Chapter 11

Accounts from Incomplete Records Questions and Answers Class 11 Accountancy Chapter 11

Test Your Understanding – I

Tick the correct answer :

Question 1.
Incomplete record mechanism of book keeping is :
(a) Scientific
(b) Unscientific
(c) Unsystematic
(d) Both (b) and (c)
Answer:
(b) Unscientific

Question 2.
Opening capital is ascertained by preparing :
(a) Total debtor’s account
(b) Total creditor’s account
(c) Cash account
(d) Opening statement of affairs
Answer:
(d) Opening statement of affairs

Question 3.
Credit purchase, during the year is ascertained by preparing :
(a) Total creditor’s account
(b) Total debtor’s account
(c) Cash account
(d) Opening statement of affairs
Answer:
(a) Total creditor’s account

Question 4.
If Opening capital is Rs. 60,000, drawings Rs. 5,000, capital introduced during the period Rs. 10,000, closing capital Rs. 90,000. The value of profit earned during the period will be:
(a) Rs. 20,000
(b) Rs. 25,000
(c) Rs. 30,000
(d) Rs. 40,000
Answer:
(b) Rs. 25,000

Test Your Understanding – II

Write the correct word(s) :
1. Credit sales can be ascertained as the balancing figure in the ………….. account.
2. Excess of over ………….. represents loss sustained during the period.
3. To ascertain the profit, closing capital is to be adjusted by deducting …………..and adding
4. Incomplete records are generally used by …………..
Answer:
1. total debtor’s
2. opening capital, closing capital
3. additional capital introduced, drawings during the year
4. small traders.

Short Answer Type Questions

Question 1.
State the meaning of incomplete records.
Answer:
Meaning of Incomplete Records – Accounting records which are not prepared in accordance with the principle of double entry are known as ‘Incomplete Records’. In other words, any accounting records which fall short of complete double entry are called incomplete records. Sometimes, it is also termed as ‘Single Entry System’.

But it is not correct to describe this system as ‘Single Entry System’ because in Single Entry System only the personal aspects of a transaction is recorded and the real and nominal aspects are left entirely unrecorded,
whereas “incomplete records refer to maintaining of only those records which are essential. In other words, under the incomplete records some of the subsidiary books and some ledger accounts are not maintained which otherwise are essential under the double entry system.’

“Single Entry System is a method or a variety of methods, employed for the recording of transaction, which ignore the two fold aspects and consequently fails to provide the businessman with the information necessary for him to be able to ascertain the position.” – Carter

“A system of book-keeping in which, as a rule only records of cash and of personal accounts are maintained, it is always incomplete double entry system, varying with circumstances.” – Kohler

In nutshell, it is a method or a variety of methods employed for the recording of transactions, which ignore the two-fold aspect and consequently fails to provide the businessman with the information necessary for him to be able to ascertain the position. It is a system which is developed by certain business houses who for their convenience and more practical approach, reject the rules of the double entry system and maintaine only the bare essential records.

Generally, business transactions are recorded on the basis of double entry system are not followed for recording business transactions. When double entry’ system is not followed for maintaining records, these records are termed as incomplete records. Many authors describe it as Single Entry System.

However, Singe Entry System is a misnomer because there is no such system of maintaining accounting records. It is rather a mechanism of maintaining records in which rules of double entry system are not followed completely. There is partial observance of rules of double entry system in this system.

In this recording is done according to convenience and needs of business entities and there is no uniformity in maintenance of records by different entities. This system differ from concern to concern. In this, only records of cash and of personal accounts are maintained. It is always incomplete double entry system, varying with circumstances,

Question 2.
What are the possible reasons for keeping incomplete records?
Answer:
The possible reasons for keeping incomplete records are following:
(1) The businessman may be ignorant of the seperate legal entity.
(2) The businessman may be ignorant of the double entry accounting principle.
(3) The businessman may not intentionally maintain proper accounts to evade taxation.
(4) Destruction of the books of accounts due to fire, flood, etc.

Question 3.
Distinguish between statement of affairs and balance sheet.
Answer:
Difference between Statement of Affairs and Balance Sheet:

Question 4.
What practical difficulties ate encountered by a trader due to incompleteness of accounting records?
Answer:
The following practical difficulties are encountered by a trader due to incompleteness of accounting records :
(1) Unscientific – Absence of systematic recording of both aspects of a transaction under this, makes it unscientific.

(2) No trial balance or arithmetical accuracy of accounts cannot be checked – Dual aspects of a transaction is not recorded under this system. As a result, trial balance cannot be prepared from the accounting records maintained. Hence, arithmetical accuracy of accounting records cannot be checked.

(3) True profits cannot be known – Nominal accounts are not maintained and therefore it is not possible to prepare trading account and Profit & Loss Account to calculate gross profit and net profit respectively. Although the amount of net profit is determinable but the absence of details of revenue, other income, expenses and losses affect sound decision making.

(4) True financial position cannot be determined – As all the assets and liabilities and depreciation are not recorded, Balance Sheet cannot be prepared and thus the true financial position cannot be ascertained.

(5) Difficult to make planning and decision making – In the absence of reliable information about nominal and real accounts, effective planning and control over expenses, assets etc. are not possible.

(6) Not recognized by tax authorities – Accounts maintained based on this system are not accepted by sale-tax and income-tax authorities.

(7) Interfirm comparison not possible – Because of variation in accounting procedure and rules, comparison of two or more business is not possible.

Long Answer Type Questions

Question 1.
What is meant by a ‘Statement of Affairs’? How can the profit or loss of a trader be ascertained with the help of a statement of affairs?
Answer:
Statement of affairs – A statement of affairs is a statement of assets and liabilities of a business as on a particular date. Under this method profit is ascertained by comparing the capital at the beginning and capital at the end of the accounting period and necessary adjustments are made for drawings, fresh additional capital, drawings and interest on capital. The following steps are followed to ascertained the profit or loss :
(1) Prepare a Statement of Affairs at the beginning (if not given) of the accounting period to ascertain the Opening Capital.
(2) Ascertain drawings and capital introduced during the year.
(3) Prepare a Statement of Affairs at the end of the accounting period to ascertain the Closing Capital (capital at the end) or prepare statement for ascertaining the closing capital before making certain adjustments.
Format of Statement of Affairs Statement of Affairs of as on

(4) Prepare a Statement of Profit with the help of the following formula:
Net Profit = Capital at the end
Add: Drawings
Less : Additional Capital introduced
Less: Opening Capital
Statement of profit is usually prepared as follows :

If it is desired to calculate profit before certain adjustments separately the Statement of Profit should be prepared as follows :

(5) Prepare Balance Sheet/Received or Final Statements of Affairs at the end after adjusting depreciation, provision for bad and doubtful debts etc.

Question 2.
“Is it possisble to prepare the profit and loss account and the balance sheet from the incomplete books of accounts kept by a trader? Do you agree? Explain.
Answer:
Yes, it is possible to prepare the Profit & Loss Account and the Balance Sheet from the incomplete books of accounts kept by a trader by “conversion method” and calculating missing figure and preparing final accounts.
While converting incomplete accounts into double entry, the following procedure should be adopted :

(1) Opening Statement of Affairs – A statement of affairs as at the beginning of the year should be prepared to find out capital in the beginning.

(2) Cash Book – For this purpose, first of all, a summary of all the cash transactions must be prepared. It should give information about all the important items and transactions, like total cash received from customers, total payment to creditors, purchase of furniture, totals for various expenses (salaries, wages, rent, etc.) The summary will begin with the opening cash and bank balance and must also show the cash in hand and the bank balance at the end of the year. Cash sales will be shown separately in the summary.

Quite often this book shows a missing figure of cash or bank balance in the beginning or at the end as the case may be. Expenses and gains can also be ascertained from the summary of the Cash Book which may be called Receipts and Payment Account. Expenses will be on the payments side and gains on the receipts sides.

The amount must be adjusted for outstanding and prepaid items and then only shown in the Profit & Loss Account. One should remember that the summary of the Cash Book will also reveal purchases of fixed assets and investments, repayments of loans, sale of fixed assets and loans taken by the firm. These do not concern the profit and loss account; the relevant balance sheet items will be adjusted.

The depreciation on fixed assets must be calculated (this information will not be available from the cash book) and debited in the Profit & Loss Accounts it must, of course, be deducted from the asset concerned when the balance sheet is prepared.

(3) Other Accounts – Then prepare
(i) Total Debtor’s Account,
(ii) Total Creditor’s Account,
(iii) Bills Receivable Account, and
(iv) Bills Payable Account. Those accounts help in finding out the balances of personal accounts, the amount of credit sales and credit purchases and any other relevant information.

(4) Total Sales and Total Purchases – Calculate total sales by adding credit and cash sales. Similarly, calculate total purchases by adding credit and cash purchases.

(5) Final Accounts – Now, prepare Trading Account, Profit & Loss Account and Balance Sheet from the various information given in the question and from the computation made as above.

Question 3.
Explain how the following may be ascertained from incomplete records :
(a) Opening capital and closing capital
(b) Credit sales and credit purchases
(c) Payment to creditors and collection from debtors
(d) Closing balance of cash.
Answer:
(a) Ascertaining Opening Capital and Closing Capital – Opening and closing capital can be ascertained by preparing a statement of affairs at the beginning of the accounting period and at the end of the accouning period respectively. ‘


(b) Ascertain Credit Sales and Purchases – Credit sales and credit purchases can be ascertain by preparing Total Debtor’s Account and Total Creditor’s Account respectively.

(c) Ascertain Payment to Creditors and Collection from Debtors – Collection from Debtors can be ascertained from Total Debtors Account or Cash and Bank Account Summary. Payments to Creditors can be ascertained from Total Creditors Account or Cash and Bank Account Summary.

(d) Ascertain Closing Balance of Cash – Closing balance of cash can be ascertained from Cash and Bank Account Summary.

Numerical Questions

Ascertainment of profit or loss by statement of affairs method

Question 1.
Following information is given below, prepare the statement of profit or loss :
Capital at the end of the year — 5,00,000
Capital in the beginning of the year — 7,50,000
Drawings made during the period — 3,75,000
Additional Capital introduced — 50,000
Answer :

Net Prorfit = Capital at end – Capital at beginning + Drawings during the year – Capital introduced during the year
= Rs. 5,00,000 – Rs. 7,50,000 + Rs. 3,75,000 – Rs. 50,000 = Rs. 75,000.

Question 2.
Manveer started his business on January 1,2011 with a capital of Rs. 4,50,000. On December 31, 2011 his position was as under:
Cash — 99,000
Bills Receivable — 75,000
Plant 48,000
Land and Building 1,80,000
Furniture 50,000
He owned Rs. 45,000 from his friend Susheel on that date. He withdrew Rs. 8,000 per month for his household purposes. Ascertain his profit or loss for the year ended December 31,2011. Solution :
Opening Capital Given = Rs. 4,50,000
Answer :

Or
Net Prorfit = Capital at end – Capital at beginning + Drawings during the year
= Rs. 4,07,000 – Rs. 4,50,000 + Rs. 96,000 = Rs. 53,000.

Question 3.
From the information given below to ascertain the profit for the year :
Capital at the beginning of the year — 70,000
Additional capital introduced during the year — 17,500
Stock — 59,500
Sundry debtors — 25,900
Business premises — 8,600
Machinery — 2,100
Sundry creditors — 33,400
Drawing made during the year — 26,400
Answer:

Or
Net Prorfit = Capital at end – Capital at beginning + Drawing during the year – Capital introduced during the year
= Rs. 62,700 – Rs. 70,000 + Rs. 26,400 – Rs. 17,500 = Rs. 1,600.

Question 4.
From the following information, calculate Capital at the beginning :
Capital at the end of the year — Rs. 4,00,000
Drawings made during the year — Rs.60,000
Fresh Capital intorduce during the year — Rs.1,00,000
Profit of the current year — Rs.80,000
Solution :
Capital at the beginning = Capital at the end + Drawing during the year – Fresh Capital introduced – Profit of the current year = Rs. 4.00,000 + Rs. 60,000 – Rs. 1,00,000 – Rs. 80,000 = Rs. 2,80,000.

Question 5.
Following information is given below, calculate the closing capital:

Calculation of profit or loss and ascertainment of statement of affairs at the end of the year
(Opening balance is given).
Answer:
..

Net Profit = Closing Capital – Opening Capital = Rs. 20,000 – Rs. 22,000 = – (Rs. 2,000)
Net Loss = Rs. 2,000.

Question 6.
Mrs. Anu started firm with a capital of Rs. 4,00,000 on 1st July, 2011. She borrowed from her friends a sum of Rs. 1,00,000 @ 10% per annum (interest paid) for business and brought a further amount to capital Rs. 75,000 on Dec. 31,2011, her position was :
Cash — Rs 30,000
Stock — Rs 4,70,000
Debtors — Rs 3,50,000
Creditors — Rs 3,00,000
She withdrew Rs. 8,000 per month for the year. Calculate profit or loss for the year and show your working clearly.
Solution :
Opening Capital on July 1,2011 = Rs. 4,00,000
Accounting period = 6 months


Or
Net Profit = Capital at the end – Capital at the beginning + Drawing during the year – Capital introduced during the year
= Rs. 4,50,000 – Rs. 4,00,000 + Rs. 48,000 – Rs. 75,000 = Rs. 23,000.

Question 7.
Mr. Arnav docs not keep proper records of his business, he provided following information, you are required to prepare a statement showing the profit or loss for the year.
Capital at the beginning of the year — Rs15,00,000
Bills Receivable — Rs 60,000
Cash in hand — Rs 80,000
Furniture — Rs 9,00,000
Building — Rs 10,00,000
Creditors — Rs 6,00,000
Stock in trade — Rs 2,00,000
Further capital introd uced — Rs 3,20,000
Drawings made during the period — Rs 80,000
Ascertainment of statement of affairs at the beginning and at end of the year and calculation of profit or loss.
Answer:

Or
Net Profit = Capital at the end – Capital at the beginning + Drawing during the year – Capital introduced during the year
= Rs. 16,40,000 – Rs. 15,00,000 + Rs. 80,000-Rs. 3,20,000 = -(Rs. 1,00,000)
Net Loss = Rs. 1,00,000.

Question 8.
Mr. Akshat keeps his books on incomplete records, following information is given below :


During the year he withdrew Rs. 45,000 and introduced Rs.25,000 as further capital in the business compute the profit or loss of the business.
Answer:
Drawing during the year = Rs. 45,000
Additional Capital = Rs. 25,000

Net Profit = Capita! at the end – Capital at the beginning + Drawing during the year – Capital introduced during the year
= Rs. 1,74,000 – Rs. 1,32,500 + Rs. 45,000 – Rs. 25,000 = Rs. 61,500.

Question 9.
Gopal does not keep proper books of account. Following information is given below :

During the year he introduced Rs. 20,000 and withdrew Rs. 12,000 from the business. Prepare the statement of profit or loss on the basis of given information.
Answer:

Or
Net Profit = Capital at the end – Capital at the beginning Drawing during the year – Capital introduced during the year
= Rs. 1,76,000 – Rs. 1,30,500 + Rs. 12,000 – Rs. 20,000 = Rs. 37,500.

Question 10.
Mr. Muneesh maintains his books of accounts from incomplete records. His books provide the information :

He withdrew Rs. 300 per month for personal expenses. He sold his investment of Rs. 16,000 at 2% premium and introduced that amount into business.
Answer:
Statement of Affairs of Mr. Muneesh as at Jan. 1,2011



Or
Net Profit = Capital at the end – Capital in beginning + Drawing during the year – Capital introduced during the year = Rs. 56,400 – Rs. 33,900 + Rs. 3,600 – Rs. 16,320 = Rs. 9,780.

Question 11.
Mr. Girdhari Lai does not keep full double entry records. His balance as on January 1,2012 is as :

His position at the end of the year is :
Cash in hand — Rs 7,000
Stock — Rs 8,600
Debtors — Rs 23,800
Furniture — Rs 15,000
Plant — Rs 20,350
Bills payable — Rs 20,200
Creditors — Rs 15,000
He withdrew Rs. 500 per month out of which he spent Rs. 1,500 for business purpose. Prepare the statement of profit or loss.
Answer:


Or
Net Profit = Capital at the end-Capital at the beginning Drawing during the year – Capital introduced during the year = Rs. 39,550 – Rs. 40,000 + Rs. 4,500 – 0 = Rs. 4,050
Net Profit is Rs. 4,050.

Question 12.
Mr. Ashok does not keep his books properly. Following information is available from his books :

Drawing during the year Rs. 1,500 x 7 months = Rs. 10,500 Rs. 4,500 x 5 months = Rs. 22,500
Total drawing = Rs. 33,000 Statement of Profit for the year ended Dec. 31,2011
Answer:

Net Loss = Rs. 60,900.
Or
Net Profit = Capital attheend-Capitai in the beginning + Drawing during the year – Capital introduced during the year
= – (Rs. 25,000) + Rs. 33,000 – Rs. 18.900 – Rs. 50,000 = – (Rs. 60,900)
Net Loss = Rs. 60,900.

Question 13.
Krishna Kulkarni has not kept proper books of accounts, prepare the statement of profit or loss for the year ending December 31, 2005 from the following information :

The following adjustments were made :
(a) Krishna withdrew cash Rs. 5,000 per mouth for private use.
(b) Depreciation @ 5% on car and furniture @ 10%.
(c) Outstanding Rent Rs. 6,000.
(d) Fresh Capital introduced during the year Rs. 30,000.
Answer:

Question 14.
M/s Saniya Sports Equipment does not keep proper records. From the following information find out profit or loss and also prepare balance sheet for the year ended December 31, 2011 :

Drawing Rs. 10,000 p.m. for personal use, fresh capital introduced during the year Rs. 2,00,000. A bad debts of Rs. 2,000 and a provision of 5% is to be made on debtors, outstanding salary Rs. 2,400, prepaid insurance Rs. 700, depreciation charged on fhrnifure and machine @ 10% p.a.
Answer:

Ascertainment of Missing Figures

Question 15.
From the following information calculate the amount to be paid to creditors :
Sundry creditors as on March 31,2011 — Rs 1,80,425
Discount received — Rs 26,000
Discount allowed — Rs 24,000
Return outwards — Rs 37,200
Return inward — Rs 32,200
Bills accepted — Rs 1,99,000
Bills endorsed to creditors — Rs 26,000
Creditors as on April 1, 2006 — Rs 2,09,050
Total purchases — Rs 8,97,000
Cash purchases — Rs 1,40,000
Answer:

Question 16.
Find out the credit purchases from the following :
Balance of creditors April 1,2010 — Rs 45,000
Balance of creditors March 31,2011 — Rs 36,000
Cash paid to creditors — Rs 1,80,000
Cheque issued to creditors — Rs 60,000
Cash purchases — Rs 75,000
Discount received from creditors — Rs 5,400
Discount allowed — Rs 5,000
Bills payable given to creditors — Rs 12,750
Return outwards — Rs 7500
Bills payable dishonoured — Rs 3,000
Bills receivable endorsed to creditors — Rs 4,500
Bills receivable endorsed to creditors dishonoured 1,800 Return inwards — Rs 3,700

Question 17.
From the following information calculate total purchases
Creditors Jan. 1, 2011 — Rs 30,000
Creditors Dec. 31, 2011 — Rs 20,000
Opetiing balance of bills payable — Rs 25,000
Closing balance of bills payable — Rs 35,000
Cash paid to creditors — Rs 1,5 1,000
Bills discharged — Rs 44,500
Cash purchases — Rs 1,29,000
Return outwards — Rs 6,000
Answer:

Total Purchases = Credit Purchases + Cash Purchases
= Rs. 2,01,500 + Rs. 1,29,000
= Rs. 3,30,500.

Question 18.
The following information is given :
Opening creditors — Rs 60,000
Cash paid to creditors — Rs 30,000
Closing creditors — Rs 36,000
Returns Inward — Rs 13,000
Bill matured — Rs 27,000
Bill dishonoured — Rs 8,000
Purchases return — Rs 12,000
Discount allowed — Rs 5,000
Calculate credit purchases during the year.
Answer:
Dr. Total Creditors A/c Cr.

Question 19.
From the following calculate the amount of bills accepted during the year :
Bills payable as on April 1, 2011 — Rs 1,80,000
Bills payable as on March 31, 2012 — Rs 2,20,000
Bills payable dishonoured during the year — Rs 28,000
Bills payable honoured during the year — Rs 50,000
Answer:

Question 20.
Find out the amount of bills matured during the year on the basis of information given below :
Bills payable dishonoured — Rs 37,000
Closing balance of bills payable — Rs 85,000
Opening balance of bills payable — Rs 70,000
Bills payable accepted — Rs 90,000
Cheque dishonoured — Rs 23,000
Answer:

Question 21.
Prepare the bills payable account from the following and find out missing figure if any :
Bills accepted — Rs. 1,05,000
Discount received — Rs 17,000
Purchases returns — Rs 9,000
Return inwards — Rs 12,000
Cash paid to accounts payable — Rs 50,000
Bills receivable endorsed to creditors — Rs 45,000
Bills dishonoured — Rs 17,000
Bad debts — Rs 14,000
Balance of accounts payable (closing) — Rs 85,000
Credit purchases — Rs 2,15,000
Answer:

Question 22.
Calculate the amount of bills receivable during the year.
Opening balance of bills receivable — Rs 75,000
Bill dishonoured — Rs 25,000
Bills collected (honoured) — Rs 130,000
Bills receivable endorsed to creditors — Rs 15,000
Closing balance of bills receivable — Rs 65,000
Answer:

Bills receivable during the year = Rs. 1,60,000.

Question 23.
Calculate the amount of bills receivable dishonoured from the following information :
Opening balance of bills receivable — Rs 1,20,000
Bills collected (honoured) — Rs 1,85,000
Bills receivable endorsed — Rs 22,800
Closing balance of bills receivable — Rs 50,700
Bills receivable received — Rs 1,50,000
Answer:

Bills receivable dishonoured = Rs. 11,500.

Question 24.
From the details given below, find out the credit sales and total sales:
Opening debtors — Rs 45000
Closing debtors — Rs 56000
Discount allowed — Rs 2.500
Sales returns — Rs 8,500
Irrecoverable account — Rs 4,000
Bills receivable received — Rs 12,000
Bills receivable dishonoured — Rs 3,000
Cheque dishonoured — Rs 7,700
Cash sales — Rs 80,000
Cash received from debtors — Rs 230,000
Cheque received from debtors — Rs 25,000
Solution:

Credit sale during the year = Rs. 2,82,300.
Total Sales = Credit Sales + Cash Sales
= Rs. 2,82,300 + Rs. 80,000
= Rs. 3,62,300.

Question 25.
From the following information, prepare the bills receivable account and total debtors account for the year ended December 31,2011:
Opening balance of debtors — Rs. 1,80,000
Opening balance of bills receivable — Rs. 55,000
Cash sales made during the year — Rs. 95,000
Credit sales made during the year — Rs. 14,50,000
Return inwards — Rs. 78,000
Cash received from debtors — Rs. 10,25,000
Discount allowed to debtors — Rs. 55,000
Bills receivable endorsed to creditors — Rs. 60,000
Cash receivable (bills matured) — Rs. 80,500
Irrecoverable amount — Rs. 10,000
Closing balance of bills receivable on Dec. 31,2011 — Rs. 75,500
Answer:

Closing balance of debtors = Rs. 3,01,000 Bills received = Rs. 1,61,000.

Question 26.
Prepare the suitable accounts and find out the missing figure if any :
Opening balance of debtors — Rs. 14,00,000
Opening balance of bills receivable — Rs. 7,00,000
Closing balance of bills receivable — Rs. 3,50,000
Cheque dishonoured — Rs. 27,000
Cash received from debtors — Rs. 10,75,000
Cheque received and deposited in the bank — Rs. 8,25,000
Discount allowed — Rs. 37,500
Irrecoverable amount — Rs. 17,500
Returns inwards — Rs. 28,000
Bills receivable received from customers — Rs. 1,05,000
Bills receivable matured — Rs. 2,80,000
Bills discounted — Rs. 65,000
Bills endorsed to creditors — Rs. 70,000
Answer:

Question 27.
From the following information ascertain the opening balance of sundry debtors and closing balance of sundry creditors :
Opening stock — Rs. 30,000
Closing stock — Rs. 25,000
Opening creditors — Rs. 50,000
Closing debtors — Rs. 75,000
Discount allowed by creditors — Rs. 1,500
Discount allowed to customers , — Rs. 2,500
Cash paid to creditors — Rs. 1,35,000
Bills payable accepted during the period — Rs. 30,000
Bills receivable received during the period — Rs. 75,000
Cash received from customers — Rs. 2,20,000
Bills receivable dishonoured — Rs.3,500
Purchases — Rs. 2,95,000
The rate of gross profit is 25% on selling price and out of the total sales Rs. 85,000 was for cash sales.
Answer :

Working Notes :
Cost of Goods Sold = Opening Stock + Purchases – Closing Stock
= Rs. 30,000 + Rs. 2,95.000 – Rs. 25,000
= Rs 3,00,000.

Question 28.
Mrs. Bhavana keeps her books by single entry system. You’re required to prepare final accounts of her business for the year ended December 31,2005. Her records relating to cash receipts and cash payments for the above period showed the following particulars:


All her sales and purchases were on credit. Provide depreciation on plant and building by 10% and machinery by 5%, make a provision for bad debts by 5%.
Answer :

(a) Provision on debtors
5% on 85,000 = Rs. 4,250

(b) Depreciation on
Plant 10% of 1,00,000 = Rs. 10,000
Machinery 5% of 50,000 = Rs. 2,500
Land & Building 10% of 2,50,000 = Rs. 25,000.