{"id":22194,"date":"2021-05-03T16:31:47","date_gmt":"2021-05-03T11:01:47","guid":{"rendered":"https:\/\/mcq-questions.com\/?p=22194"},"modified":"2022-03-02T10:45:31","modified_gmt":"2022-03-02T05:15:31","slug":"ncert-solutions-for-class-11-accountancy-chapter-3","status":"publish","type":"post","link":"https:\/\/mcq-questions.com\/ncert-solutions-for-class-11-accountancy-chapter-3\/","title":{"rendered":"NCERT Solutions for Class 11 Accountancy Chapter 3 Recording of Transactions 1"},"content":{"rendered":"

Detailed, Step-by-Step NCERT Solutions for 11 Accountancy<\/a> Chapter 3 Recording of Transactions 1 Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.<\/p>\n

Recording of Transactions 1 NCERT Solutions for Class 11 Accountancy Chapter 3<\/h2>\n

Recording of Transactions 1 Questions and Answers <\/span>Class 11 Accountancy Chapter 3<\/h3>\n

Test Your Understanding – I<\/span><\/p>\n

Question 1.
\nDouble entry accounting requires that:
\n(i) All transactions that create debits to asset accounts must create credits to liability or capital accounts:
\n(ii) A transaction that requires a debit to a liability account require a credit to an asset account;
\n(iii) Every transaction must be recorded with equal debits equal total credits.
\nAnswer:
\n(iii) Every transaction must be recorded with equal debits equal total credits.<\/p>\n

\"NCERT<\/p>\n

Question 2.
\nState different kinds of transactions that increase and decrease capital.
\nAnswer:
\nCapital increases by net profit and fresh capital introduced and decreases by drawings and net loss.<\/p>\n

Question 3.
\nDoes debit always mean increase and credit always mean decrease?
\nAnswer:
\nNo<\/p>\n

Question 4.
\nWhich of the following answers properly classifies these commonly used accounts:
\n(1) Building
\n(2) Wages
\n(3) Credit sales
\n(4) Credit purchases
\n(5) Electricity charges due but not yet paid (outstanding electricity hills)
\n(6) Godown rent paid in advance (prepaid godown rent)
\n(7) Sales
\n(8) Fresh capital introduced
\n(9) Drawings
\n(10) Discount paid
\n\"NCERT
\nAnswer:
\n(ii)<\/p>\n

Test Your Understanding -II<\/span><\/p>\n

State the title of the accounts affected, type of account and the account to be debited and account to be credited
\n.\"NCERT
\n\"NCERT
\nAnswer:
\n\"NCERT
\n\"NCERT<\/p>\n

Test Your Understanding – III<\/span>
\nChoose the Correct Answer:<\/span><\/p>\n

1.The ledger folio column of journal is used to:
\n(a) Record the date on which amount posted to a ledger account.
\n(b) Record the number of ledger account to which information is posted.
\n(c) Record the number of amounts posted to the ledger account.
\n(d) Record the page number of the ledger account.
\nAnswer:
\n(d) Record the page number of the ledger account.<\/p>\n

2. The journal entry to record the sale of services on credit should include:
\n(a) Debit to debtors and Credit to capital.
\n(b) Debit to cash and Credit to debtors.
\n(c) Debit to Ices income and Credit to debtors.
\n(d) Debit to debtors and Credit to fees income.
\nAnswer:
\n(d) Debit to debtors and Credit to fees income.<\/p>\n

\"NCERT<\/p>\n

3. The journal entry to record purchase of equipment for Rs. 2,00.000 cash and a balance of Rs. 8,00,000 due in 30 days include:
\n(a) Debit equipment for Rs. 2,00,000 and Credit cash Rs. 2,00,000.
\n(b) Debit equipment for Rs. 10.00,000 and Credit cash Rs. 2.00,000 and creditors Rs. 8,00.000.
\n(c) Debit equipment Rs. 2,00,000 and Credit debtors Rs. 8.00,000.
\n(d) Debit equipment Rs. 10,00.000 and Credit cash Rs. 10,00,000.
\nAnswer:
\n(b) Debit equipment for Rs. 10.00,000 and Credit cash Rs. 2.00,000 and creditors Rs. 8,00.000.<\/p>\n

4. When an entry is made in journal:
\n(a) Assets are listed first.
\n(b) Accounts to be debited listed first.
\n(c) Accounts to be credited listed first.
\n(d) Accounts may be listed in any order.
\nAnswer:
\n(b) Accounts to be debited listed first.<\/p>\n

5. If a transaction is properly analysed and recorded :
\n(a) Only two accounts will be used to record (lie transaction.
\n(b) One account will be used to record transaction.
\n(c) One account balance will increase and another will decrease.
\n(d) Total amount debited will equals total amount credited.
\nAnswer:
\n(d) Total amount debited will equals total amount credited.<\/p>\n

6. The journal entry to record payment\u2019of monthly bill will include:
\n(a) Debit monthly bill and Credit capital.
\n(b) Debit capital and Credit cash.
\n(c) Debit monthly bill and Credit cash.
\n(d) Debit monthly bill and Credit creditors.
\nAnswer:
\n(c) Debit monthly bill and Credit cash.<\/p>\n

\"NCERT<\/p>\n

7. Journal entry to record salaries will include:
\n(a) Debit salaries Credit cash.
\n(b) Debit capital Credit cash.
\n(c) Debit cash Credit salary.
\n(d) Debit salary\u2019 Credit creditors.
\nAnswer:
\n(a) Debit salaries Credit cash.<\/p>\n

Test Your Understanding – IV<\/span><\/p>\n

Fill in the blanks:
\n1. Issued a cheque for Rs.8,000 to pay rent. The account to be debited is ………….
\n2. Collected Rs. 35,000 from debtors. The account w be credited is …………..
\n3. Purchased office stationary for Rs. [8.000. The account to be credited is ……………
\n4. Purchased new machine for Rs. 1,70.000 and issued cheque for the same. The account to be debited is ……………..
\n5. Issued cheque for Rs. 70.000 to pay otT one of the creditors. The account to be debited is ………….
\n6. Returned damaged office stationary and received Rs. 50,000. The account to be credited is ……….
\n7. Provided services for Rs. 65,000 on credit. The account to be debited is ………………
\nAnswer:
\n1. Rent A\/c
\n2. Debtor\u2019s A\/c
\n3. Cash A\/c
\n4. Machine A\/c
\n5. Creditors A\/c
\n6. Office Stationery A\/c
\n7. Debtors A\/c<\/p>\n

Test Your Understanding – V<\/span><\/p>\n

Select Right Answer:
\nQuestion 1.
\nVoucher is prepared for:
\n(i) Cash received and paid
\n(ii) Cash\/Credit sales
\n(iii) Cash\/Credit purchase
\n(iv) All of the above
\nAnswer:
\n(iv) All of the above<\/p>\n

Question 2.
\nVoucher is prepared from:
\n(i) Documentary evidence
\n(ii) Journal entry
\n(iii) Ledger account
\n(iv) All of the above
\nAnswer:
\n(i) Documentary evidence<\/p>\n

\"NCERT<\/p>\n

Question 3.
\nHow nian\u2019 sides does an account have?
\n(i) Two
\n(ii) Three
\n(iii) one
\n(iv) None of These
\nAnswer:
\n(i) Two<\/p>\n

Question 4.
\nA purchase of machine for cash should be debited to:
\n(i) Cash account
\n(ii) Machine account
\n(iii) Purchase account
\n(iv) None of these
\nAnswer:
\n(ii) Machine account<\/p>\n

Question 5.
\nWhich of the following is correct?
\n(i) Liabilities Assets + Capital
\n(ii) Assets Liabilities \u2014 Capital
\n(iii) Capital = Assets \u2014 Liabilities
\n(iv) Capital Assets + Liabilities.
\nAnswer:
\n(iii) Capital = Assets \u2014 Liabilities<\/p>\n

Question 6.
\nCash withdrawn by the Proprietor should be credited to:
\n(i) Drawings account
\n(ii) Capital account
\n(iii) Profit and loss account
\n(iv) Cash account
\nAnswer:
\n(iv) Cash account<\/p>\n

Question 7.
\nFind title correct statement :
\n(i) Credit a decrease in assets
\n(ii) Credit the increase in expenses
\n(iii) Debit the increase in revenue
\n(iv) Credit the increase in capital
\nAnswer:
\n(iv) Credit the increase in capital<\/p>\n

Question 8.
\nThe book in which all accounts are maintained is known as:
\n(i) Cash Book
\n(ii) Journal
\n(iii) Purchases Book
\n(iv) Ledger
\nAnswer:
\n(iv) Ledger<\/p>\n

\"NCERT<\/p>\n

Question 9.
\nRecording of transaction in title Journal is called :
\n(i) Costing
\n(ii) Posting
\n(iii) Journalising
\n(iv) Recording
\nAnswer:
\n(iii) Journalising<\/p>\n

Short Answer Type Questions<\/span><\/p>\n

Question 1.
\nSlate the three fundamental steps in accounting process.
\nAnswer:
\nThe fundamental steps of accounting process are as follows:
\n(i) Financial Transactions
\n(ii) Recording.
\n(iii) Classifying.
\n(iv) Summarizing. and
\n(v) Analysis and interpretation.<\/p>\n

These steps may be explained with the help of following diagram:
\n\"NCERT<\/p>\n

Question 2.
\nWhy is the evidence provided by source documents important in accounting?
\nAnswer:
\nSource Documents : Financial accounting records contain factual financial information and, th .refore, all business transactions should be evidenced by document ary evidence. For example, cash memo showing cash sale, an invoice showing sale of goods in credit, the receipt made out by the payee against cash payment are examples of source documents.<\/p>\n

Business document is called the source document and is an evidence in support of a transaction.A source document is the first record prepared for a business transaction and are the basis for entries in the accounting books. On the basis of this record, the accounts are to be debited and credited.<\/p>\n

\"NCERT<\/p>\n

Question 3.
\nShould a transaction be first recorded in a journal or Ledger? Why?
\nAnswer:
\nFirstly, all transactions are recorded in journal. Transactions are written, as they occur in a rough books or on various documents. On the basis of the entries made in the rough book or on the basis of source documents, a voucher is prepared indicating the accounts to be debited or credited carefully in a systematic manner.<\/p>\n

This is done in a book which is known as journal.Journal is the primary book of accounts in which transactions are originally recorded in chronological order. It is called the book of original entry.<\/p>\n

Question 4.
\nAre debits or credits listed first in journal entries? Are debits and credits intended?
\nAnswer:
\nWhen recording each transaction, the total debits amount must equal to the total credits amount. In accounting, the terms debit and credit indicate whether the transactions are to be recorded on the left hand side or right hand side of the account while journalizing the transactions, the amounts debited is written with the word \u2018Dr\/ In the next line, after leaving a little space, the name of account to be credited is written by the word\u2018To\u2019.<\/p>\n

Question 5.
\nWhy are some accounting systems called double accounting system?
\nAnswer:
\nUnder Double accounting system every business transactions affects two accounts in opposite directions. For example, if the furniture is purchased in the business, furniture is increased whereas the cash is decreased. There can be no transaction in the business which effects only one account or which has only one aspect. As such, both the aspect of every transaction are recorded under this system.<\/p>\n

It may, however, be noted that the double entry does not mean that a transaction – One account receiving a benefit is debited and the another account yielding a benefit and to give something to the business is credited. The amount of every transaction is written twice, once as a debit and again as a credit.<\/p>\n

For example, Receipt of Rs. 6,000 from Mohan affects two accounts – Cash Account and Mohan\u2019s Account. Cash Account is receiving a benefit and will be debited, whereas Mohan is yielding a benefit, his account will be credited.Double Entry system is based on the principle that \u201cEvery debit has a credit and every credit has a debit.\u201d<\/p>\n

Question 6.
\nGive a specimen of an Account.
\nAnswer:
\nAccount: An account is a record of all business transactions relating to a particular person or item. In accounting we keep a separate
\nrecord of each individual, asset, liability, expense or income. The place where such a record is maintained is termed as an \u2018Account’. Such as the Account of Ghanshyam, the Account of Ram, the Account of Machinery, the account of Salary, the Account of Rent and likewise transactions entered into with Ghanshyam will be recorded in the Account of Ghanshyam and similarly, all transactions relating to Ram will be recorded in the Account of Ram. According to Carter:<\/p>\n

\u201cAn Account is a ledger record in a summarised form, of all the transactions that have taken place with the particular person or things specified.\u201d<\/p>\n

All accounts are divided into two sides. The left side of an account is arbitrarily or traditionally called Debit side and the right side of an account is called Credit side. In the abbreviated form, Debit is written as Dr. and Credit is written as Cr. For example, the transactions relating to cash are recorded in an account, entitled \u2018Cash Account\u2019 and its format will be as given below :
\n\"NCERT<\/p>\n

The above account resembles English capital letter \u2018T’ As such, it is often called \u2018T\u2019 shape account. An Account is abbreviated as A\/c.
\n\"NCERT<\/p>\n

Question 7.
\nWhy are the rules of debit and credit same for both liability and capital?
\nAnswer:
\n1. Liability Account: When there is an increase in the amount of a liability, such an increase will be recorded on the credit side of the liability account. On the contrary, if there is a reduction in the amount of a liability, it will be recorded on the debit side of the liability account. For example, if a firm borrows Rs. 40,000 from Ashok the account of Ashok will be credited since Rs. 40,000 is now owing to him. When the loan is repaid, the account of Ashok will be debited since the liability no longer exists.
\n\"NCERT<\/p>\n

2. Capital Account: An increase in the capital is recorded on the credit side and the decrease in the capital is recorded on the debit side. Suppose, the proprietor introduces the additional capital in the business, the capital account will be credited. Similarly, if the proprietor whithdraws some money for his personal use, i.e, makes drawings, the capital account will be debited.
\n.\"NCERT
\nIt is concluded that both liabilities and capital account increases the credit side of an account if increased. Similarly, the reduction of both liabilities and capital will be debited in an account.<\/p>\n

\"NCERT<\/p>\n

Question 8.
\nWhat is the purpose of posting J.F.\/L.F. numbers that are entered in the journal at the time entries are posted to the accounts?
\nAnswer:
\nThe purpose of positing L.F. (stands for Ledger Folio) and J.F. (Journal Folio) is the page number of the original posting of transactions in a book known as Journal or Ledger (Primary books). It may further be understood with the help of format.<\/p>\n

Form of Journal : the form of the journal is given below :
\n\"NCERT
\n(L.F. Stands for Ledger Folio)<\/p>\n

The columns have been numbered only to make clear how the Journal is written up, otherwise they are not numbered. While journalising, the following points should be noted:<\/p>\n

(i) In the first column, the date of transaction is entered and the year is written at the top, then the month and in the narrow part of the column the date of the transaction concerned is entered.<\/p>\n

(ii) In the second column, the names of the accounts involved are written in a logical manner. First, the account to be debited is written, with the word \u201cDr.\u201d written towards the end of the column. In the next line, after leaving a little space, the name of the account to be credited is written preceded by word \u201cTo\u201d. (The modem practice is more and more to omit writing of \u201cDr.\u201d and \u201cTo\u201d). Then in the next line the explanation called narration for.the entry together with necessary details is given.<\/p>\n

(iii) In the third column, the number of the page in the ledger on which the account is written up is entered. (L.F. is Ledger Folio)<\/p>\n

(iv) In the fourth column, the amount or amounts to be debited to the various accounts concerned is entered.<\/p>\n

(v) In the fifth column, the amount to be credited to various accounts is entered.<\/p>\n

Question 9.
\nWhat entry (Debit or Credit) would you make to
\n(a) Increase revenue
\n(b) decrease in Expenses
\n(c) record drawings
\n(d) record the fresh capital introduced by the owner.
\nAnswer:
\n(a) Revenue or Income Accounts : All increases in the gains and incomes are recorded on the credit sides of the concerned income account as it leads to increase in the capital. On the contrary, if there is a reduction in any gain or income, the account concerned will be debited, as it leads to decrease in the capital.
\n\"NCERT<\/p>\n

(b) Losses or Expenses Accounts : All increases in the losses and expenses are recorded on the debit side of the concerned expenses account as it leads to decrease in the capital. On the contrary, the reduction in expenses is recorded on the credit side.
\n\"NCERT
\n(c) An increase in the owner\u2019s capital is recorded by crediting the capital account : Suppose, the proprietor introduces additional capital, the capital account will be credited. If the owner withdraws some money, i.e., makes a drawing the capital account will be debited. Journal Entries may be made as under:<\/p>\n

(a) In case of Increase in revenue : Suppose rent received on subletting of premises, the journal entry will be passed as under:
\nCash A\/c — Dr.
\nTo Rent A\/c (Being rent received)<\/p>\n

(b) Decrease in Expenses : In such situation again the entry will
\nbe made in the credit side, for example insurance prepaid may be recorded as under:
\nPrepaid Insurance A\/c — Dr.
\nTo Insurance A\/c
\n(Being insurnace paid in advance)<\/p>\n

(c)Record Drawings: In case of Drawings, capital will be reduced to the amount of Drawings. The journal entry will be as under:
\nDrawings A\/c — Dr.
\nTo Cash\/Bank A\/c (Being drawings made)<\/p>\n

\"NCERT<\/p>\n

(d) Fresh capital Introduced: While introducing fresh capital, the capital account will be credited. The journal entry is as follows :
\nCash A\/c — Dr.
\nTo Capital A\/c
\n(Being cash introduced to business as fresh capital)<\/p>\n

Question 10.
\nIf a transaction has the effect of decreasing an assest, is the decrease recorded as a debit or as a credit. If the transaction has the effect of decreasing a liability is the decrease recorded as a debit or as a credit.
\nAnswer:
\n(i) When there is an increase in the amount of an asset, its account is debited; on the contrary, the account will be credited if there is a reduction in the amount of the asset concerned. Let this point be clarified with an example. Suppose, furniture of Rs. 1,800 is purchased, the furniture account will be debited by Rs. 1,800 since the asset has increased by this amount. Suppose, later furniture of Rs. 1,300 is sold, the reduction will be recorded by crediting the furniture account by Rs. 1,300.<\/p>\n

(ii) If the amount of liability increases, the increase will be entered on the credit side of the liability account, i.e., the account will be credited. Similarly, a libility account will.be debited if there is a reduction in the amount of the liability. Suppose, a firm borrows Rs. 8,000 from Rakesh. Rakeslfs account will be credited since Rs. 8,000 is now owning to him. If later the loan is repaid, Rakeslfs account will be debited since the liability no longer exists.<\/p>\n

(iii) Journal entries at the time of increase or decrease of an Assets may be made as under :
\nIn case of purchase of furniture of Rs. 800 as mentioned above:
\nFurniture A\/c — Dr.
\nTo Cash A\/c
\n(Being assets increased at the time of purchase and debited)<\/p>\n

In case of sale of furniture :
\nCash A\/c — Dr.
\nTo Furniture A\/c
\n(Being furniture sold and credited)<\/p>\n

(ii) Journal entries at the time of decreasing and increasing of a liability:
\nIn case of raising a loan :
\nCash A\/c — Dr.
\nTo Loan A\/c
\n(Being loan raised, liability’ increased and credited)<\/p>\n

In case of Repayment of loan:
\nLoan A\/c — Dr.
\nTo Cash A\/c
\n(Being loan paid, liability decreased and debited)<\/p>\n

Long Answer Type Questions<\/span><\/p>\n

Question 1.
\nDescribe the events recorded in accounting systems and the importance of source documents in those systems.
\nAnswer:
\nVarious transactions are made in a business in day to day dealings such as purchase, sale of goods and services, receipts and payments of cash etc. Each business transaction is supported by documentary evidence, such as cash memo for cash transactions, cash receipt, invoice or bill, debit and credit notes, pay-in-slips, cheque, bill of exchange etc.<\/p>\n

These business documents are called source documents and first record of details of a business transaction. Entries in the books are made with the help of these source documents. These documents provide the verifiable objective of accounting by supporting adequate proof of transactions recorded in the books of accounts.<\/p>\n

These documents are written and authentic proof of the exactness and correctness of the events or facts recorded in the books of account. These documents are helpful in assessment for tax and serve as legal evidence in case of a dispute.<\/p>\n

\"NCERT<\/p>\n

Question 2.
\nDescribe how debits and credits are used to analyse transactions.
\nAnswer:
\nRules of Debit and Credit : Debit and credit are simply additions to or substraction from an account. We have discussed that by deducting the total of liabilities from the total of assets, the amount of capital is ascertained, as is indicated by the accounting equation,<\/p>\n

i.e.
\nAssets = Liabilities + Capital
\nOr
\nAssets – Liabilities = Capital<\/p>\n

We have also discussed that if there is any change on one side of the equation, there is bound to be a similar change on the other side of the equation or amongst items comprised in it. This is due to dual aspect accect effect of the transactions. It becomes clear from the following illustration:
\n\"NCERT<\/p>\n

The rules regarding debit and credit,may be summarised as under;
\n1. Debit the increase in assets and credit the decrease in assets.
\n2. Credit the increase in liabilities while make debit all the decrease in liabilities.
\n3. Debit the decrease in capital and credit the increase in capital.
\n4. Debit the decrease in income and credit thb increase in incomes.
\n5. Debit the increase in expenses and losses, and credit the decrease in expenses and losses.<\/p>\n

Question 3.
\nDescribe how account are used to record information about the effects of transaction.
\nAnswer:
\nThe process of analysing transactions and recording their effects directly in the accounts is helpful as a learning exercise. However, real accounting system do not record transactions directly in accounts. Firstly, every transaction is recorded in a journal or ledger known as books of original entry. This practice provides a complete record of each transaction in one place and links the debits and credits for each transaction.<\/p>\n

After the debits and credits for each transaction are entered in journal book, they are transferred to the individual accounts, known as ledger posting, when this process is completed, it provides a complete and useful interpretation of the transaction or event’s effect in the organisation.<\/p>\n

Question 4.
\nWhat is journal? Give a specimen of Journal showing at least five entries.
\nAnswer:
\nJournal is a book of original entry in which transactions are recorded firstly as and when they take place in the business. \u201cThe Journal is originally used as a book of original entry of recording transaction in order of date form a memorandum book, classified into debits and credits, in order to facilitate their correct posting in ledger.\u201d – Prof. Carter<\/p>\n

Journal provides a date-wise record of all the transactions with details of accounts debited and credited, and the amount of each transaction. A journal records both debit and credit aspects of a transaction on the basis of double entry system of book-keeping.
\n\"NCERT
\n1. Date : In the first column, the date of transaction is entered. The year and month is also written only once, till they change. The order\/sequence of dates and months must be maintained.<\/p>\n

2. Paticulars : In this column, Debit the word (Dr.) is written first in the first line. In the second line, the name of account to be credited with the word (Cr.). After each entry, a brief explanation known as narration is also given.The narration
\nhelps to know the reason of the entry and also the reason of debit and credit of a particular account.<\/p>\n

3. Ledger Falio (L.F.) : The page number of ledger account where the posting has been made from the journal is recorded in the L.F. column. For example, the posting of furniture A\/c of Page no. 38 of the ledger to write 38 in the L.F. column against furniture A\/c in journal.<\/p>\n

4. Amount Dr.: In this column, the amount of the account being debited is, written.<\/p>\n

5. Amount Cr.: In this column, the amount of the account being, credited as written.<\/p>\n

Posting of these five entries in the journal: July 2005<\/p>\n