Short Answer Type Questions<\/span><\/p>\nQuestion 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 <\/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
<\/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 <\/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 <\/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 <\/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. \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
<\/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 \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 <\/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 \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
<\/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>\nQuestion 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
<\/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 <\/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 \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
\nRam Prasad started business with cash Rs. 1,50,000<\/li>\n Purchased furniture of cash Rs. 18.000<\/li>\n Sold goods to Mahesh Rs. 27,000<\/li>\n Purchase goods from Anuj Rs. 38,000<\/li>\n Withdraw cash for personal use Rs. 22.000.<\/li>\n<\/ul>\nThese transactions may be entered in the journal in this manner : \n \n <\/p>\n
Question 5. \nDifferentiate between source documents and vouchers. \nAnswer: \nSource Documents : Business transactions arc recorded in various documents and papers where they occur in the business. These documents like cash memo, invoice, purchase and sales bill, debit and credit notes, pay-in-slips, cheques, salary slips are known as source documents.<\/p>\n
Accounting Vouchers: Accounting vouchers also serves as a source ducument. These vouchers are arranged in a cronological order, serially numbered, kept in a separate file to facilitate the posting. Accounting vouchers record a transaction entailing multiple debits and credits. These vouchers must be kept in safe custody till the audit of the accounts and tax assessments for relevant periods are completed.<\/p>\n
Question 6. \nAccounting equation remains intact under all circumstances. Justify the statement with the help of an example. \nAnswer: \nAccounting equation signifies the assets and liabilities of a business always remain equal and intact as this equation connotes the fundamental relationship among the figures of Balance-Sheet Equation. It is also termed as statement of assets, liabilities and capital. The claim of owner is known as Capital and the claim of outsiders is known as Liabilities. Assets side is the list of various assets, which the business entity owns. The equality of the assets side and the liabilities side of the balance sheet is intact under accounting equation also known as Balance-Sheet Equation.<\/p>\n
<\/p>\n
Accounting equation may be understood with the help of following example :<\/p>\n
\nRamesh started business with a capital of Rs. 6,00,000.<\/li>\n Opened a bank account with an amount of Rs. 5,20,000.<\/li>\n Purchased Machinery for business of Rs. 80,000 and a cheque issued on the same day.<\/li>\n Goods purchased from Somesh for Rs. 60,000.<\/li>\n Goods costing Rs. 25,000 sold to Pankaj for Rs. 35,000.<\/li>\n<\/ul>\nThe summary of effects of transactions on accounting equation 1-5 in the following analysis table : \n <\/p>\n
Question 7. \nExplain the double entry mechanism with an illustrate example. \nAnswer: \nDouble entry system affects two accounts in opposite direction. It is based on the principle that \u2018Every debit has a credit and every credit has a debit\u2019. Every business transaction has a two-fold effect and that it effects two accounts in opposite directions and if a complete record were to be made of each transaction, it would be necessary to debit one account and credit the other.<\/p>\n
Both personal and impersonal accounts (Real and Nominal accounts) are recorded in Double Entry, one account is debited and any other account may be credited.<\/p>\n
(i) Rules regarding the recording of Personal Accounts : \nPersonal accounts relate to an individual, firm, company or an instruction are called personal accounts such as Ramesli’s account, Mphan\u2019s account. Accounts of State Bank of India, Accounts of Delhi Transport Company (DTC), capital account of proprietor. Drawing account etc.<\/p>\n
The simple rule for recording a transaction in personal accounts \u201cDebit the receiver and credit the giver Examples: \n(i) Paid Rs. 20.000 to Rakesh \n(ii) Received Rs. 10,000 from Gopal<\/p>\n
Following transactions can be recorded as under: \n <\/p>\n
(ii) Rules regarding the recording of Real Accounts under Double Entry System : The accounts relating to assets whose value can be measured in terms of money are termed as Real Account such as Cash account, Machinery account, Furniture account, Building account and Goodwill account etc. The simple rule for recording of Real Accounts transaction is \u201cDebit what comes in credit what goes out\u201d. \nExamples : \n(i) Purchased furniture for Rs. 50,000<\/p>\n
(ii) Sold Machinery for Rs. 20,000. \n <\/p>\n
Numerical Questions<\/span><\/p>\nQuestion 1. \nPrepare accounting equation on the basis of the following: \n(a) Harsha started business with cash Rs. 2,00,000 \n(b) Purchased goods from Naman for cash Rs. 40,000 \n(c) Sold goods to Bhanu costing Rs. 10,000\/- Rs. 12,000 \n(d) Bought furniture on credit Rs. 7,000 \n[Ans. Assets = Cash Rs. 1,60,000 + Goods Rs. 30,000 + Debtors \nRs. 12,000 + Furniture Rs. 7,000 = Rs. 2,09,000; Liabilities = Creditors Rs. 7,000 + Capital Rs. 2,02,000 \n= Rs. 2,09,000)] \nAnswer: \nAccounting Equation may be summarised in the following Transaction Analytical Table. \n <\/p>\n
Question 2. \nPrepare Accounting Equation from the following: \n(a) Kunal started business with cash Rs. 2,50,000 \n(b) He purchased furniture for cash Rs. 35,000 \n(c) He paid commission Rs. 2,000 \n(d) He purchase goods on credit Rs. 40,000 \n(e) He sold goods (Costing Rs. 20000\/-) for cash Rs. 26,000 [Ans : Assets = Cash Rs. 2.39,000 + Furniture Rs. 35,000 + Goods Rs. 20,000 = Rs. 2,94,000; Liabilities = Creditors Rs. 40,000 + Capital Rs. 2,54,000 = Rs. 2,94.000] \nAnswer: \n <\/p>\n
Question 3. \nMohit has the following Transactions, prepare accounting equation: \n(a) Business Started with cash Rs. 1,75,000 \n(b) Purchased goods from Rohit Rs. 50,000 \n(c) Sales Goods on Credit to Manish \n(Costing Rs. 17,500\/-) Rs. 20,000 \n(d) Purchase Furniture for office use Rs. 10,000 \n(e) Cash paid to Rohit in full settlement Rs. 48,500 \n(f) Cash received from Manish Rs. 20,000 \n(g) Rent paid Rs. 1,00 0 \n(h) Cash withdrew for personal use Rs. 3,000 \n[Ans. Assets = Cash Rs. 1.32,500 + Goods Rs. 32,500 + Furniture Rs. 10,000 = Rs. 1,75.000: Liabilities = Capital 1,75,000) \nAnswer: \n <\/p>\n
<\/p>\n
Question 4. \nRohit has the following Transaction : \n(a) Commenced business with cash Rs. 1,50,000 \n(b) Purchased Machinery on credit Rs. 40,000 \n(c) Purchased goods for cash Rs. 20,000 \n(d) Purchased car for personal use Rs. 80,000 \n(e) Paid to creditors in full settlement Rs. 38,000 \n(f) Sold goods for cash costing Rs. 5,000\/- Rs. 4,500 \n(g) Paid rent Rs. 1,000 \n(h) Commission received in advance Rs. 2,000 \nPrepare the Accounting Equation to show the effect of the \nabove Transactions on the Assets, Liabilities and Capital. \n[Ans. Assets = Cash Rs. 17,500 + Machine Rs. 40,000 + Goods Rs. 15,000 = Rs.72,500; Liabilities = Commission Rs. 2,000 + Capital Rs. 70,500 = Rs. 72,500] \nAnswer: \n <\/p>\n
Question 5. \nUse accounting Equation to show the effect of the following transactions of \n(a) M\/s. Royal Traders: \n(b) Started business with cash Rs. 1,20,000 \n(c) Purchase goods for cash Rs. 10,000 \n(d) Rent received Rs. 5,000 \n(e) Salary outstanding Rs. 2,000 \n(f) Prepaid insurance Rs. 1,000 \n(g) Received interest Rs. 700 \n(h) Sold goods for cash (Costing Rs. 5,000) Rs. 7,000 \n(i) Goods destroyed by fire Rs. 500 \n[Ans. Assets = Cash Rs. 1,21,700 + Goods Rs. 4,500 + Prepaid Iunsurance Rs. 1,000; Liabilities = Outstanding salary Rs. 2,000 + Capital Rs. 1,25.200] \nAnswer: \n <\/p>\n
Question 6. \nShow that accounting Equation on the basis of the following transaction: \n(a) Udit started Business with Cash Goods Rs. 5,00,000 Rs. 1,00,000 \n(b) Purchase Building for cash Rs. 2,00,000 \n(c) Purchase goods from Himani Rs. 50,000 \n(d) Sold goods to Ashu (Cost Rs. 25,000\/-) Rs. 36,000 \n(e) Paid Insurance Premium Rs. 3,000 \n(f) Rent Outstanding Rs. 5,000 \n(g) Depreciation on Building Rs. 8,000 \n(h) Cash withdrawn for personal use Rs. 20,000 \n(i) Rent received in advance Rs. 5,000 \n(j) Cash paid to Himani on account Rs. 20,000 \n(k) Cash received from Ashu Rs. 30,000 \n[Ans. Assets = Cash Rs. 2,92,000 + Goods Rs. 1,25,000 + Building Rs. 1,92,000 + Debtors Rs. 6,000; Liabilities = Creditors Rs. 30.000 + o\/s Rent Rs. 5,000 + Rent Rs. 5,000 +Capital Rs. 5.75,000 = Rs. 6.15,000 \nAnswer: \n <\/p>\n
Question 7. \nShow the effect of the following transactions of Assets, \nLiabilities and Capital through accounting equation: \n(a) Started Business with Cash Rs. 1,20,000 \n(b) Rent Received Rs. 10,000 \n(c) Invested in Shares Rs. 50,000 \n(d) Received Dividend Rs. 5,000 \n(e) Purchase goods on credit from Ragani Rs. 35,000 \n(f) Paid cash for household Expenses Rs. 7,000 \n(g) Sold goods for cash (Costing Rs.10,000) Rs. 14,000 \n(h) Cash paid to Ragani Rs. 35,000 \n(i) Deposited into Bank Rs. 20,000 \n[Ans : Assets = Cash Rs. 37,000 + Shares Rs. 50,000 + Goods Rs. 25,000 + Bank Rs. 20.000 = Rs. 1,32,000] \nAnswer: \n <\/p>\n
<\/p>\n
Question 8. \nShow the effect of following transaction on the accounting equation: \n \n \nAnswer: \n <\/p>\n
Question 9. \nTransactions of M\/s Vipin Traders are given below. Prepare Vouchers and show the effects on Assets, Liabilities and Capital with the help of accounting Equation. \n(a) Business started with cash Rs. 1,25,000 \n(b) Purchase goods for Cash (Vide Cash Memo No. 1212) Rs. 50,000 \n(c) Purchase Furniture from R.K. Furniture (Vide Bill No. 3425) Rs. 10,000 \n(d) Sold goods to Parul Traders (Costing Rs. 7,000) (Vide Bill No. 5674) Rs. 9,000 \n(e) Paid Cartage Rs. 100 \n(f) Cash paid to R.K. Furniture in full settlement Rs. 9,700 \n(g) Cash sales (Costing Rs. 10,000) Rs. 12,000 \n(h) Rent received Rs. 4,000 \n(i) Cash withdrew for personal use Rs. 3000 \n[Ans : Asset = Cash Rs. 78,200 + Goods Rs. 33,000 + Furniture Rs. 10,000 + Debtors Rs. 9,000 = Rs. 1,30,200; Liabilities = Capital Rs. 1,30.200] \nAnswer: \n \n <\/p>\n
Question 10. \nBobby opened a consulting firm and completed these transactions during November, 2005 : \n(a) Invested Rs. 4,00,000 cash and office equipment with Rs.1,50,000 in a business called Bobbie Consulting. \n(b) Purchased land and a small office building. The land was worth Rs. 3,00,000 and the building worth Rs. 7,00,000. The purchase price was paid with Rs. 2,00,000 cash and a long term note payable for Rs. 8,00,000. \n(c) Purchased office supplies on credit for Rs. 12,000. \n(d) Bobbie transferred title of motor car to the business. The motor car was worth Rs, 90,000. \n(e) Purchased for Rs. 30,000 additional office equipment on credit. \n(f) Paid Rs. 7,500 salary to the office manager. \n(g) Provided services to a client and collected Rs. 30,000. \n(h) Paid Rs. 4,000 for the month\u2019s utilities. \n(i) Paid supplier created in transaction (c). \n(j) Purchase new office equipment by paying Rs. 93,000 cash and trading in old equipment with a recorded cost of Rs.7,000. \n(k) Completed services of a client for Rs. 26,000. This amount is to be paid within 30 days. \n(l) Received Rs. 19,000 payment from the client created in transaction (k). \n(m) Bobby withdrew’ Rs. 20,000 from the business. \nAnalyse the above stated transactions and open the following \nT-accounts : Cash, client, office supplies, motor car, building, land, long term payables, capital, withdrawals, salary, expense and utilities expense. \nAnswer: \n \n <\/p>\n
<\/p>\n
<\/p>\n
\n <\/p>\n
<\/p>\n
\n <\/p>\n
Analysis of Transactions \n<\/span> \n(a) Increases Cash, Office equipment (Assets) and Bobby’s Capital (Owner’s equity ). \n(b) Increases Land and Building (Assets) and Increases Long Term Loan (Liability). \n(c) Increases Stock (Assets) and Creditors (Liabilities). \n(d) Increases Motor Car (Assets) and Capital (Owner’s equity). \n(e) Increases Office Equipment (Assets) and Creditors (Liabilities). \n(f) Decreases Cash (Assets) and Increases Expenses (Expenses). \n(g) Increases Cash (Assets) and Increases Sales (Revence). \n(h) Decreases Cash (Assets) and Increases (Expenses). \n(i) Decreases Cash (Assets) and Creditors (Liabilities). \n(j) Decreases Cash, Office Equipment (Assets) and Increases Office Equipment (Assets). \n(k) Increases Debtors (Assets) and Sales (Revenue). \n(l) Increases Cash (Assets) and Decreases Debtors (Assets). \n(m) Decreases Cash (Assets) and own’s equity (Capital).<\/p>\n <\/p>\n
Journalising \n<\/span> \nQuestion 11. \nJournalise the following transactions Himanshu : in the Books of \n2005 Dec. 01, Business started with cash Rs. 75,000 \nDec. 07, Purchase goods for cash Rs. 10.000 \nDec. 09, Sold goods to Swati Rs. 5,000 \nDec. 12, Purchase furniture \nDec. 18, Cash received from Swati in full Rs. 32,000 \nsettlement Rs. 4,000 \nDec. 25. Paid Rent Rs, 1,000 \nDec. 30, Paid Salary’ Rs. 1,500 \nAns. Journal Entries in the books of Himanshu : \nAnswer: \n \n <\/p>\nQuestion 12. \nEnter the following Transactions in the Journal of Mudit: \n2006 Jan. 01 Commenced business with cash Rs. 1,75,000 \nBuilding Rs. 1,00,000 \nJan. 02 Goods Purchase for Cash Rs. 75,000 \nJan. 03 Sold goods to Ramesh Rs. 3.0,000 \nJan.04 Paid wages Rs. 500 \nJan.06 Sold good for cash Rs. 10,000 \nJan. 10 Paid for Trade Expenses Rs. 700 \nJan. 12. Cash Received from Ramesh Rs. 29,500 \nDiscount Allowed Rs. 500 \nJan.14 Goods purchase from Sudhir Rs. 27,000 \nJan. 18 Cartage paid Rs. 1,000 \nJan.20 Drew cash for personal use Rs. 5,000 \nJan.22 Goods use for house hold Rs. 2,000 \nJan. 25 Cash paid to Sudhir Rs. 26,700 \nDiscount received Rs. 300 \nAnswer: \n \n \n <\/p>\n
<\/p>\n
Question 13. \nJournalizing the following transactions : 2005 \nDec. 01 Hema started business with cash Rs. 1,00,000 \nDec. 02 Open a Bank account With SBI Rs. 30,000 \nDec. 04 Purchase goods from Ashu Rs. 20,000 \nDec. 06 Sold goods to Rahul for Cash Rs. 15,000 \nDec. 10 Bought goods from Tara for cash Rs. 40,000 \nDec. 13 Sold goods to Suman Rs. 20,000 \nDec. 16 Received Cheque from Suman Rs. 19,500 \nDiscount allowed Rs. 500 \nDec. 20 Cheque given to Ashu on account Rs. 10,000 \nDec. 22 Rent paid by Cheque Rs. 2,000 \nDec. 23 Deposited into Bank Rs. 16,000 \nDec. 25 Machine Purchased from Parigya Rs. 10,000 \nDec. 26 Trade Expenses Rs. 2,000 \nDec. 28 Cheque issued to Parigya Rs. 10,000 \nDec. 29 Paid Telephone Expenses by Cheque Rs. 1,200 \nDec. 31 Paid Salary Rs. 4,500 \nAns Journal Entries : \nAnswer: \n <\/p>\n
\n <\/p>\n
Question 14. \nJournalise the following transaction in the Books of Harpreet Bros : \n(a) Rs. 1,000 due from Rohit are now a bad debts. \n(b) Goods worth Rs. 2,000 were used by the proprietor. \n(c) Charge depreciation @ 10% p.a for Two month on machine costing Rs. 30,000. \n(d) Provide interest on capital of Rs. 1,50,000 at 6% p.a. for 9 months. \n(e) Rahul become insolvent, who owed Rs. 2,000 a final dividend of 60 paise in a rupee is received from his estate. \nAns. \n <\/p>\n
<\/p>\n
Question 15. \nPrepare Journal from the transaction given below : \n(a) Cash paid for installation of machine Rs. 500 \n(b) Goods given as charity Rs. 2,000 \n(c) Interest charge on capital @7% p.a. when total capital were Rs. 70,000 \n(d) Received Rs. 1,200 of a bad debts written of last year \n(e) Goods destroyed by fire Rs. 2,000 \n(f) Rent outstanding Rs. 1,000 \n(g) Interest on drawing Rs. 900 \n(h) Sudhir Kumar who owed me Rs. 3,000 has failed to pay the amount. He pays me a compensation of 45 p. in a rupee. \n(i) Commission received in advance Rs. 7,000 \nAnswer: \n \n <\/p>\n
Question 16. \nJournalise the following transactions, post to the ledger : 2005 \nNov. 01 Business started with Cash Rs. 1,50,000 \nGood Rs. 50,000 \nNov. 03 Purchase Goods from Harish Rs. 30,000 \nNov. 05 Sold goods for cash Rs. 12,000 \nNov. 08 Purchase Furniture for cash Rs. 5,000 \nNov. 10 Cash Paid to Harish on account Rs. 15,000 \nNov. 13 Paid Sundry Expenses Rs. 200 \nNov. 15 Cash sales Rs. 15,000 \nNov. 18 Deposited into Bank Rs. 5,000 \nNov. 20 Drew Cash for personal use Rs. 1,000 \nNov. 22 Cash Paid to Harish in full settlement of account Rs. 14,700 \nNov. 25 Goods sold to Nitesh Rs. 7,000 \nNov. 26 Cartage paid Rs. 200 \nNov. 27 Rent Paid Rs. 1,500 \nNov. 29 Received cash from Nitesh Rs. 6,800 \nDiscount.given Rs. 200 \nNov. 30 Salary Paid Rs. 3,000 \n[Ans. Total of Debit and credit Rs. 3,16,900] \nAnswer: \n <\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
Question 17. \nJournalize the following transactions is the journal of M\/s Goel Brothers and post to the ledger 2006 \nJan. 01 Started Business with Cash Rs. 1,65,000 \nJan.02 Open Bank Account in PNB Rs. 80,000 \nJan. 04 Goods purchased from Tara Rs. 22,000 \nJan. 05 Goods purchases for cash Rs. 30,000 \nJan. 08 Goods sold to Naman Rs. 12,000 \nJan.10 Cash paid to Tara Rs. 22,000 \nJan. 15 Cash received from Naman Rs, 11,700 \nDiscount allowed Rs. 300 \nJan.16 Paid Wages Rs. 200 \nJan.18 Furniture purchased for office use Rs. 5,000 \nJan.20 Withdrawn from bank for personal Rs. 4,000 \nuse \nJan. 22 Issued cheque for Rent Rs. 3,000 \nJan.23 Goods issued for house hold purpose Rs. 2,000 \nJan.24 Drawn cash from bank for office use Rs. 6,000 \nJan.26 Commission received Rs. 1,000 \nJan.27 Bank charges Rs. 200 \nJan.28 Cheque given for Insurance premium Rs. 3,000 \nJan.29 Paid salary Rs. 7,000 \nJan.30 Cash Sales Rs. 10,000 \n[Ans. Total of debit and credit Rs. 3,84,400] \nAnswer: \nJournal entry in the books of M\/s.Goel Brothers for the month, of January, 2006. \n \n <\/p>\n
<\/p>\n
\n \n \n <\/p>\n
Question 18. \nGive journal entries of M\/s. Mohit Traders. Post them the Ledger from the following : \nTransactions 2005 August \n1. Commenced business with cash Rs.1,10,000 \n2. Opened bank account with H.D.F.C. Rs. 50,000 \n3. Purchase furniture Rs. 20,000 \n7. Bought goods for cash from M\/s. Rupa \nTraders Rs. 30,000 \n8. Purchased goods from M\/s. Hema Traders Rs. 42,000 \n10. Sold goods for cash Rs. 30,000 \n14. Sold goods on credit to M\/s. Gupta Traders Rs. 12,000 \n16. Rent paid Rs. 4,000 \n18. Paid Trade Expenses Rs. 1,000 \n20. Received cash from Gupta Traders Rs. 12,000 \n22. Goods Return to Henia Traders Rs. 2,000 \n23. Cash paid to Hema Traders Rs. 40,000 \n25. Bought Postage stamps Rs. 100 \n30. Paid Salary to Rishabh Rs. 4,000 \nAns. Journal Entries in the books of M\/s. Mohit Traders for the month of August, 2005. \nAnswer: \n \n <\/p>\n
<\/p>\n
\n \n <\/p>\n
Question 19. \nJournalise the following transactions in the Books of the M\/s. Bhanu Traders and post them into the Ledger. \n2005 Dec. \n1. Started Business with Cash Rs. 92,000 \n2. Deposited into Bank Rs. 60,000 \n4. Bought goods on credit from Himani Rs. 40,000 \n6. Purchased goods for cash Rs. 20,000 \n8. Returned goods to Himani Rs. 4,000 \n10. Sold goods for cash Rs. 20,000 \n14. Cheque given to Himani Rs. 36,000 \n17. Goods sold to M\/s. Goyal Traders. Rs. 3,50,000 \n19. Drew cash from Bank for Personal use Rs. 2,000 \n21. Goyal Traders returned goods Rs. 3,500 \n22. Cash deposited into bank Rs. 20,000 \n26. Cheque Received from Goyal Traders Rs. 31,500 \n28. Goods given as charity Rs. 2,000 \n29. Rent paid Rs. 3,000 \n30. Salary paid Rs. 7,000 \n31. Office machine purchased for cash Rs. 3,000 \nAns. Journal Entries in the books of M\/s. Bhanu Traders : \nAnswer: \n \n \nNote : For transaction on Dec. 29, 2005, it has been assumed that the rent of Rs. 3,000 is paid through cheque, or the cash account would have shown a credit balance and that is logically not possible. \n \n \n \n <\/p>\n
<\/p>\n
Question 20. \nJournalise the following, transactions in the Book of M\/s. Beauti Traders. Also post the in the ledger. \n2005 Dec. \n1. Started business with cash Rs. 2,00,000 \n2. Bought office furniture . Rs. 30,000 \n3. Paid into bank to open an current account Rs. 1,00,000 \n5. Purchased a Computer and paid by cheque Rs. 2,50,00 \n6. Bought goods on credit from Ritika Rs. 60,000 \n8. Cash Sales Rs. 30,000 \n9. Sold goods to Krishna on credit Rs. 25,000 \n12. Cash paid to Mansi on account Rs. 30,000 \n14. Goods returned to Ritika Rs. 2,000 \n15. Stationery purchased for cash Rs. 3,000 \n16. Paid wages Rs. 1,000 \n18. Goods returned by Krishna Rs. 2,000 \n20. Cheque given to Ritika Rs. 28,000 \n22. Cash received from Krishna on account Rs. 15,000 \n24. Insurance premium paid by cheque Rs. 4,000 \n26. Cheque received from Krishna Rs. 8,000 \n28. Rent paid by Cheque Rs. 3,000 \n29. Purchased goods on credit from Meena \nTraders Rs. 20,000 \n30. Cash Sales Rs. 14,000 \nAnswer: \nJournal Entries in the Books of M\/s. Beauti Traders. \n \n \n <\/p>\n
\n \n \n \n <\/p>\n
Question 21. \nPrepare Journal and post it to ledger of Sanjana. \nCash in hand Rs. 6,000 \nCash at bank Rs. 55,000 \nStock of good Rs. 40,000 \nDue to Rohan Rs. 6,000 \nDue from Tarun Rs. 10,000 \n3. Solti goods to Karuna Rs. 15,000 \n4. Cash sales Rs. 10,000 \n6. Goods sold to Heena Rs. 5,000 \n8. Purchased goods from Rupali Rs. 30,000 \n10. Goods returned from Karuna Rs. 2,000 \n14. Cash received from Karuna Rs. 13,000 \n15. Cheque given to Rohan Rs. 6,000 \n16. Cash received from Heena Rs. 3,000 \n20. Cheque received from Tarun Rs. 10,000 \n22. Cheque received from Heena Rs. 2,000 \n25. Cash given to Rupali Rs. 18,000 \n26. Paid cartage Rs. 1,000 \n27. Paid salary Rs. 8,000 \n28. Cash Sale Rs. 7,000 \n29. Cheque given to Rupali Rs. 12,000 \n30. Sanjana took goods for Personal use Rs. 4,000 \n31. Paid General Expense Rs. 500 \nAnswer: \nJournal Entries in the books of Sanjana.<\/p>\n
\n \n <\/p>\n
<\/p>\n
\n \n \n <\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
Detailed, Step-by-Step NCERT Solutions for 11 Accountancy 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. Recording of Transactions 1 NCERT Solutions for Class 11 Accountancy Chapter 3 Recording of Transactions 1 Questions and Answers …<\/p>\n
NCERT Solutions for Class 11 Accountancy Chapter 3 Recording of Transactions 1<\/span> Read More »<\/a><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","spay_email":""},"categories":[4],"tags":[],"yoast_head":"\nNCERT Solutions for Class 11 Accountancy Chapter 3 Recording of Transactions 1 - MCQ Questions<\/title>\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n