SHORT NOTES
Q.1 Double Entry System
Ans. Double Entry System: i.e.
Q.2 Meaning of Transactions and events
Ans. Meaning of Transactions :
vice versa.
viz., e.g. `
TRANSACTION
(Transaction is a give & take which has some financial effect on entity)
8.3
Meaning of Events: Ex.
Q.3 Petty Cash Book[June 2022, 5 Marks]
Ans. Petty Cash Book:
Posting
Q.4 Imprest System
Ans. Imprest System:
Q.5 Sales Book
Ans. Sales Book:
8.4
Posting:
Q.6 Purchase Book
Ans. Purchase Book:
Posting:
Q.7 Principal Book (Ledger)[Dec. 2021, 5 Marks]
Ans. Principal Book (Ledger):
8.5
Posting:
Ledger Account
Dr. Cr. DateParticularsFAmount ` DateParticularsFAmount `
Q.8 Mercantile System of Accounting and Cash System of Accounting [Dec. 2021, 5 Marks]
Ans. Mercantile System of Accounting (Accrual basis of accounting) and Cash System of Accounting: i.e.
Q.9 Journal proper Ans. Journal proper:
(i) Opening entries:
(ii) Closing entries:
(iii) Rectification entries:
(iv) Transfer entries:
(v) Adjusting entries:
(vi) Entries on dishonour of Bills:
(vii) Miscellaneous entries:
8.7
DIFFERENCES
Q.1 Trade discount and Cash discount
Ans. Trade discount and Cash discount: Trade Discount:
Cash Discount:
Q.2 Debit Note and Credit Note
Ans. Debit Note and Credit Note: Debit Note : -
Entry:In the books of sender of Debit noteIn the books of receiver of Debit note
Credit Note: -
8.8
Entry:In the books of sender of Credit noteIn the books of receiver of Credit note
TRUE OR FALSE
Q.1 Wages paid for erection of machinery is debited to Profit and Loss Account.
Ans. False:
Q.2 The balance in the cash book shows net income.
Ans. False:
Q.3 The debts written off as bad, if recovered subsequently are credited to Debtors Account.
Ans. False:
Q.4 The sales day book is a part of the ledger.
Ans. False:
Q.5 Patent right is in the nature of nominal account.
Ans. False:
Q.6 Goods costing ` 600 taken by the proprietor for personal use should be credited to Sales Account.
Ans. False:
Q.7 If a cheque received is further endorsed, it must be entered on both sides of the cash book.
Ans. True:
Q.8 Rent paid account is Nominal Account whereas, rent received account is a Real Account.
Ans. False:
Q.9 A tallied Trial balance is a conclusive proof of accuracy of books of account.
Ans. False: -
8.9
Q.10 Opening, Closing, Rectifying and Adjusting entries are recorded in journal proper.
Ans. True:
Q.11 Sale of office furniture should be credited to Sales Account.
Ans. False:
Q.12 The balance in the Petty Cash Book represents expenses.
Ans. False:
Q.13 The purchase day book is a part of the ledger.
Ans. False:
Q.14 In a Cash Book, Discount Columns may show either debit balance or credit balance.
Ans. False:
Q.15 Purchase book records all purchases of goods.
Ans. False:
Q.16 The Sales book is kept to record all sales.
Ans. False:
Q.17 The debit notes issued are used to prepare sales return book.
Ans. False:
Q.18 Bank column of the cash book will show only a debit balance.
Ans. False:
Q.19 Trade Discount is a reduction granted by a supplier from the list price of goods/or services on business considerations for prompt payment. [Nov. 2019, 2 Marks]
Ans. False:
Q.20 The Sale Book is kept to record both the cash and credit sales. [Jan. 2021, 2 Marks]
Ans. False:
Q.21 Cash book is a subsidiary book as well as a principal book. [July 2021, 2 Marks]
Ans. True:
8.10
Q.22 Discount column of the cash book is never balanced. [Dec. 2021, 2 Marks]
Ans. True:
Q.23 At the end of the accounting year, all the nominal accounts of the ledger book are balanced. [June 2022, 2 Marks]
Ans. False:
Q.24 Discount column of cash book records the trade discount. [Dec. 2023, 2 Marks]
Ans. False:
DESCRIPTIVE QUESTIONS
Q.1 What are the advantages of subsidiary books ?
[July 2021, 5 Marks; June 2024, 5 Marks]
Ans. Following are the uses & advantages of subsidiary book:-
1. Division of work:
2. Specialization and efficiency:
3. Saving of the time:
4. Availability of information:
5. Facility in checking: -
Q. 2 What are the importance of Journal?
Ans.
[June 2023, 5 Marks]
Importance of Journal:
(i) Provides an information of the transaction :
(ii) Records a chronological order of all transactions : i.e.
(iii) Reduces the possibility of error :
PRACTICAL QUESTIONS
Q.1 Classify the following accounts into Personal, Real and Nominal:
(a) Cash Account
(b) Wages Account
(c) Building Account
(d) Calcutta Tramway Co. Account
(e) East Bengal Club Account
(f) Rent Account
(g) Capital Account
(h) Drawings Account
(i) Interest Account
(j) Trade Mark Account
(k) Dividend Account
(l) Land Account
(m) Goodwill Account
(n) Patent Account
(o) Bad Debts Account
(p) Bank Account
(q) Discount Allowed Account
(r) Interest Received Account
(s) Discount Received Account
(t) Salary Payable
(u) Bills Receivable
Solution:
8.12
Q.2 From the following transactions prepare the Cash Book with cash and discount columns: Aug. 2016 `
1Opening cash balance2500.00
3Received from D & Co. ` 1,350 in full settlement of ` 1,400
4Received for cash sales1250.00
5Paid to Rajesh & Co. ` 775 in full settlement of his account for800.00
7Purchased office furniture670.00
13Paid for postal stamps25.00
15Paid for office rent for month of July, 2016125.00
17Used office cash for meeting personal expenses150.00
19Sold goods on credit to Mr. Faithful1700.00
20Paid to Rajnikant ` 670 in full settlement of his account for ` 700
20Deposited in the Bank all cash in excess of ` 1,200.
Solution: Double Column Cash Book Dr. Cr. DateParticularsLFDisCashDateParticularsLFDisCash
Triple Column Cash book
Q.3 Write up a three column cash book from the following : Sept. 2016 ` 1Cash balance1,700.00 Bank overdraft5,600.00
5Received from Dinanath cash ` 750 and a cheque of ` 860 in full settlement of ` 1650
7Paid for office rent by cheque500.00
8Paid for wages in cash250.00
9Sold goods for cash ` 1500 and received half the amount in cash and half by cheque which is deposited in the bank
10Bank pass book states that the bank has collected interest on investment 660.00
12Cheque received on 5th paid into bank
15Transferred ` 3000 from fixed deposit to Current account
20Drew for personal use cash ` 250 and a cheque of ` 375
25Made cash purchase and paid by cheque ` 1595
30Paid Dinesh ` 800 by cheque
Solution: Dr. Triple Column Cash Book Cr.
Cheque received but not deposited in bank
Q.4 Enter the following transactions in a three column cash book of M/s. Barket & Co. April, 2016 1 Cash on hand ` 237; Balance at bank ` 6,594.
8.14
2 Received from K. Agrawal cash ` 590, allowed him discount ` 10.
4 Paid salaries for March by cash ` 200. Cash sales, ` 134.
5 Paid B.K. Bose by cheque ` 300. Cash Purchases ` 60.
7 Paid Q. Ahmad by cheque ` 585; discount received 2.5%.
8 Cash Sales ` 112. Paid cartage and coolie ` 6.
10 Paid rent in cash ` 50
14 Cash Sales ` 212. Received from G.C. Dhar ` 194 by cheque discount 3%.
16 Deposited into Bank ` 600. Purchased a motor car for ` 5,800 and drawn a cheque for the amount.
23 Received a cheque from Robert & Co. for ` 291; discount received 3%.
28 Cash Sales ` 298.
29 Bank notifies that Robert & Co.’s cheque has been dishonoured.
30 Deposited with Bank ` 300. Paid wages ` 72. Bank charges as shown in Pass Book ` 5.
Solution:
Column Cash Book
Q.5 Enter the following transactions in a columnar Petty Cash Book kept on the Imprest System and balance the cash book. Also post the transaction to the respective ledger accounts.
8.16
Posting from above petty cash book to ledger accounts will be made as follows:
Carriage and Coolie Charges Account
DateParticulars ` DateParticulars `
Postage Account
DateParticulars ` DateParticulars `
Office Expenses Account
DateParticulars ` DateParticulars `
Stationery Expenses Account
DateParticulars ` DateParticulars `
Travelling Expenses Account
DateParticularsJ.F.AmountDateParticularsJ.F.Amount
Advertisement Account
DateParticularsJ.F.AmountDateParticularsJ.F.Amount
Advance Account
DateParticularsJ.F.AmountDateParticularsJ.F.Amount Sales Book
Q.6 From the transactions given below prepare the Sales Book of Amin Chand, a furniture dealer: June, 2016
5Sold on credit to Ideal College :10 tables @ ` 25 less 10% 10 chairs @ ` 15
8Sold Mohan Bros. : 5 stools @ ` 10
10Sold on credit M/s. Golchand & Co.: 3 tables @ ` 75, 5 chairs @ ` 30
20Sold to M/s. Ram Lal & Sons for cash 5 tables @ ` 40
27Sold on credit to Anand Pal & Co. old typewriter for ` 400
