Recording of Transactions - II Class 11 Financial Accounting 1 NCERT Solutions

Q1Long Answers

Explain the need for drawing up the special purpose books.

Solution

As a business expands, the number of transactions becomes very large. Recording all transactions in a single general journal becomes cumbersome, inefficient, and prone to errors. To overcome these limitations, the journal is sub-divided into special purpose books (or subsidiary books). The need for these books arises from the following advantages they offer:

Convenience in Recording: Many business transactions are repetitive. Special purpose books are designed to record all transactions of a similar nature in one place. For example, all credit sales are recorded in the Sales Book, and all cash transactions in the Cash Book. This makes recording systematic and convenient.
Division of Accounting Work: Maintaining separate books for different types of transactions allows the accounting work to be divided among several employees. For instance, one clerk can handle the cash book while another manages the purchases book. This leads to specialization and increases the overall efficiency of the accounting department.
Efficiency and Time Saving: Recording in special purpose books is faster than writing a full journal entry for every transaction. For example, in a sales book, only the date, customer name, invoice number, and amount are recorded, saving time and effort.
Ease of Information Retrieval: Specific information can be obtained easily and quickly without going through the entire journal. For example, the total credit purchases for a month can be found directly from the purchases book.
Facilitates Checking and Auditing: The division of records makes it easier to check for errors. If the trial balance does not tally, the error can be traced to a specific subsidiary book, simplifying the rectification process. It also makes the auditing process more systematic.
Accountability: Since different clerks are responsible for different books, it helps in fixing responsibility for any errors or discrepancies.

Q2Long Answers

What is cash book? Explain the types of cash book.

Solution

A cash book is a special purpose book in which all transactions relating to cash receipts and cash payments are recorded chronologically. It is a book of original entry because transactions are recorded here for the first time from source documents. It also serves the purpose of a ledger account for cash (and bank), hence it is both a journal and a ledger.

There are different types of cash books, primarily:

Single Column Cash Book:
- This is the simplest form of cash book and is used by small businesses that deal only in cash transactions.
- It has only one amount column on each side (debit and credit). The left (debit) side is used to record all cash receipts, and the right (credit) side is used to record all cash payments.
Double Column Cash Book:
- This type of cash book has two amount columns on each side: one for 'Cash' and one for 'Bank'.
- It is used by businesses that have a significant number of bank transactions. It records all cash receipts and payments in the cash column, and all receipts and payments through the bank in the bank column.
- It shows the balance of both cash in hand and cash at bank simultaneously.
- This book also records 'contra entries', which are transfers between the cash and bank accounts.
Petty Cash Book:
- This book is used to record numerous small, repetitive payments like postage, stationery, conveyance, etc.
- It is maintained by a separate 'petty cashier' on an imprest system to reduce the workload of the main cashier and keep the main cash book from becoming too bulky.

Q3Long Answers

What is contra entry? How can you deal this entry while preparing double column cash book?

Solution

A contra entry is a transaction that affects both the cash and bank accounts simultaneously, but in opposite directions. It represents a transfer of funds from one account to the other. Since both aspects of the transaction (debit and credit) are recorded within the double-column cash book itself, it is not posted to any account in the general ledger.

The two main examples of contra entries are:

Cash deposited into the bank.
Cash withdrawn from the bank for office use.

Dealing with Contra Entries in a Double-Column Cash Book:

A contra entry is recorded on both sides of the cash book. The procedure is as follows:

When cash is deposited into the bank:
- The bank account is receiving money, so it is debited. The entry is made on the debit (receipts) side by writing 'To Cash A/c' in the particulars column and the amount in the Bank column.
- The cash account is giving money, so it is credited. The entry is made on the credit (payments) side by writing 'By Bank A/c' in the particulars column and the amount in the Cash column.
When cash is withdrawn from the bank for office use:
- The cash account is receiving money, so it is debited. The entry is made on the debit (receipts) side by writing 'To Bank A/c' in the particulars column and the amount in the Cash column.
- The bank account is giving money, so it is credited. The entry is made on the credit (payments) side by writing 'By Cash A/c' in the particulars column and the amount in the Bank column.

In both cases, the letter 'C' is written in the Ledger Folio (L.F.) column on both sides to indicate that it is a contra entry and does not require posting to the ledger.

Q4Long Answers

What is petty cash book? Write the advantages of petty cash book?

Solution

A petty cash book is a subsidiary book maintained to record small and numerous payments like conveyance, cartage, postage, stationery, etc. These expenses are often repetitive in nature. To avoid overburdening the main cashier and making the main cash book unnecessarily bulky, a separate cashier, known as the petty cashier, is appointed to handle these payments and record them in the petty cash book.

It is usually maintained on the 'Imprest System', where a fixed amount is given to the petty cashier at the start of a period, and the amount spent is reimbursed at the end of the period.

Advantages of Petty Cash Book:

Saving of Time and Effort of Chief Cashier: The chief cashier is relieved from the task of handling numerous small payments. This allows them to concentrate on major cash transactions, leading to greater efficiency.
Effective Control over Cash Disbursements: The system provides better control over small expenditures. The head cashier controls large payments directly, while petty payments are controlled by checking the petty cashier's records before reimbursement. This division of work minimizes the chances of fraud.
Convenient Recording: Recording all minor expenses in the main cash book would make it very bulky and difficult to manage. The petty cash book keeps the main cash book concise and focused on significant transactions, in line with the materiality principle.
Simplified Posting to Ledger: The petty cash book has analytical columns for different expense heads. At the end of the period, only the totals of these columns are posted to the respective expense accounts in the ledger, instead of posting each individual small payment. This saves significant time and effort in ledger posting.

Q5Long Answers

Describe the advantages of sub-dividing the Journal.

Solution

Sub-dividing the journal into various special purpose books or subsidiary books is a common practice in businesses with a large volume of transactions. This approach offers several significant advantages over maintaining a single general journal:

Division of Labour: The accounting process can be divided among several clerks. Each clerk can be made responsible for a specific subsidiary book (e.g., one for sales, another for purchases). This leads to specialization, as each clerk becomes an expert in their area, resulting in faster and more accurate work.
Increased Efficiency: Since transactions of a similar nature are recorded together, the process becomes systematic and efficient. It saves time as the full details of a journal entry (debit, credit, narration) do not need to be written for every repetitive transaction.
Easy Access to Information: Information about a particular type of transaction is available in one place. For example, if management wants to know the total credit sales for a month, they can simply refer to the total of the Sales Journal, instead of sifting through a lengthy general journal.
Simplified Posting: Posting to the ledger is simplified and less time-consuming. Instead of posting each individual transaction, the periodic totals of the subsidiary books are posted to the respective control accounts in the ledger. For example, the monthly total of the Purchases Journal is debited to the Purchases Account in a single entry.
Minimization of Errors: When the accounting work is divided, the possibility of errors is reduced. Furthermore, if the trial balance does not agree, it is easier to locate the error by checking the subsidiary books one by one. This process is known as sectional balancing.
Fixing Responsibility: With different clerks handling different books, it becomes easier to hold a specific person accountable for the records they maintain, which promotes carefulness and reduces the likelihood of fraud or errors.

Q6Long Answers

What do you understand by balancing of account?

Solution

Balancing of an account is the process of equalizing the two sides (debit and credit) of a ledger account to find its net balance. This is typically done at the end of an accounting period to ascertain the final position of each account. The balance represents the net result of all transactions related to that account during the period.

The process of balancing involves the following steps:

Totaling Both Sides: First, the total of all amounts on the debit side and the total of all amounts on the credit side of the account are calculated separately.
Finding the Difference: The difference between the two totals is then determined.
Inserting the Balance: The difference is written on the side with the lower total, so that the totals of both sides become equal. This difference is described as 'Balance c/d' (carried down) or 'Balance c/f' (carried forward).
Bringing Down the Balance: After totaling and ruling off the account, the balance is brought down to the opposite side below the total for the next accounting period. This is described as 'Balance b/d' (brought down) or 'Balance b/f' (brought forward).

If the debit side total is greater than the credit side total, the account has a debit balance.
If the credit side total is greater than the debit side total, the account has a credit balance.

Accounts of expenses and revenues (nominal accounts) are not balanced; instead, they are closed by transferring their balances to the Trading and Profit and Loss Account.

Q1Numerical Questions

Enter the following transactions in a simple cash book for December 2016: ₹ 01 Cash in hand 12,000 05 Cash received from Bhanu 4,000 07 Rent Paid 2,000 10 Purchased goods Murari for cash 6,000 15 Sold goods for cash 9,000 18 Purchase stationery 300 22 Cash paid to Rahul on account 2,000 28 Paid salary 1,000 30 Paid rent 500

Solution

Simple Cash Book

Dr.

Date	Receipts	Amount (₹)	Date	Payments	Amount (₹)
2016			2016
Dec. 01	To Balance b/d	12,000	Dec. 07	By Rent A/c	2,000
Dec. 05	To Bhanu's A/c	4,000	Dec. 10	By Purchases A/c	6,000
Dec. 15	To Sales A/c	9,000	Dec. 18	By Stationery A/c	300
			Dec. 22	By Rahul's A/c	2,000
			Dec. 28	By Salary A/c	1,000
			Dec. 30	By Rent A/c	500
			Dec. 31	By Balance c/d	13,200
	Total	25,000		Total	25,000
2017
Jan. 01	To Balance b/d	13,200

Q2Numerical Questions

Record the following transaction in simple cash book for November 2016: ₹ 01 Cash in hand 12,500 04 Cash paid to Hari 600 07 Purchased goods 800 12 Cash received from Amit 1,960 16 Sold goods for cash 800 20 Paid to Manish 590 25 Paid cartage 100 31 Paid salary 1,000

Solution

Simple Cash Book

Dr.

Date	Receipts	Amount (₹)	Date	Payments	Amount (₹)
2016			2016
Nov. 01	To Balance b/d	12,500	Nov. 04	By Hari's A/c	600
Nov. 12	To Amit's A/c	1,960	Nov. 07	By Purchases A/c	800
Nov. 16	To Sales A/c	800	Nov. 20	By Manish's A/c	590
			Nov. 25	By Cartage A/c	100
			Nov. 30	By Salary A/c	1,000
			Nov. 30	By Balance c/d	12,170
	Total	15,260		Total	15,260
2016
Dec. 01	To Balance b/d	12,170

Q3Numerical Questions

Enter the following transaction in Simple cash book for December 2017: ₹ 01 Cash in hand 7,750 06 Paid to Sonu 45 08 Purchased goods 600 15 Received cash from Parkash 960 20 Cash sales 500 25 Paid to S.Kumar 1,200 30 Paid rent 600

Solution

Simple Cash Book

Dr.

Date	Receipts	Amount (₹)	Date	Payments	Amount (₹)
2017			2017
Dec. 01	To Balance b/d	7,750	Dec. 06	By Sonu's A/c	45
Dec. 15	To Parkash's A/c	960	Dec. 08	By Purchases A/c	600
Dec. 20	To Sales A/c	500	Dec. 25	By S. Kumar's A/c	1,200
			Dec. 30	By Rent A/c	600
			Dec. 31	By Balance c/d	6,765
	Total	9,210		Total	9,210
2018
Jan. 01	To Balance b/d	6,765

Q4Numerical Questions

Record the following transactions in a bank column cash book for December 2016: ₹ 01 Started business with cash 80,000 04 Deposited in bank 50,000 10 Received cash from Rahul 1,000 15 Bought goods for cash 8,000 22 Bought goods by cheque 10,000 25 Paid to Shyam by cash 20,000 30 Drew from Bank for office use 2,000 31 Rent paid by cheque 1,000

Solution

Double Column Cash Book

Dr.

Date	Receipts	L.F.	Cash (₹)	Bank (₹)	Date	Payments	L.F.	Cash (₹)	Bank (₹)
2016					2016
Dec. 01	To Capital A/c		80,000		Dec. 04	By Bank A/c	C	50,000
Dec. 04	To Cash A/c	C		50,000	Dec. 15	By Purchases A/c		8,000
Dec. 10	To Rahul's A/c		1,000		Dec. 22	By Purchases A/c			10,000
Dec. 30	To Bank A/c	C	2,000		Dec. 25	By Shyam's A/c		20,000
					Dec. 30	By Cash A/c	C		2,000
					Dec. 31	By Rent A/c			1,000
					Dec. 31	By Balance c/d		5,000	37,000
	Total		83,000	50,000		Total		83,000	50,000
2017
Jan. 01	To Balance b/d		5,000	37,000

Q5Numerical Questions

Prepare a double column cash book with the help of following information for December 2016: 01 Started business with cash 1,20,000 03 Cash paid into bank 50,000 05 Purchased goods from Sushmita 20,000 06 Sold goods to Dinker and received a cheque 20,000 10 Paid to Sushmita cash 20,000 14 Cheque received on December 06, 2016 deposited into bank 18 Sold goods to Rani 12,000 20 Cartage paid in cash 500 22 Received cash from Rani 12,000 27 Commission received 5,000 30 Drew cash for personal use 2,000

Solution

Note: The purchase from Sushmita on Dec 05 is a credit transaction and will not be recorded in the cash book. Similarly, the sale to Rani on Dec 18 is a credit transaction and not recorded in the cash book.

Double Column Cash Book

Dr.

Date	Receipts	L.F.	Cash (₹)	Bank (₹)	Date	Payments	L.F.	Cash (₹)	Bank (₹)
2016					2016
Dec. 01	To Capital A/c		1,20,000		Dec. 03	By Bank A/c	C	50,000
Dec. 03	To Cash A/c	C		50,000	Dec. 10	By Sushmita's A/c		20,000
Dec. 06	To Sales A/c		20,000		Dec. 14	By Bank A/c	C	20,000
Dec. 14	To Cash A/c	C		20,000	Dec. 20	By Cartage A/c		500
Dec. 22	To Rani's A/c		12,000		Dec. 30	By Drawings A/c		2,000
Dec. 27	To Commission A/c		5,000		Dec. 31	By Balance c/d		64,500	70,000
	Total		1,57,000	70,000		Total		1,57,000	70,000
2017
Jan. 01	To Balance b/d		64,500	70,000

Q6Numerical Questions

Enter the following transactions in double column cash book of M/s Ambica Traders for July 2017: 01 Commenced business with cash 50,000 03 Opened bank account with ICICI 30,000 05 Purchased goods for cash 10,000 10 Purchased office machine for cash 5,000 15 Sales goods on credit from Rohan and received chaeque 7,000 18 Cash sales 8,000 20 Rohan's cheque deposited into bank 22 Paid cartage by cheque 500 25 Cash withdrawn for personal use 2,000 30 Paid rent by cheque 1,000

Solution

Note: The transaction on July 15, 'Sales goods on credit from Rohan and received cheque' is interpreted as 'Sold goods to Rohan and received cheque'. The cheque is treated as cash on July 15 and deposited on July 20.

Double Column Cash Book

Dr.

Date	Receipts	L.F.	Cash (₹)	Bank (₹)	Date	Payments	L.F.	Cash (₹)	Bank (₹)
2017					2017
July 01	To Capital A/c		50,000		July 03	By Bank A/c	C	30,000
July 03	To Cash A/c	C		30,000	July 05	By Purchases A/c		10,000
July 15	To Sales A/c		7,000		July 10	By Office Machine A/c		5,000
July 18	To Sales A/c		8,000		July 20	By Bank A/c	C	7,000
July 20	To Cash A/c	C		7,000	July 22	By Cartage A/c			500
					July 25	By Drawings A/c		2,000
					July 30	By Rent A/c			1,000
					July 31	By Balance c/d		11,000	35,500
	Total		65,000	37,000		Total		65,000	37,000
2017
Aug. 01	To Balance b/d		11,000	35,500

Q7Numerical Questions

Prepare double column cash book from the following information for July 2017: ₹ 01 Cash In hand 7,500 Bank overdraft 3,500 03 Paid wages 200 05 Cash sales 7,000 10 Cash deposited into bank 4,000 15 Goods purchased and paid by cheque 2,000 20 Paid rent 500 25 Drew from bank for personal use 400 30 Salary paid 1,000

Solution

Note: Bank overdraft is a credit balance, so it will be shown on the credit side as 'By Balance b/d'.

Double Column Cash Book

Dr.

Date	Receipts	L.F.	Cash (₹)	Bank (₹)	Date	Payments	L.F.	Cash (₹)	Bank (₹)
2017					2017
July 01	To Balance b/d		7,500		July 01	By Balance b/d			3,500
July 05	To Sales A/c		7,000		July 03	By Wages A/c		200
July 10	To Cash A/c	C		4,000	July 10	By Bank A/c	C	4,000
					July 15	By Purchases A/c			2,000
					July 20	By Rent A/c		500
					July 25	By Drawings A/c			400
					July 30	By Salary A/c		1,000
July 31	To Balance c/d			1,900	July 31	By Balance c/d		8,800
	Total		14,500	5,900		Total		14,500	5,900
2017					2017
Aug. 01	To Balance b/d		8,800		Aug. 01	By Balance b/d			1,900

Q8Numerical Questions

Enter the following transaction in a double column cash book of M/s.Mohit Traders for January 2017: ₹ 01 Cash in hand 2,300 Bank overdraft 5,000 03 Goods purchased for cash 1,200 05 Paid wages 200 10 Cash sales 8,000 15 Deposited into bank 6,000 22 Sold goods for cheque which was deposited into bank same day 2,000 25 Paid rent by cheque 1,200 28 Drew from bank for personal use 1,000 31 Bought goods by cheque 1,000

Solution

Double Column Cash Book

Dr.

Date	Receipts	L.F.	Cash (₹)	Bank (₹)	Date	Payments	L.F.	Cash (₹)	Bank (₹)
2017					2017
Jan. 01	To Balance b/d		2,300		Jan. 01	By Balance b/d			5,000
Jan. 10	To Sales A/c		8,000		Jan. 03	By Purchases A/c		1,200
Jan. 15	To Cash A/c	C		6,000	Jan. 05	By Wages A/c		200
Jan. 22	To Sales A/c			2,000	Jan. 15	By Bank A/c	C	6,000
					Jan. 25	By Rent A/c			1,200
					Jan. 28	By Drawings A/c			1,000
					Jan. 31	By Purchases A/c			1,000
					Jan. 31	By Balance c/d		2,900	200
	Total		10,300	8,000		Total		10,300	8,000
2017
Feb. 01	To Balance b/d		2,900	200

Q9Numerical Questions

Prepare double column cash book from the following transactions for the year August 2017: ₹ 01 Cash in hand 17,500 Cash at bank 5,000 03 Purchased goods for cash 3,000 05 Received cheque from Jasmeet 10,000 08 Sold goods for cash 7,000 10 Jasmeet's cheque deposited into bank 12 Purchased goods and paid by cheque 20,000 15 Paid establishment expenses through bank 1,000 18 Cash sales 7,000 20 Deposited into bank 10,000 24 Paid trade expenses 500 27 Received commission by cheque 6,000 29 Paid Rent 2,000 30 Withdrew cash for personal use 1,200 31 Salary paid 6,000

Solution

Double Column Cash Book

Dr.

Date	Receipts	L.F.	Cash (₹)	Bank (₹)	Date	Payments	L.F.	Cash (₹)	Bank (₹)
2017					2017
Aug. 01	To Balance b/d		17,500	5,000	Aug. 03	By Purchases A/c		3,000
Aug. 05	To Jasmeet's A/c		10,000		Aug. 10	By Bank A/c	C	10,000
Aug. 08	To Sales A/c		7,000		Aug. 12	By Purchases A/c			20,000
Aug. 10	To Cash A/c	C		10,000	Aug. 15	By Estb. Exp. A/c			1,000
Aug. 18	To Sales A/c		7,000		Aug. 20	By Bank A/c	C	10,000
Aug. 20	To Cash A/c	C		10,000	Aug. 24	By Trade Exp. A/c		500
Aug. 27	To Commission A/c			6,000	Aug. 29	By Rent A/c		2,000
					Aug. 30	By Drawings A/c		1,200
					Aug. 31	By Salary A/c		6,000
					Aug. 31	By Balance c/d		8,800	10,000
	Total		41,500	31,000		Total		41,500	31,000
2017
Sep. 01	To Balance b/d		8,800	10,000

Q10Numerical Questions

M/s Ruchi trader started their cash book with the following balances on July 2017: cash in hand ₹1,354 and balance in bank current account ₹7,560. He had the following transaction in the month of July 2017: ₹ 03 Cash sales 2,300 05 Purchased goods, paid by cheque 6,000 08 Cash sales 10,000 12 Paid trade expenses 700 15 Sales goods, received cheque (deposited same day) 20,000 18 Purchased motor car paid by cheque 15,000 20 Cheque received from Manisha (deposited same day) 10,000 22 Cash Sales 7,000 25 Manisha's cheque returned dishonoured 28 Paid Rent 2,000 29 Paid telephone expenses by cheque 500 31 Cash withdrawn for personal use 2,000

Solution

Double Column Cash Book

Dr.

Date	Receipts	Cash (₹)	Bank (₹)	Date	Payments	Cash (₹)	Bank (₹)
2017				2017
July 01	To Balance b/d	1,354	7,560	July 05	By Purchases A/c		6,000
July 03	To Sales A/c	2,300		July 12	By Trade Exp. A/c	700
July 08	To Sales A/c	10,000		July 18	By Motor Car A/c		15,000
July 15	To Sales A/c		20,000	July 25	By Manisha's A/c		10,000
July 20	To Manisha's A/c		10,000	July 28	By Rent A/c	2,000
July 22	To Sales A/c	7,000		July 29	By Telephone Exp. A/c		500
				July 31	By Drawings A/c	2,000
				July 31	By Balance c/d	15,954	6,060
	Total	20,654	37,560		Total	20,654	37,560
2017
Aug. 01	To Balance b/d	15,954	6,060

Q11Numerical Questions

Prepare petty cash book from the following transactions. The imprest amount is ₹2,000. 2017 ..... ₹ January 01 Paid cartage ..... 50 02 STD charges ..... 40 02 Bus fare ..... 20 03 Postage ..... 30 04 Refreshment for employees ..... 80 06 Courier charges ..... 30 08 Refreshment of customer ..... 50 10 Cartage ..... 35 15 Taxi fare to manager ..... 70 18 Stationery ..... 65 20 Bus fare ..... 10 22 Fax charges ..... 30 25 Telegrams charges ..... 35 27 Postage stamps ..... 200 29 Repair on furniture ..... 105 30 Laundry expenses ..... 115 31 Miscellaneous expenses ..... 100

Solution

Petty Cash Book

Amount Received (₹)	Date	Particulars	Amount Paid (₹)	Conveyance (₹)	Postage & Courier (₹)	Stationery (₹)	Repairs (₹)	Miscellaneous (₹)
2,000	Jan 01	To Cash A/c
	Jan 01	By Cartage	50	50
	Jan 02	By STD Charges	40		40
	Jan 02	By Bus Fare	20	20
	Jan 03	By Postage	30		30
	Jan 04	By Refreshment	80					80
	Jan 06	By Courier Charges	30		30
	Jan 08	By Refreshment	50					50
	Jan 10	By Cartage	35	35
	Jan 15	By Taxi Fare	70	70
	Jan 18	By Stationery	65			65
	Jan 20	By Bus Fare	10	10
	Jan 22	By Fax Charges	30		30
	Jan 25	By Telegrams	35		35
	Jan 27	By Postage Stamps	200		200
	Jan 29	By Repair on Furniture	105				105
	Jan 30	By Laundry Expenses	115					115
	Jan 31	By Misc. Expenses	100					100
	Jan 31	By Balance c/d	935
		Total	2,000	185	365	65	105	345

935	Feb 01	To Balance b/d
1,065	Feb 01	To Cash A/c (Reimbursement)

Q12Numerical Questions

Record the following transactions during the week ending Dec.30,2014with a weekly imprest ₹ 500 . 2017 ..... ₹ January 24 Stationery ..... 100 25 Bus fare ..... 12 25 Cartage ..... 40 26 Taxi fare ..... 80 27 Wages to casual labour ..... 90 29 Postage ..... 80

Solution

Petty Cash Book

Amount Received (₹)	Date	Particulars	Amount Paid (₹)	Stationery (₹)	Conveyance (₹)	Wages (₹)	Postage (₹)
500	Jan 24	To Cash A/c
	Jan 24	By Stationery	100	100
	Jan 25	By Bus Fare	12		12
	Jan 25	By Cartage	40		40
	Jan 26	By Taxi Fare	80		80
	Jan 27	By Wages to Casual Labour	90			90
	Jan 29	By Postage	80				80
	Jan 30	By Balance c/d	98
		Total	500	100	132	90	80

98	Jan 31	To Balance b/d
402	Jan 31	To Cash A/c (Reimbursement)

Q13Numerical Questions

Enter the following transactions in the Purchase Journal (Book) of M/s Gupta Traders of July 2017: 01 Bought from Rahul Traders as per invoice no. 20041 40 Registers @ ₹60 each 80 Gel Pens @ ₹ 15 each 50 note books @ ₹20 each Trade discount 10%. 15 Bought from Global Stationers as per invoice no. 1132 40 Ink Pads @ ₹8 each 50 Files @ ₹ 10 each 20 Color Books @ ₹ 20 each Trade Discount 5% 23 Purchased from Lamba Furniture as per invoice no. 3201 2 Chairs @ 600 per chair 1 Table @ 1000 per table 25 Bought from Mumbai Traders as per invoice no. 1111 10 Paper Rim @ ₹ 100 per rim 400 drawing Sheets @ ₹3 each 20 Packets waters colour @ ₹40 per packet

Solution

Note: Purchase of furniture on July 23 is a purchase of an asset, not goods for resale. Therefore, it will be recorded in the Journal Proper, not the Purchases Journal.

Purchases Journal (Book)

Date	Invoice No.	Name of Supplier (Account to be credited)	Details (₹)	Amount (₹)
2017
July 01	20041	Rahul Traders	40 Registers @ 60 = 2,400
			80 Gel Pens @ 15 = 1,200
			50 Note Books @ 20 = 1,000
			Total = 4,600
			Less: 10% Trade Discount (460)	4,140
July 15	1132	Global Stationers	40 Ink Pads @ 8 = 320
			50 Files @ 10 = 500
			20 Color Books @ 20 = 400
			Total = 1,220
			Less: 5% Trade Discount (61)	1,159
July 25	1111	Mumbai Traders	10 Paper Rim @ 100 = 1,000
			400 Drawing Sheets @ 3 = 1,200
			20 Packets Water Colour @ 40 = 800
			Total	3,000
July 31		Purchases A/c Dr.		8,299

Q14Numerical Questions

Enter the following transactions in sales (journal) book of M/s.Bansal electronics: 2014 September 01 Sold to Amit Traders as per bill no. 4321 20 Pocket Radio @ 70 per Radio 2, T.V. set, B&W.(6") @ 800 Per T.V. 10. Sold to Arun Electronics as per bill no. 4351 5 T.V. sets (20") B&W @ ₹3,000 per T.V. 2 T.V. sets (21") Colour @ ₹ 4,800 per T.V. 22 Sold to Handa Electronics as per bill no. 4,399 10 Tape recorders @ ₹ 600 each 5 Walkman @ ₹ 300 each 28 Sold to Harish Trader as per bill no. 4430 10 Mixer Juicer Grinder @ ₹ 800 each.

Solution

Sales Journal (Book)

Date	Invoice No.	Name of Customer (Account to be debited)	Details (₹)	Amount (₹)
2014
Sep. 01	4321	Amit Traders	20 Pocket Radios @ 70 = 1,400
			2 B&W TV Sets @ 800 = 1,600	3,000
Sep. 10	4351	Arun Electronics	5 B&W TV Sets @ 3,000 = 15,000
			2 Colour TV Sets @ 4,800 = 9,600	24,600
Sep. 22	4399	Handa Electronics	10 Tape Recorders @ 600 = 6,000
			5 Walkman @ 300 = 1,500	7,500
Sep. 28	4430	Harish Trader	10 Mixer Grinders @ 800	8,000
Sep. 30		Sales A/c Cr.		43,100

Q15Numerical Questions

Prepare a purchases return (journal) book from the following transactions for April 2017. April 05 Returned goods to M/s Kartik Traders 1,200 10 Goods returned to Sahil Pvt. Ltd. 2,500 17 Goods returned to M/s Kohinoor Traders. for list price ₹2,000 less 10% trade discount. 28 Return outwards to M/s Handa Traders 550

Solution

Purchases Return Journal (Book)

Date	Name of Supplier (Account to be debited)	Details (₹)	Amount (₹)
2017
Apr. 05	M/s Kartik Traders		1,200
Apr. 10	Sahil Pvt. Ltd.		2,500
Apr. 17	M/s Kohinoor Traders	List Price = 2,000
		Less: 10% Trade Discount (200)	1,800
Apr. 28	M/s Handa Traders		550
Apr. 30	Purchases Return A/c Cr.		6,050

(Correction to textbook answer: The total is 1200 + 2500 + 1800 + 550 = 6050, not 6150)

Q16Numerical Questions

Prepare Return Inward Journal (Book) from the following transactions of M/s Bansal Electronics for July 2017: 2017 July 04 M/s Gupta Traders returned the goods 1,500 10 Goods returned from M/s Harish Traders 800 18 M/s Rahul Traders returned the goods not as per specifications 1,200 28 Goods returned from Sushil Traders 1,000

Solution

Sales Return (Return Inward) Journal (Book)

Date	Name of Customer (Account to be credited)	Amount (₹)
2017
July 04	M/s Gupta Traders	1,500
July 10	M/s Harish Traders	800
July 18	M/s Rahul Traders	1,200
July 28	Sushil Traders	1,000
July 31	Sales Return A/c Dr.	4,500

Q17Numerical Questions

Prepare proper subsidiary books and post them to the ledger from the following transactions for the month of February 2017: 2017 ₹ February 01 Goods sold to Sachin 5,000 04 Purchase from Kushal Traders 2,480 06 Sold goods to Manish Traders 2,100 07 Sachin returned goods 600 08 Returns to Kushal Traders 280 10 Sold to Mukesh 3,300 14 Purchased from Kunal Traders 5,200 15 Furniture purchased from Tarun 3,200 17 Bought of Naresh 4,060 20 Return to Kunal Traders 200 22 Return inwards from Mukesh 250 24 Purchased goods from Kirit & Co. for list price of 5,700 less 10% trade discount 25 Sold to Shri Chand goods 6600 less 5% trade discount 26 Sold to Ramesh Brothers 4,000 28 Return outwards to Kirit and Co. 1,000 less 10% trade discount 28 Ramesh Brothers returned goods ₹ 500.

Solution

1. Subsidiary Books

Sales Journal

Date	Name of Customer	Amount (₹)
Feb. 01	Sachin	5,000
Feb. 06	Manish Traders	2,100
Feb. 10	Mukesh	3,300
Feb. 25	Shri Chand (6600 - 330)	6,270
Feb. 26	Ramesh Brothers	4,000
Feb. 28	Total to Sales A/c (Cr.)	20,670

Purchases Journal

Date	Name of Supplier	Amount (₹)
Feb. 04	Kushal Traders	2,480
Feb. 14	Kunal Traders	5,200
Feb. 17	Naresh	4,060
Feb. 24	Kirit & Co. (5700 - 570)	5,130
Feb. 28	Total to Purchases A/c (Dr.)	16,870

Sales Return Journal

Date	Name of Customer	Amount (₹)
Feb. 07	Sachin	600
Feb. 22	Mukesh	250
Feb. 28	Ramesh Brothers	500
Feb. 28	Total to Sales Return A/c (Dr.)	1,350

Purchases Return Journal

Date	Name of Supplier	Amount (₹)
Feb. 08	Kushal Traders	280
Feb. 20	Kunal Traders	200
Feb. 28	Kirit & Co. (1000 - 100)	900
Feb. 28	Total to Purchases Return A/c (Cr.)	1,380

Journal Proper

Date	Particulars	Debit (₹)	Credit (₹)
Feb. 15	Furniture A/c Dr.	3,200
	To Tarun's A/c		3,200
	(Being furniture purchased on credit)

2. Ledger Accounts

Sales A/c

Date	Particulars	J.F.	Amount (₹)	Date	Particulars	J.F.	Amount (₹)
				Feb. 28	By Sundries (as per Sales Journal)		20,670

Purchases A/c

Date	Particulars	J.F.	Amount (₹)	Date	Particulars	J.F.	Amount (₹)
Feb. 28	To Sundries (as per Purchases Journal)		16,870

Sales Return A/c

Date	Particulars	J.F.	Amount (₹)	Date	Particulars	J.F.	Amount (₹)
Feb. 28	To Sundries (as per Sales Return Journal)		1,350

Purchases Return A/c

Date	Particulars	J.F.	Amount (₹)	Date	Particulars	J.F.	Amount (₹)
				Feb. 28	By Sundries (as per Purchases Return Journal)		1,380

Sachin's A/c

Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
Feb. 01	To Sales A/c	5,000	Feb. 07	By Sales Return A/c	600
			Feb. 28	By Balance c/d	4,400
	Total	5,000		Total	5,000

Kushal Traders' A/c

Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
Feb. 08	To Purchases Return A/c	280	Feb. 04	By Purchases A/c	2,480
Feb. 28	To Balance c/d	2,200
	Total	2,480		Total	2,480

Q18Numerical Questions

The following balances of ledger of M/s Marble Traders on April 01, 2017 2017 ₹ April Cash in hand 6,000 Cash at bank 12,000 Bills receivable 7,000 Ramesh (Cr.) 3,000 Stock (Goods) 5,400 Bills payable 2,000 Rahul (Dr.) 9,700 Himanshu (Dr.) 10,000 Transactions during the month were: April ..... ₹ 01 Goods sold to Manish ..... 3,000 02 Purchased goods from Ramesh ..... 8,000 03 Received cash from Rahul in full settlement ..... 9,200 05 Cash received from Himanshu on account ..... 4,000 06 paid to Remesh by cheque ..... 6,000. 08 Rent paid by cheque ..... 1,200 10 Cash received from manish ..... 3,000 12 Cash sales ..... 6,000 14 Goods returned to Ramesh ..... 1,000 15 Cash paid to Ramesh in full settlement ..... 3,700 Discount received ..... 300 18 Goods sold to Kushal ..... 10,000 20 Paid trade expenses ..... 200 21 Drew for personal use ..... 1,000 22 Goods return from Kushal ..... 1,200 24 Cash received from Kushal ..... 6,000 26 Paid for stationery ..... 100 27 Postage charges ..... 60 28 Salary Paid ..... 2,500 29 Goods purchased from Sheetal Traders ..... 7,000 30 Sold goods to Kirit ..... 6000 Goods purchased from Handa Traders ..... 5,000 Journlise the above transactions and post them to the ledger.

Solution

1. Journal (Opening Entry & Discount)

Date	Particulars	Debit (₹)	Credit (₹)
2017
Apr. 01	Cash A/c Dr.	6,000
	Bank A/c Dr.	12,000
	Bills Receivable A/c Dr.	7,000
	Stock A/c Dr.	5,400
	Rahul's A/c Dr.	9,700
	Himanshu's A/c Dr.	10,000
	To Ramesh's A/c		3,000
	To Bills Payable A/c		2,000
	To Capital A/c (Bal. Fig.)		45,100
	(Being opening balances brought forward)
Apr. 03	Discount Allowed A/c Dr.	500
	To Rahul's A/c		500
	(Discount allowed on full settlement)
Apr. 15	Ramesh's A/c Dr.	300
	To Discount Received A/c		300
	(Discount received on full settlement)

2. Subsidiary Books

Cash Book (Double Column)

Dr.

Date	Receipts	Cash (₹)	Bank (₹)	Date	Payments	Cash (₹)	Bank (₹)
Apr. 01	To Balance b/d	6,000	12,000	Apr. 06	By Ramesh's A/c		6,000
Apr. 03	To Rahul's A/c	9,200		Apr. 08	By Rent A/c		1,200
Apr. 05	To Himanshu's A/c	4,000		Apr. 15	By Ramesh's A/c	3,700
Apr. 10	To Manish's A/c	3,000		Apr. 20	By Trade Exp. A/c	200
Apr. 12	To Sales A/c	6,000		Apr. 21	By Drawings A/c	1,000
Apr. 24	To Kushal's A/c	6,000		Apr. 26	By Stationery A/c	100
				Apr. 27	By Postage A/c	60
				Apr. 28	By Salary A/c	2,500
				Apr. 30	By Balance c/d	26,640	4,800
	Total	34,200	12,000		Total	34,200	12,000

Sales Journal

Date	Name of Customer	Amount (₹)
Apr. 01	Manish	3,000
Apr. 18	Kushal	10,000
Apr. 30	Kirit	6,000
Apr. 30	Total	19,000

Purchases Journal

Date	Name of Supplier	Amount (₹)
Apr. 02	Ramesh	8,000
Apr. 29	Sheetal Traders	7,000
Apr. 30	Handa Traders	5,000
Apr. 30	Total	20,000

Sales Return Journal

Date	Name of Customer	L.F.	Amount (₹)
Apr. 22	Kushal		1,200
Apr. 30	Total		1,200

Purchases Return Journal

Date	Name of Supplier	L.F.	Amount (₹)
Apr. 14	Ramesh		1,000
Apr. 30	Total		1,000

3. Ledger Posting (Key Accounts)

Ramesh's A/c

Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
Apr. 06	To Bank A/c	6,000	Apr. 01	By Balance b/d	3,000
Apr. 14	To Pur. Return A/c	1,000	Apr. 02	By Purchases A/c	8,000
Apr. 15	To Cash A/c	3,700
Apr. 15	To Disc. Rec. A/c	300
	Total	11,000		Total	11,000

Rahul's A/c

Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
Apr. 01	To Balance b/d	9,700	Apr. 03	By Cash A/c	9,200
			Apr. 03	By Disc. Allowed A/c	500
	Total	9,700		Total	9,700

Kushal's A/c

Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
Apr. 18	To Sales A/c	10,000	Apr. 22	By Sales Return A/c	1,200
			Apr. 24	By Cash A/c	6,000
			Apr. 30	By Balance c/d	2,800
	Total	10,000		Total	10,000

Q1Short Answers

Briefly state how the cash book is both journal and a ledger.

Solution

A cash book is considered both a journal and a ledger due to its unique nature:

As a Journal (Book of Original Entry): Transactions are recorded in the cash book as and when they occur, in a chronological order, directly from the source documents. This is the primary function of a journal. When a cash book is maintained, cash transactions are not recorded in the general journal.
As a Ledger (Principal Book): The cash book serves the purpose of the Cash Account and Bank Account. It has debit and credit sides like a ledger account. The balance of cash in hand and at bank can be ascertained directly from it. Therefore, separate cash and bank accounts are not opened in the ledger.

Q2Short Answers

What is the purpose of contra entry?

Solution

A contra entry is a transaction that involves both the cash and bank accounts. The purpose of a contra entry is to record the transfer of funds between the cash account and the bank account within the double-column cash book itself. Since both aspects of the transaction (debit and credit) are recorded in the cash book, these entries are not posted to any other account in the ledger. The letter 'C' is written in the Ledger Folio (L.F.) column to indicate that it is a contra entry.

Examples include:

Depositing cash into the bank.
Withdrawing cash from the bank for office use.

Q3Short Answers

What are special purpose books?

Solution

Special purpose books, also known as daybooks or subsidiary books, are subdivisions of the Journal. They are used to record a large number of repetitive and similar transactions. Instead of recording every transaction in one general journal, which can be cumbersome for a large business, specific books are maintained for specific types of transactions. This practice makes the recording process quick, efficient, and accurate, and also allows for the division of accounting work.

The main special purpose books are:

Cash Book
Purchases Book
Sales Book
Purchases Return Book
Sales Return Book
Journal Proper (for transactions that do not fit in any other special book)

Q4Short Answers

What is petty cash book? How it is prepared?

Solution

A petty cash book is a type of cash book used to record small, repetitive payments like conveyance, postage, stationery, etc. It is maintained by a petty cashier to reduce the burden on the main cashier and to avoid cluttering the main cash book with numerous small entries.

It is generally prepared on the 'Imprest System':

Imprest Amount: The head cashier gives a fixed sum of money (e.g., ₹2,000) to the petty cashier at the beginning of a period. This is called the imprest amount.
Recording Payments: The petty cashier makes all small payments out of this amount and records them in the petty cash book, which has separate columns for different types of expenses.
Reimbursement: At the end of the period (e.g., a month or a week), the petty cashier submits the accounts to the head cashier. The head cashier then reimburses the exact amount spent by the petty cashier. This brings the cash balance back to the original imprest amount for the next period.

Q5Short Answers

Explain the meaning of posting of journal entries?

Solution

Posting is the process of transferring entries from the books of original entry (like the Journal or special purpose books) to their respective accounts in the ledger. The ledger is the principal book of accounts where all transactions are classified and summarized in the form of accounts.

The process involves:

Debit Aspect: The account to be debited in the journal entry is located in the ledger, and the entry is made on its debit side.
Credit Aspect: The account to be credited in the journal entry is located in the ledger, and the entry is made on its credit side.

For example, when posting from the sales book, the individual customer accounts are debited, and at the end of the period, the total of the sales book is credited to the Sales Account. This process helps in ascertaining the net position of each account.

Q6Short Answers

Define the purpose of maintaining subsidiary journal.

Solution

The primary purpose of maintaining subsidiary journals (or special purpose books) is to overcome the limitations of using only a single general journal for a large business. The key purposes are:

Division of Labour: The accounting work can be divided among several clerks, with each person handling a specific journal. This leads to specialization and increased efficiency.
Time and Labour Saving: Recording repetitive transactions in special journals is faster and more efficient than journalising each one individually.
Ease of Posting: Posting to the ledger becomes simpler as totals of subsidiary books are posted periodically (e.g., monthly) to the control accounts, instead of posting each individual transaction.
Error Prevention and Location: Dividing the journal helps in locating errors more easily, as a trial balance difference can be traced to a specific book.
Detailed Information: Each subsidiary book provides detailed information about a particular aspect of the business, such as total credit sales or total credit purchases, in one place.

Q7Short Answers

Write the difference between return Inwards and return ouwards.

Solution

The difference between Return Inwards and Return Outwards is as follows:

Basis	Return Inwards (Sales Return)	Return Outwards (Purchases Return)
Meaning	It refers to goods sold by the business that are returned by the customers.	It refers to goods purchased by the business that are returned to the suppliers.
Reason for Return	Goods may be defective, not as per sample, or damaged in transit.	Goods may be of inferior quality, defective, or not as per the order placed.
Subsidiary Book	These transactions are recorded in the Sales Return (Journal) Book.	These transactions are recorded in the Purchases Return (Journal) Book.
Source Document	A Credit Note is issued to the customer upon receipt of the returned goods.	A Debit Note is sent to the supplier along with the returned goods.
Ledger Posting	The total of the Sales Return Book is debited to the Sales Return Account.	The total of the Purchases Return Book is credited to the Purchases Return Account.

Q8Short Answers

What do you understand by ledger folio?

Solution

Ledger Folio, abbreviated as L.F., is a column in the books of original entry, such as the Journal and subsidiary books (Cash Book, Purchases Book, etc.). The term 'folio' means page number. The purpose of the L.F. column is to record the page number of the ledger where the respective account has been posted.

This serves as a cross-reference, making it easy to locate the corresponding entry in the ledger from the journal and vice versa. It ensures that all entries have been posted and helps in auditing the books of accounts. Similarly, a Journal Folio (J.F.) column is maintained in the ledger to record the page number of the journal from where the entry has been posted.

Q9Short Answers

What is difference between trade discount and cash discount?

Solution

The difference between trade discount and cash discount is as follows:

Basis	Trade Discount	Cash Discount
Purpose	It is allowed by a seller to a buyer to encourage bulk purchases. It is a reduction in the list price of goods.	It is allowed to customers to encourage prompt or early payment of their dues.
Timing	It is allowed at the time of purchase or sale of goods.	It is allowed at the time of payment, if payment is made within a specified period.
Recording in Books	It is not recorded separately in the books of accounts. Transactions are recorded at the net value (List Price - Trade Discount).	It is recorded separately in the books of accounts. It is an expense for the party allowing it and an income for the party receiving it.
Calculation	It is calculated on the list price or invoice price of the goods.	It is calculated on the amount due after deducting the trade discount.

Q10Short Answers

Write the process of preparing ledger from a journal.

Solution

The process of preparing a ledger from a journal is called posting. It involves transferring entries from the journal (or subsidiary books) to the respective accounts in the ledger. The steps are as follows:

Identify the Accounts: For each journal entry, identify the two accounts involved: the one to be debited and the one to be credited.
Locate the Debit Account: Find the account to be debited in the ledger.
Post to the Debit Side: On the debit side of this account, write the date, the name of the account credited in the 'Particulars' column, the journal folio (J.F.) number, and the amount.
Locate the Credit Account: Find the account to be credited in the ledger.
Post to the Credit Side: On the credit side of this account, write the date, the name of the account debited in the 'Particulars' column, the journal folio (J.F.) number, and the amount.
Update Folio Columns: In the journal, write the ledger page number (folio) in the L.F. column for both the debited and credited accounts to indicate that posting is complete.
Repeat: Repeat this process for all journal entries in chronological order.

Q11Short Answers

What do you understand by Imprest amount in petty cash book?

Solution

The Imprest amount is the fixed sum of money given by the head cashier to the petty cashier at the beginning of a period (e.g., a week or a month) to meet small, day-to-day expenses. This is the core concept of the 'Imprest System' of maintaining a petty cash book.

Under this system, the petty cashier makes payments from this imprest amount. At the end of the period, the petty cashier submits a statement of expenses. The head cashier then reimburses the exact amount that was spent. This reimbursement restores the petty cashier's cash balance to the original imprest amount. This system ensures better control over petty cash expenditures, as the total amount spent is reviewed before reimbursement.

Q1Test Your Understanding - I

Select the Correct Answer (a) When a firm maintains a cash book, it need not maintain ;

(i)

Journal Proper

(ii)

Purchases (journal) book

(iii)

Sales (journal) book

(iv)

Bank and cash account in the ledger

Solution

(iv) Bank and cash account in the ledger

Q2Test Your Understanding - I

(b) Double column cash book records:

(i)

All transactions

(ii)

Cash and bank transactions

(iii)

Only cash transactions

(iv)

Only credit transactions

Solution

(ii) Cash and bank transactions

Q3Test Your Understanding - I

(c) Goods purchased on cash are recorded in the :

(i)

Purchases (journal) book

(ii)

Sales (journal) book

(iii)

Cash book

(iv)

Purchases return (journal) book

Solution

(iii) Cash book

Q4Test Your Understanding - I

(d) Cash book does not record transaction of :

(i)

Cash nature

(ii)

Credit nature

(iii)

Cash and credit nature

(iv)

None of these

Solution

(ii) Credit nature

Q5Test Your Understanding - I

(e) Total of these transactions is posted in purchase account :

(i)

Purchase of furniture

(ii)

Cash and credit purchase

(iii)

Purchases return

(iv)

Purchase of stationery

Solution

(ii) Cash and credit purchase

Q6Test Your Understanding - I

(f) The periodic total of sales return journal is posted to :

(i)

Sales account

(ii)

Goods account

(iii)

Purchases return account

(iv)

Sales return account

Solution

(iv) Sales return account

Q7Test Your Understanding - I

(g) Credit balance of bank account in cash book shows :

(i)

Overdraft

(ii)

Cash deposited in our bank

(iii)

Cash withdrawn from bank

(iv)

None of these

Solution

(i) Overdraft

Q8Test Your Understanding - I

(h) The periodic total of purchases return journal is posted to :

(i)

Purchase account

(ii)

Profit and loss account

(iii)

Purchase returns account

(iv)

Furniture account

Solution

(iii) Purchase returns account

Q9Test Your Understanding - I

(i) Balancing of account means: (i) Total of debit side (ii) Total of credit side (iii) Difference in total…

(i)

Balancing of account means :

(i)

Total of debit side

(ii)

Total of credit side

(iii)

Difference in total of debit & credit

(iv)

None of these

Solution

(iii) Difference in total of debit & credit

Q1Test Your Understanding - II

Fill in the Correct Words :

(a)

Cash book is a ______ journal.

(b)

In Journal proper, only. ______ discount is recorded.

(c)

Return of goods purchased on credit to the suppliers will be entered in ______ Journal.

(d)

Assets sold on credit are entered in ______

(e) Double column cash book records transaction relating to ______ and ______

(f) Total of the debit side of cash book is ______ than the credit side.

(g) Cash book does not record the ______ transactions.

(h) In double column cash book ______ transactions are also recorded.

(i) Credit balance shown by a bank column in cash book is ______

(j) The amount paid to the petty cashier at the beginning of a period is known as ______ amount.

(k) In purchase book goods purchased on ______ are recorded.

Solution

(a) subsidiary (b) cash (c) purchases return (d) journal proper (e) cash, bank (f) more (g) credit (h) bank (i) overdraft (j) imprest (k) credit

Q2Test Your Understanding - II

State whether the following statements are True or False :

(a)

Journal is a book of secondary entry.

(b)

One debit account and more than one credit account in a entry is called compound entry.

(c)

Assets sold on credit are entered in sales journal.

(d)

Cash and credit purchases are entered in purchase journal.

(e) Cash sales are entered in sales journal.

(f) Cash book records transactions relating to receipts and payments.

(g) Ledger is a subsidiary book.

(h) Petty cash book is a book having record of big payments.

(i) Cash received is entered on the debit side of cash book.

(j) Transaction recorded both on debit and credit side of cash book is known as contra entry.

(k) Balancing of account means total of debit and credit side.

(l) Credit purchase of machine is entered in purchase journal.

Solution

(a) False (b) True (c) False (d) False (e) False (f) True (g) False (h) False (i) True (j) True (k) False (l) False

Recording of Transactions - IIClass 11 Financial Accounting 1 NCERT Solutions

Explain the need for drawing up the special purpose books.

Solution

What is cash book? Explain the types of cash book.

Solution

What is contra entry? How can you deal this entry while preparing double column cash book?

Solution

What is petty cash book? Write the advantages of petty cash book?

Solution

Describe the advantages of sub-dividing the Journal.

Solution

What do you understand by balancing of account?

Solution

Solution

Simple Cash Book

Record the following transaction in simple cash book for November 2016: ₹ 01 Cash in hand 12,500 04 Cash paid to Hari 600 07 Purchased goods 800 12 Cash received from Amit 1,960 16 Sold goods for cash 800 20 Paid to Manish 590 25 Paid cartage 100 31 Paid salary 1,000

Solution

Simple Cash Book

Enter the following transaction in Simple cash book for December 2017: ₹ 01 Cash in hand 7,750 06 Paid to Sonu 45 08 Purchased goods 600 15 Received cash from Parkash 960 20 Cash sales 500 25 Paid to S.Kumar 1,200 30 Paid rent 600

Solution

Simple Cash Book

Solution

Double Column Cash Book

Solution

Double Column Cash Book

Solution

Double Column Cash Book

Solution

Double Column Cash Book

Solution

Double Column Cash Book

Solution

Double Column Cash Book

Solution

Double Column Cash Book

Solution

Petty Cash Book

Record the following transactions during the week ending Dec.30,2014with a weekly imprest ₹ 500 . 2017 ..... ₹ January 24 Stationery ..... 100 25 Bus fare ..... 12 25 Cartage ..... 40 26 Taxi fare ..... 80 27 Wages to casual labour ..... 90 29 Postage ..... 80

Solution

Petty Cash Book

Solution

Purchases Journal (Book)

Solution

Sales Journal (Book)

Solution

Purchases Return Journal (Book)

Solution

Sales Return (Return Inward) Journal (Book)

Solution

Solution

Briefly state how the cash book is both journal and a ledger.

Solution

What is the purpose of contra entry?

Solution

What are special purpose books?

Solution

What is petty cash book? How it is prepared?

Solution

Explain the meaning of posting of journal entries?

Solution

Define the purpose of maintaining subsidiary journal.

Solution

Write the difference between return Inwards and return ouwards.

Solution

What do you understand by ledger folio?

Solution

What is difference between trade discount and cash discount?

Solution

Write the process of preparing ledger from a journal.

Solution

What do you understand by Imprest amount in petty cash book?

Solution

Select the Correct Answer (a) When a firm maintains a cash book, it need not maintain ;

Journal Proper

Purchases (journal) book

Sales (journal) book

Bank and cash account in the ledger

Solution

(b) Double column cash book records:

All transactions