Practice Questions

List the six main special purpose books mentioned in the chapter.

Calculate the net amount to be recorded in the Sales Book if goods with a list price of ₹20,000 are sold to a customer at a 15 percent trade discount.

Define a Cash Book and state its primary purpose in accounting.

Identify the type of transactions that are recorded in the Purchases (Journal) Book.

Apply the correct accounting principle to determine where the purchase of goods for cash amounting to ₹15,000 would be recorded.

Propose the most appropriate special purpose book for recording the sale of old office computers on credit and justify your choice.

Name the document prepared by a buyer when returning goods purchased on credit.

Justify the necessity of a Journal Proper even when a full set of special purpose books, including a cash book, is maintained by a business.

Apply your knowledge of special journals to identify where the withdrawal of goods by the proprietor for personal use would be recorded.

Explain why a large business would need to subdivide its Journal into special purpose books.

Analyze the accounting treatment required when a cheque for ₹5,000, received from a customer and deposited into the bank, is dishonoured.

A company undertakes the following transactions in a day: (a) Sold goods for cash ₹10,000. (b) Sold goods on credit to Mr. X for ₹15,000. (c) Purchased goods for cash ₹8,000. (d) Purchased goods on credit from Mr. Y for ₹12,000. Analyze each transaction and demonstrate where it would be recorded in the books of original entry.

Demonstrate how the monthly total of the Sales Return Book, amounting to ₹4,500, is posted to the ledger.

Contrast the Purchases Book with the Purchases Account in the ledger.

On April 1, a firm had a bank overdraft of ₹5,000. During the month, it deposited cheques of ₹25,000 and issued cheques for payments amounting to ₹18,000. The bank also charged ₹200 as bank charges. Solve for the bank balance at the end of the month as per the cash book.

Design an analytical petty cash book for a new marketing agency. Create and justify the choice of at least five specific expense columns that would be most relevant to its operations.

Recall the source document used for recording transactions in a Sales Return (Journal) Book.

Explain what a contra entry is and provide two examples.

Define the term 'balancing of an account'.

Describe the function of the Journal Proper.

Explain the difference between a single column cash book and a double column cash book.

Summarize the process of posting entries from the Sales (Journal) Book to the ledger.

Summarize the key advantages of maintaining a Petty Cash Book.

Compare the single column cash book with the double column cash book.

Create a comprehensive set of rules for a new accountant to distinguish between transactions that should be recorded in the Purchases Book, the Cash Book, and the Journal Proper, focusing on the acquisition of goods versus assets.

Propose a modified format for a cash book that includes columns for cash, bank, and discount, often called a three-column cash book. Justify how the inclusion of a discount column on both sides simplifies the recording and posting process.

Demonstrate the process of posting transactions from the Sales (Journal) Book to the respective ledger accounts.

Examine why a transaction involving the purchase of office furniture on credit for ₹25,000 is not recorded in the Purchases Book.

From the following, solve for the total of the Purchases Book and Purchases Return Book of M/s Sharma Traders for January: Jan 5: Bought goods on credit from Verma Co. for ₹20,000, less 10% trade discount. Jan 15: Purchased goods on credit from Gupta Bros. for ₹12,000. Jan 20: Returned goods to Verma Co. of the list price ₹2,000.

A small retail shop owner who deals exclusively in cash argues that a single-column cash book is sufficient for all their needs. Evaluate this position.

Critique the imprest system of petty cash. Propose one significant improvement to enhance control over small expenditures in a large organization.

Justify the dual role of a cash book as both a book of original entry (journal) and a principal book (ledger).

Evaluate the statement: 'The Purchases Book is designed to record all types of purchases made by a business.' Justify your assessment.

Propose two distinct business scenarios where a debit note would be prepared and issued, explaining the accounting implication for each.

A business owner argues that maintaining separate subsidiary books is redundant in the age of accounting software. Formulate a counter-argument justifying the conceptual importance of understanding these special purpose books for a student of accounting.

Examine the statement: "The Cash Book serves the dual purpose of a journal and a ledger."

A growing business finds that while it has a double-column cash book, many transactions now happen via digital wallets and UPI. Design a 'Modern Cash Book' with four amount columns and justify the purpose of each column.

Evaluate the accounting impact of incorrectly recording a credit purchase of machinery for ₹50,000 in the Purchases Book instead of the Journal Proper. Formulate the necessary rectification entry to correct this error.

Critique the traditional accounting practice of balancing ledger accounts only at the end of an accounting period. Propose a more dynamic approach for a manager who needs real-time financial data for decision-making.

Explain the dual role of the Cash Book as both a book of original entry and a principal book.

Describe the Imprest System of maintaining a Petty Cash Book.

A business has the following transactions: 1. Started business with cash ₹50,000. 2. Opened a bank account by depositing ₹20,000. 3. Purchased goods for cash ₹5,000. 4. Withdrew cash from bank for office use ₹3,000. Analyze these transactions and demonstrate how they would be recorded in a double column cash book.

List and briefly explain five types of transactions recorded in the Journal Proper.

A petty cashier is given an imprest amount of ₹3,000. During the week, the following expenses were incurred: Postage ₹300, Stationery ₹500, Conveyance ₹450, and Miscellaneous expenses ₹250. Calculate the closing balance with the petty cashier and the amount of reimbursement required to restore the imprest.

Formulate a clear, step-by-step procedure for recording a cheque received from a customer that is subsequently dishonoured by the bank.