NCERT | CLASS 11 Recording of Transactions – I | IMPORTANT QUESTIONS
Question 1 : What is the purpose of posting J.F numbers that are entered in the journal at the time entries are posted to the accounts?
ANSWER:
J.F. number is the number that is entered in the ledger at the time of posting entries into their respective accounts. It helps in determining whether all transactions are properly posted in their accounts. It is recorded at the time of posting and not at the time of recording the transactions.
The purpose of entering the J.F. number in the ledger is because of the below-given benefits.
- J.F. number helps in locating the entries of accounts in the journal book. In other words, J.F number helps to locate the position of the related journal entry and subsidiary book in the journal book.
- J.F. number in accounts ensures that recording in the books of original entry has been posted or not.
Question 2 : Describe how debits and credits are used to analyse transactions.
ANSWER:
Debit originated from the Italian word debito, which in turn is derived from the Latin word debeo, which means ‘owed to proprietor’ and credit comes from the Italian word credito, which is derived from the Latin word credo, which means belief, i.e., ‘owed by proprietor’.
According to the dual aspect concept, all the business transactions that are recorded in the books of accounts, have two aspects- debit and credit. The dual aspect can be better understood with the help of an example; bought goods worth Rs 500 on cash. This transaction affects two accounts with the same amount simultaneously. As goods are brought in exchange of cash, so the cash balances in the business reduce by Rs 500, i.e. why the cash account is credited. Simultaneously, the amount of goods increases by Rs 500, so the purchases account will be debited. Debit and credit depend on the nature of accounts involved; such as assets, expenses, income, liabilities, and capital. There are five types of Accounts.
- Assets– These include all properties or legal rights owned by a firm for its operations, such as cash in hand, plant and machinery, bank, land, building, etc. All assets have debit balance. If assets increase, they are debited and if assets decrease, they are credited.
For example, furniture purchased and payment made by cheque. The journal entry is:
| Furniture A/c | Dr. |
| To Bank A/c |
Here, furniture and bank balance, both are assets to the firm. As furniture is purchased, so furniture account will increase and will be debited. On the other hand, payment of furniture is being made by cheque that reduces the bank balance of the business, so bank account will be credited.
- Expense− It is made to run business smoothly and to carry day to day business activites.
All expenses have a debit balance. If an expense is incurred, it must be debited.
For example, rent paid. The journal entry is:
| Rent A/c | Dr. |
| To Cash A/c |
Here, rent is an expense. All expenses have a debit balance. Hence, rent is debited. On the other hand, as rent is paid in cash that reduces the cash balances, so the cash account is credited.
- Liability− Liability is an obligation of business. Increase in liability is credited and decrease in liability is debited.
For example, a loan taken from the bank. The journal entry is:
| Bank A/c | Dr. |
| To Bank Loan A/c |
Here, a loan from the bank is a liability to the firm. As all liabilities have a credit balance, so loan from the bank has been credited because it increases the liabilities.
- Income− Income means profit earned during an accounting period from any source. Income also means excess of revenue over its cost during an accounting period. Income has credit balance because it increases the balance of capital.
For example, rent received from the tenant. The journal entry is:
| Cash A/c | Dr. |
| To Rent A/c |
Here, rent is an income; hence, the rent account has been credited and cash has been debited, as rent received increases the cash balances.
- Capital− Capital is the amount invested by the proprietor in the business. Capital has credit balance. Increase in capital is credited and decrease in capital is debited
For example, additional capital is introduced by the owner. The journal entry is:
| Cash A/c | Dr. |
| To Capital A/c |
As additional capital is introduced, so the amount of capital will increase, i.e. why, the capital account is credited. On the other hand, as capital is introduced in form of cash, so the cash balances decrease, i.e. why, the cash account is debited.
Question 3 : Differentiate between source documents and vouchers.
ANSWER :
| Basis of Difference | Source Documents | Vouchers |
| Meaning | It refers to the documents in writing, containing the details of events or transactions. | When a source document is considered as evidence of an event or transaction, then it is called a voucher. |
| Purpose | It is used for preparing accounting vouchers. | It is used for analyzing transactions. |
| Recording | It acts as a basis for preparing an accounting voucher that helps in the recording. | It acts as a basis for recording transactions. |
| Preparation | It is prepared at the time when an event or a transaction occurs. | It can be prepared either when an event or a transaction occurs, or later on. |
| Legality/Validity | It can be used as evidence in a court of law. | It can be used for assessing the authentication of transactions. |
| Prepared By | It is prepared by the persons who are directly involved in the transactions, or who are authorized to prepare or approve these documents. | It is prepared by authorized persons or by accountants. |
| Examples | Cash memo, invoice, and pay-in-slip, etc. | Cash memo, invoice, pay-in-slip (if used as evidence), debit note, credit note, cash vouchers, transfer vouchers, etc. |
Question 4:
Prepare accounting equation on the basis of the following:
(a) Harsha started the business with cash of Rs 2,00,000
(b) Purchased goods from Naman for cash Rs 40,000
(c) Sold goods to Bhanu costing Rs 10,000/- Rs 12,000
(d) Bought furniture on credit Rs 7,000
ANSWER :
| S.No. | Explanation | Assets | = | Liabilities | + | Capital | ||||||
| Cash | + | Stock | + | Debtors | + | Furniture | Creditors | |||||
| (a) | Increase in cash | 2,00,000 | = | |||||||||
| Increase in capital | 2,00,000 | |||||||||||
| 2,00,000 | = | NIL | + | 2,00,000 | ||||||||
| (b) | Increase in stock | 40,000 | ||||||||||
| Decrease in cash | (40,000) | |||||||||||
| 1,60,000 | + | 40,000 | = | NIL | + | 2,00,000 | ||||||
| (c) | Increase in debtors | 12,000 | ||||||||||
| Decrease in stock | (10,000) | |||||||||||
| Profit | 2,000 | |||||||||||
| 1,60,000 | + | 30,000 | + | 12,000 | = | NIL | 2,02,000 | |||||
| (d) | Increase in furniture | 7,000 | ||||||||||
| Increase in creditors | 7,000 | |||||||||||
| 1,60,000 | + | 30,000 | + | 12,000 | + | 7,000 | = | 7,000 | + | 2,02,000 | ||
Question 5 :
Show the accounting equation on the basis of the following transaction:
| (a) | Udit started business with: | Rs |
| (I) Cash | 5,00,000 | |
| (ii) Goods | 1,00,000 | |
| (b) | Purchased building for cash | 2,00,000 |
| (c) | Purchased goods from Himani | 50,000 |
| (d) | Sold goods to Ashu (Cost Rs 25,000) | 36,000 |
| (e) | Paid insurance premium | 3,000 |
| (f) | Rent outstanding | 5,000 |
| (g) | Depreciation on building | 8,000 |
| (h) | Cash withdrawn for personal use | 20,000 |
| (i) | Rent received in advance | 5,000 |
| (j) | Cash paid to Himani on account | 20,000 |
| (k) | Cash received from Ashu | 30,000 |
ANSWER :
| S.No. | Explanation | Assets | = | Liabilities | + | Capital | ||||||||||
| Cash | + | Stock | + | Building | + | Debtors | Creditors | + | Outstanding Expenses | + | Unaccrued Income | |||||
| (a) | Increase in cash | 5,00,000 | ||||||||||||||
| Increase in stock | 1,00,000 | |||||||||||||||
| Increase in capital | 6,00,000 | |||||||||||||||
| 5,00,000 | + | 1,00,000 | = | NIL | + | 6,00,000 | ||||||||||
| (b) | Increase in building | 2,00,000 | ||||||||||||||
| Decrease in cash | (2,00,000) | = | ||||||||||||||
| 3,00,000 | + | 1,00,000 | + | 2,00,000 | = | NIL | + | 6,00,000 | ||||||||
| (c) | Increase in stock | 50,000 | ||||||||||||||
| Increase in creditors | = | 50,000 | ||||||||||||||
| 3,00,000 | + | 1,50,000 | + | 2,00,000 | = | 50,000 | + | 6,00,000 | ||||||||
| (d) | Increase in debtors | 36,000 | ||||||||||||||
| Decrease in stock | (25,000) | |||||||||||||||
| Increase in the capital (Profit) | 11,000 | |||||||||||||||
| 3,00,000 | + | 1,25,000 | + | 2,00,000 | + | 36,000 | = | 50,000 | + | 6,11,000 | ||||||
| (e) | Decrease in cash | (3,000) | ||||||||||||||
| Decrease in the capital (Expense) | (3,000) | |||||||||||||||
| 2,97,000 | + | 1,25,000 | + | 2,00,000 | + | 36,000 | = | 50,000 | + | + | 6,08,000 | |||||
| (f) | Decrease in the capital (Expense) | 5,000 | ||||||||||||||
| Increase in liabilities | (5,000) | |||||||||||||||
| 2,97,000 | + | 1,25,000 | + | 2,00,000 | + | 36,000 | = | 50,000 | + | 5,000 | + | 6,03,000 | ||||
| (g) | Decrease in building | (8,000) | ||||||||||||||
| Decrease in capital | (8,000) | |||||||||||||||
| 2,97,000 | + | 1,25,000 | + | 1,92,000 | + | 36,000 | = | 50,000 | + | 5,000 | + | 5,95,000 | ||||
| (h) | Decrease in cash | (20,000) | ||||||||||||||
| Decrease in capital | (20,000) | |||||||||||||||
| 2,97,000 | + | 1,25,000 | + | 1,92,000 | + | 36,000 | = | 50,000 | + | 5,000 | + | 5,75,000 | ||||
| (i) | Increase in cash | 5,000 | ||||||||||||||
| Increase in liability | 5,000 | |||||||||||||||
| 2,82,000 | + | 1,25,000 | + | 1,92,000 | + | 36,000 | = | 50,000 | + | 5,000 | + | 5,000 | + | 5,75,000 | ||
| (j) | Decrease in creditors | (20,000) | ||||||||||||||
| Decrease in cash | (20,000) | |||||||||||||||
| 2,62,000 | + | 1,25,000 | + | 1,92,000 | + | 36,000 | = | 30,000 | + | 5,000 | + | 5,000 | + | 5,75,000 | ||
| (k) | Increase in cash | 30,000 | ||||||||||||||
| Decrease in debtors | (30,000) | |||||||||||||||
| 2,92,000 | + | 1,25,000 | + | 1,92,000 | + | 6,000 | = | 30,000 | + | 5,000 | + | 5,000 | + | 5,75,000 | ||
Question 6: Describe the events recorded in accounting systems and the importance of
source documents in those systems?
ANSWER :
It is beyond human capabilities to memorize each financial transaction and that is why source documents have their own importance in the accounting system. They are
considered as evidence of transactions and can be presented in a court of law.
Transactions supported by evidence can be verified. Source documents also ensure
that transactions recorded in the books are free from personal biases.
A few events that are supported by the source document are given below.
1. Sale of goods worth Rs 200 on credit, supported by sales invoice/bill
2. Purchase of goods worth Rs 500 on credit, supported by purchase invoice/bill
3. Cash sales worth Rs 1,000, supported by cash memo
4. Cash purchase of goods worth Rs 400, supported by cash memo
5. Goods worth Rs 100 returned by the customer, supported by credit note
6. Return of goods purchased on credit worth Rs 200, supported by debit note
7. Payment worth Rs 1,200 through the bank, supported by cheques
8. Deposits into bank worth Rs 500, supported by pay-in slips.
Out of the above events, only those events that can be expressed in monetary terms,
are recorded in the books of accounts. However, the non-monetary events
are not recorded in accounts; for example, the promotion of the manager cannot be recorded
but an increment in salary can be recorded at the time when salary is paid or due.
Source document in accounting is important because of the below-given reasons.
1. It provides evidence that the transaction has actually occurred.
2. It provides information about the date, amount and parties involved, and other details of a particular transaction.
3. It acts as evidence in a court of law.
4. It helps in verifying the transaction during the auditing process.
Question 7 :
Journalise the following transactions is the journal of M/s. Goel Brothers and post them to the ledger.
| 2017 | Rs | |
| Jan. 01 | Started business with cash | 1,65,000 |
| Jan. 02 | Opened bank account in PNB | 80,000 |
| Jan. 04 | Goods purchased from Tara | 22,000 |
| Jan.05 | Goods purchased for cash | 30,000 |
| Jan.08 | Goods sold to Naman | 12,000 |
| Jan.10 | Cash paid to Tara | 22,000 |
| Jan.15 | Cash received from Naman | 11,700 |
| Discount allowed | 300 | |
| Jan. 16 | Paid wages | 200 |
| Jan. 18 | Furniture purchased for office use | 5,000 |
| Jan. 20 | Withdrawn from the bank for personal use | 4,000 |
| Jan. 22 | Issued cheque for rent | 3,000 |
| Jan. 23 | Goods issued for household purpose | 2,000 |
| Jan. 24 | Drawn cash from the bank for office use | 6,000 |
| Jan. 26 | Commission received | 1,000 |
| Jan. 27 | Bank charges | 200 |
| Jan. 28 | Cheque is given for insurance premium | 3,000 |
| Jan. 29 | Paid salary | 7,000 |
| Jan. 30 | Cash sales | 10,000 |
ANSWER:
| Books of M/s Goel Brothers | |||||||
| Journal | |||||||
| Date | Particulars | L.F. | Debit Amount Rs | Credit Amount Rs | |||
| 2017 | |||||||
| Jan.01 | Cash A/c | Dr. | 1,65,000 | ||||
| To Capital A/c | 1,65,000 | ||||||
| (Started business with cash) | |||||||
| Jan.02 | Bank A/c | Dr. | 80,000 | ||||
| To Cash A/c | 80,000 | ||||||
| (Bank account opened with PNB) | |||||||
| Jan.04 | Purchases A/c | Dr. | 22,000 | ||||
| To Tara | 22,000 | ||||||
| (Goods purchased from Tara) | |||||||
| Jan.05 | Purchases A/c | Dr. | 30,000 | ||||
| To Cash A/c | 30,000 | ||||||
| (Goods purchased for cash) | |||||||
| Jan.08 | Naman | Dr. | 12,000 | ||||
| To Sales A/c | 12,000 | ||||||
| (Sale of goods to Naman) | |||||||
| Jan.10 | Tara | Dr. | 22,000 | ||||
| To Cash A/c | 22,000 | ||||||
| (Cash paid to Tara) | |||||||
| Jan.15 | Cash A/c | Dr. | 11,700 | ||||
| Discount Allowed A/c | Dr. | 300 | |||||
| To Naman | 12,000 | ||||||
| (Cash received from Naman and discount allowed) | |||||||
| Jan.16 | Wages A/c | Dr. | 200 | ||||
| To Cash A/c | 200 | ||||||
| (Wages paid) | |||||||
| Jan.18 | Furniture A/c | Dr. | 5,000 | ||||
| To Cash A/c | 5,000 | ||||||
| (Furniture purchased for cash) | |||||||
| Jan.20 | Drawings A/c | Dr. | 4,000 | ||||
| To Bank A/c | 4,000 | ||||||
| (Cash drawn from bank for personal use) | |||||||
| Jan.22 | Rent A/c | Dr. | 3,000 | ||||
| To Bank A/c | 3,000 | ||||||
| (Rent paid through cheque) | |||||||
| Jan.23 | Drawings A/c | Dr. | 2,000 | ||||
| To Purchases A/c | 2,000 | ||||||
| (Goods drawn for household purpose) | |||||||
| Jan.24 | Cash A/c | Dr. | 6,000 | ||||
| To Bank A/c | 6,000 | ||||||
| (Cash drawn from the bank) | |||||||
| Jan.26 | Cash A/c | Dr. | 1,000 | ||||
| To Commission A/c | 1,000 | ||||||
| (Commission received) | |||||||
| Jan.27 | Bank Charges A/c | Dr. | 200 | ||||
| To Bank A/c | 200 | ||||||
| (Bank charged charges) | |||||||
| Jan.28 | Insurance A/c | Dr. | 3,000 | ||||
| To Bank A/c | 3,000 | ||||||
| (Insurance paid through cheque) | |||||||
| Jan.29 | Salaries A/c | Dr. | 7,000 | ||||
| To Cash A/c | 7,000 | ||||||
| (Salary paid) | |||||||
| Jan.30 | Cash A/c | Dr. | 10,000 | ||||
| To Sales A/c | 10,000 | ||||||
| (Cash received for the sale of goods) | |||||||
| Total | 3,84,400 | 3,84,400 | |||||
| Ledger | |||||||
| Cash Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | AmountRs |
| 2017 | 2017 | ||||||
| Jan.01 | Capital | 1,65,000 | Jan.02 | Bank | 80,000 | ||
| Jan.15 | Naman | 11,700 | Jan.05 | Purchases | 30,000 | ||
| Jan.24 | Bank | 6,000 | Jan.10 | Tara | 22,000 | ||
| Jan.26 | Commission | 1,000 | Jan.16 | Wages | 200 | ||
| Jan.30 | Sales | 10,000 | Jan.18 | Furniture | 5,000 | ||
| Jan.29 | Salaries | 7,000 | |||||
| Jan.31 | Balance c/d | 49,500 | |||||
| 1,93,700 | 1,93,700 | ||||||
| Capital Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.01 | Cash | 1,65,000 | |||||
| Jan.31 | Balance c/d | 1,65,000 | |||||
| 1,65,000 | 1,65,000 | ||||||
| Bank Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.02 | Cash | 80,000 | Jan.20 | Drawings | 4,000 | ||
| Jan.22 | Rent | 3,000 | |||||
| Jan.24 | Cash | 6,000 | |||||
| Jan.27 | Bank charges | 200 | |||||
| Jan.28 | Insurance | 3,000 | |||||
| Jan.31 | Balance c/d | 63,800 | |||||
| 80,000 | 80,000 | ||||||
| Tara’s Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.10 | Cash | 22,000 | Jan.04 | Purchases | 22,000 | ||
| 22,000 | 22,000 | ||||||
| Purchases Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.04 | Tara | 22,000 | Jan.23 | Drawings | 2,000 | ||
| Jan.05 | Cash | 30,000 | Jan.31 | Balance c/d | 50,000 | ||
| 52,000 | 52,000 | ||||||
| Sales Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.08 | Naman | 12,000 | |||||
| Jan.31 | Balanced c/d | 22,000 | Jan.30 | Cash | 10,000 | ||
| 22,000 | 22,000 | ||||||
| Naman’s Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.08 | Sales | 12,000 | Jan.15 | Cash | 11,700 | ||
| Jan.15 | Discount Allowed | 300 | |||||
| 12,000 | 12,000 | ||||||
| Discount Allowed Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.15 | Naman | 300 | |||||
| Jan.31 | Balance c/d | 300 | |||||
| 300 | 300 | ||||||
| Wages Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.16 | Cash | 200 | |||||
| Jan.31 | Balance c/d | 200 | |||||
| 200 | 200 | ||||||
| Furniture Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.18 | Cash | 5,000 | |||||
| Jan.31 | Balance c/d | 5,000 | |||||
| 5,000 | 5,000 | ||||||
| Drawings Account | ||||||||
| Dr. | Cr. | |||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs | |
| 2017 | 2017 | |||||||
| Jan.20 | Bank | 4,000 | ||||||
| Jan.23 | Purchases | 2,000 | Jan.31 | Balance c/d | 6,000 | |||
| 6,000 | 6,000 | |||||||
| Rent Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.22 | Bank | 3,000 | |||||
| Jan.31 | Balance c/d | 3,000 | |||||
| 3,000 | 3,000 | ||||||
| Commission Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.26 | Cash | 1,000 | |||||
| Jan.31 | Balance c/d | 1,000 | |||||
| 1,000 | 1,000 | ||||||
| Bank Charges Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.27 | Bank | 200 | |||||
| Jan.31 | Balance c/d | 200 | |||||
| 200 | 200 | ||||||
| Insurance Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | AmountRs |
| 2017 | 2017 | ||||||
| Jan.28 | Bank | 3,000 | |||||
| Jan.31 | Balance c/d | 3,000 | |||||
| 3,000 | 3,000 | ||||||
| Salaries Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.29 | Cash | 7,000 | |||||
| Jan.31 | Balance c/d | 7,000 | |||||
| 7,000 | 7,000 | ||||||
Question 8:
Journalize the following transaction in the books of Sanjana and post them into the ledger:
| January 2017 | Rs | |
| 1 | Cash in hand | 6,000 |
| 2 | Cash at bank | 55,000 |
| 3 | Stock of goods | 40,000 |
| 4 | Due to Rohan | 6,000 |
| 5 | Due from Tarun | 10,000 |
| 6 | Sold goods to Karuna | 15,000 |
| 7 | Cash sales | 10,000 |
| 8 | Goods sold to Heena | 5,000 |
| 9 | Purchased goods from Rupali | 30,000 |
| 10 | Goods returned from Karuna | 2,000 |
| 11 | Cash received from Karuna | 13,000 |
| 12 | Cheque given to Rohan | 6,000 |
| 13 | Cash received from Heena | 3,000 |
| 14 | Cheque received from Tarun | 10,000 |
| 15 | Cheque received from to Heena | 2,000 |
| 16 | Cash given to Rupali | 18,000 |
| 17 | Paid cartage | 1,000 |
| 18 | Paid salary | 8,000 |
| 19 | Cash sale | 7,000 |
| 20 | Cheque given to Rupali | 12,000 |
| 21 | Sanjana took goods for Personal use | 4,000 |
| 22 | Paid General expense | 500 |
ANSWER:
| Books of Sanjana | ||||||
| Journal Entries | ||||||
| S.No. | Particulars | L.F. | Debit Amount Rs | Credit Amount Rs | ||
| 2017 | ||||||
| Jan.01 | Cash A/c | Dr. | 6,000 | |||
| Bank A/c | Dr. | 55,000 | ||||
| Stock A/c | Dr. | 40,000 | ||||
| Tarun | Dr. | 10,000 | ||||
| To Rohan | 6,000 | |||||
| To Capital A/c | 1,05,000 | |||||
| (Balance brought from the last month) | ||||||
| Jan.03 | Karuna | Dr. | 15,000 | |||
| To Sales A/c | 15,000 | |||||
| (Goods sold to Karuna) | ||||||
| Jan.04 | Cash A/c | Dr. | 10,000 | |||
| To Sales A/c | 10,000 | |||||
| (Goods sold for cash) | ||||||
| Jan.06 | Heena | Dr. | 5,000 | |||
| To Sales A/c | 5,000 | |||||
| (Goods sold to Henna) | ||||||
| Jan.08 | Purchases A/c | Dr. | 30,000 | |||
| To Rupali | 30,000 | |||||
| (Goods purchased from Rupali) | ||||||
| Jan.10 | Sales Return A/c | Dr. | 2,000 | |||
| To Karuna | 2,000 | |||||
| (Goods returned by Karuna) | ||||||
| Jan.14 | Cash A/c | Dr. | 13,000 | |||
| To Karuna | 13,000 | |||||
| (Cash received from Karuna) | ||||||
| Jan.15 | Rohan | Dr. | 6,000 | |||
| To Bank A/c | 6,000 | |||||
| (Cheque issued to Rohan) | ||||||
| Jan.16 | Cash A/c | Dr. | 3,000 | |||
| To Heena | 3,000 | |||||
| (Cash received from Heena) | ||||||
| Jan.20 | Bank A/c | Dr. | 10,000 | |||
| To Tarun | 10,000 | |||||
| (Cheque received from Tarun) | ||||||
| Jan.22 | Bank A/c | Dr. | 2,000 | |||
| To Heena | 2,000 | |||||
| (Cheque received from Heena) | ||||||
| Jan.25 | Rupali | Dr. | 18,000 | |||
| To Cash A/c | 18,000 | |||||
| (Payment made to Rupali) | ||||||
| Jan.26 | Cartage A/c | Dr. | 1,000 | |||
| To Cash A/c | 1,000 | |||||
| (Cartage paid) | ||||||
| Jan.27 | Salaries A/c | Dr. | 8,000 | |||
| To Cash A/c | 8,000 | |||||
| (Salaries paid) | ||||||
| Jan.28 | Cash A/c | Dr. | 7,000 | |||
| To Sales A/c | 7,000 | |||||
| (Goods sold for cash) | ||||||
| Jan.29 | Rupali | Dr. | 12,000 | |||
| To Bank A/c | 12,000 | |||||
| (Cheque issued to Rupali) | ||||||
| Jan.30 | Drawings A/c | Dr. | 4,000 | |||
| To Purchases A/c | 4,000 | |||||
| (Goods drawn for personal use) | ||||||
| Jan.31 | General Expenses A/c | Dr. | 500 | |||
| To Cash A/c | 500 | |||||
| Total | 2,57,500 | 2,57,500 | ||||
| Ledger | |||||||
| Cash Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.01 | Balance b/d | 6,000 | Jan.25 | Rupali | 18,000 | ||
| Jan.04 | Sales | 10,000 | Jan.26 | Cartage | 1,000 | ||
| Jan.14 | Karuna | 13,000 | Jan.27 | Salaries | 8,000 | ||
| Jan.16 | Heena | 3,000 | Jan.31 | General Expenses | 500 | ||
| Jan.28 | Sales | 7,000 | Jan.31 | Balance c/d | 11,500 | ||
| 39,000 | 39,000 | ||||||
| Capital Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | AmountRs |
| 2017 | 2017 | ||||||
| Jan.01 | Balance b/d | 1,05,000 | |||||
| Jan.31 | Balance c/d | 1,05,000 | |||||
| 1,05,000 | 1,05,000 | ||||||
| Bank Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.01 | Balance b/d | 55,000 | Jan.15 | Rohan | 6,000 | ||
| Jan.20 | Tarun | 10,000 | Jan.29 | Rupali | 12,000 | ||
| Jan.22 | Heena | 2,000 | Jan.31 | Balance c/d | 49,000 | ||
| 67,000 | 67,000 | ||||||
| Stock Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.01 | Balance b/d | 40,000 | |||||
| Jan.31 | Balance c/d | 40,000 | |||||
| 40,000 | 40,000 | ||||||
| Rohan’s Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.15 | Bank | 6,000 | Jan.01 | Balance b/d | 6,000 | ||
| 6,000 | 6,000 | ||||||
| Tarun’s Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.01 | Balance b/d | 10,000 | Jan.20 | Bank | 10,000 | ||
| 10,000 | 10,000 | ||||||
| Sales Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.03 | Karuna | 15,000 | |||||
| Jan.04 | Cash | 10,000 | |||||
| Jan.06 | Heena | 5,000 | |||||
| Jan.31 | Balance c/d | 37,000 | Jan.28 | Cash | 7,000 | ||
| 37,000 | 37,000 | ||||||
| Karuna’s Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.03 | Sales | 15,000 | Jan.10 | Sales Return | 2,000 | ||
| Jan.14 | Cash | 13,000 | |||||
| 15,000 | 15,000 | ||||||
| Heena’s Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.06 | Sales | 5,000 | Jan.16 | Cash | 3,000 | ||
| Jan.22 | Bank | 2,000 | |||||
| 5,000 | 5,000 | ||||||
| Purchases Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.08 | Rupali | 30,000 | Jan.30 | Drawings | 4,000 | ||
| Jan.31 | Balance c/d | 26,000 | |||||
| 30,000 | 30,000 | ||||||
| Rupali’s Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.25 | Cash | 18,000 | Jan.08 | Purchases | 30,000 | ||
| Jan.29 | Bank | 12,000 | |||||
| 30,000 | 30,000 | ||||||
| Sales Return Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.10 | Karuna | 2,000 | |||||
| Jan.31 | Balance c/d | 2,000 | |||||
| 2,000 | 2,000 | ||||||
| Cartage Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.26 | Cash | 1,000 | |||||
| Jan.31 | Balance c/d | 1,000 | |||||
| 1,000 | 1,000 | ||||||
| Salaries Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.27 | Cash | 8,000 | |||||
| Jan.31 | Balance c/d | 8,000 | |||||
| 8,000 | 8,000 | ||||||
| Drawings Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.30 | Purchases | 4,000 | |||||
| Jan.31 | Balance c/d | 4,000 | |||||
| 4,000 | 4,000 | ||||||
| General Expenses Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
| 2017 | 2017 | ||||||
| Jan.31 | Cash | 500 | |||||
| Jan.31 | Balance c/d | 500 | |||||
| 500 | 500 | ||||||
Question 9: What entry (debit or credit) would you make to
- increase revenue,
- decrease in expense
- record drawings,
- record the fresh capital introduced by the owner.
ANSWER :
- The following entry will be made in the above case
- Increase Revenue-Revenue account have always credit balance so credit entry will be made to record increase in revenue.
- Decrease in Expense- Expense account always have a debit balance so credit entry will be made to record decrease in expenses.
- Record Drawings- Drawings is a reduction of capital balance so debit entry will be made in capital account to record drawings.
- Record the fresh Capital Introduced by the Owner- Capital account always have a credit balance so credit entry will be made to record increase in capital.
Question 10: Describe the events recorded in accounting systems and the importance of
source documents in those systems?
Answer: It is beyond human capabilities to memorize each financial transaction and that is why source documents have their own importance in the accounting system. They are
considered as evidence of transactions and can be presented in the court of law.
Transactions supported by evidence can be verified. Source documents also ensure
that transactions recorded in the books are free from personal biases.
A few events that are supported by the source document are given below.
1. Sale of goods worth Rs 200 on credit, supported by sales invoice/bill
2. Purchase of goods worth Rs 500 on credit, supported by purchase invoice/bill
3. Cash sales worth Rs 1,000, supported by cash memo
4. Cash purchase of goods worth Rs 400, supported by cash memo
5. Goods worth Rs 100 returned by the customer, supported by credit note
6. Return of goods purchased on credit worth Rs 200, supported by debit note
7. Payment worth Rs 1,200 through the bank, supported by cheques
8. Deposits into bank worth Rs 500, supported by pay-in slips.
Out of the above events, only those events that can be expressed in monetary terms,
are recorded in the books of accounts. However, the non-monetary events
are not recorded in accounts; for example, the promotion of the manager cannot be recorded
but an increment in salary can be recorded at the time when salary is paid or due.
Source document in accounting is important because of the below-given reasons.
1. It provides evidence that the transaction has actually occurred.
2. It provides information about the date, amount and parties involved, and other details of a particular transaction.
3. It acts as evidence in a court of law.
4. It helps in verifying the transaction during the auditing process.









































































































































