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.

1. 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.
2. 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.

1. 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.

2. 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.

3. 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.

4. 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.

5. 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

1. increase revenue,
2. decrease in expense
3. record drawings,
4. record the fresh capital introduced by the owner.

ANSWER :

1. The following entry will be made in the above case
   1. Increase Revenue-Revenue account have always credit balance so credit entry will be made to record increase in revenue.
   2. Decrease in Expense- Expense account always have a debit balance so credit entry will be made to record decrease in expenses.
   3. Record Drawings- Drawings is a reduction of capital balance so debit entry will be made in capital account to record drawings.
   4. 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.