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 youmake 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.
