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Balbharti Maharashtra State Board 11th Commerce Book Keeping & Accountancy Important Questions Chapter 10 Single Entry System Important Questions and Answers.

Maharashtra State Board 11th Commerce BK Important Questions Chapter 10 Single Entry System

1. Answer in One sentence only.

Question 1.
In which method statement of affairs is prepared?
Answer:
Under the Net worth method of a single entry, a statement of affairs is prepared.

Question 2.
How is closing capital calculated under a single entry system?
Answer:
Under single entry system closing capital is calculated by deducting the total closing value of liabilities from the total closing value of assets.

Question 3.
Which statement is prepared under the single entry system to ascertain profit?
Answer:
A statement of profit or loss is prepared to ascertain profit under a single entry system.

Question 4.
What is a Statement of Profit or Loss?
Answer:
A statement that is prepared under a single entry system to calculate profit or loss is called a statement of profit or loss.

2. Write a word, term, or phrase which can substitute each of the following statements.

Question 1.
A system of book-keeping in which both the aspects of transactions are recorded.
Answer:
Double Entry System

Question 2.
Name the method of accounting in which only cash and personal transactions are recorded.
Answer:
Single Entry System

Question 3.
A statement is similar to the Balance sheet was prepared to ascertain the amounts of closing capital.
Answer:
Closing Statement of Affairs

Question 4.
The system of accounting is most scientific and reliable.
Answer:
Double Entry System

Question 5.
Name the statement prepared to find out profit or loss under a single entry system.
Answer:
Statement of Profit or Loss

Question 6.
Excess of opening capital over closing capital of proprietor under single entry system.
Answer:
Loss

Question 7.
Method of accounting in which real accounts and nominal accounts are not maintained.
Answer:
Single Entry System

Question 8.
A statement that shows profit or loss of business under a single entry system.
Answer:
Statement of Profit or Loss

Question 9.
An accounting system where rules of debit and credit are not followed.
Answer:
Single Entry System

Question 10.
The incomplete method of the accounting system.
Answer:
Single Entry System

Question 11.
A system of book-keeping which records only one aspect of business transactions and ignores other aspects.
Answer:
Single Entry System

Question 12.
A statement that shows the balances of various assets and liabilities at their approximate or estimated values as on a particular date.
Answer:
Statement of Affairs

3. Select the most appropriate answer from the alternatives given below and rewrite the sentence.

Question 1.
The difference between the capital at the end of the year and capital at the beginning of the year is called _____________
(a) Profit
(b) Income
(c) Drawings
(d) Expenses
Answer:
(a) Profit

Question 2.
A statement of _____________ is to be prepared in under to find out profit or loss under a single entry system.
(a) Income
(b) Affairs
(c) Revenue
(d) Profit or Loss
Answer:
(d) Profit or Loss

Question 3.
A statement of affairs is a summarised statement of an estimated _____________
(a) Financial Position
(b) Profit
(c) Income
(d) Loss
Answer:
(a) Financial Position

Question 4.
If closing capital is ₹ 30,000 and profit is ₹ 5,000 opening capital was _____________
(a) ₹ 35,000
(b) ₹ 30,000
(c) ₹ 25,000
(d) ₹ 15,000
Answer:
(c) ₹ 25,000

Question 5.
Under single Entry system, Profit = Closing Capital less _____________
(a) Opening Capital
(b) Opening Assets
(c) Opening Liabilities
(d) Drawings
Answer:
(a) Opening Capital

Question 6.
The capital at the end of the accounting year is ascertained by preparing _____________
(a) Cash Account
(b) Closing Statement of Affairs
(c) Total Debtors Account
(d) Opening Statement of Affairs
Answer:
(b) Closing Statement of Affairs

Question 7.
The capital at the beginning of the accounting year is ascertained by preparing _____________
(a) Receipt and Payment Account
(b) Cash Account
(c) Opening Statement of Affairs
(d) Closing Statement of Affairs
Answer:
(c) Opening Statement of Affairs

Question 8.
Under Single Entry System only _____________ are opened.
(a) Cash and Personal Accounts
(b) Real Accounts
(c) Nominal Accounts
(d) Real and Nominal Accounts
Answer:
(a) Cash and Personal Accounts

Question 9.
Statement of Affairs is just like _____________
(a) Profit and Loss A/c
(b) Real A/c
(c) Trading A/c
(d) Balance Sheet
Answer:
(d) Balance Sheet

Question 10.
Under the Net worth method, the basis for ascertaining profit or loss is the difference between _____________
(a) Capital on two dates
(b) Gross assets on two dates
(c) Liabilities on two dates
(d) Net assets on two dates
Answer:
(a) Capital on two dates

4. State True or False with reasons:

Question 1.
Statement of profit is just like Profit and Loss Account.
Answer:
This statement is False.
The profit and loss account has the debit and credit side which shows all expenses on the debit side and all incomes on the credit side and the differences are profit and loss for the year. Whereas statement of profit just adds and less income and expenses to find profit or loss.

Question 2.
The single Entry System is based on certain rules and principles.
Answer:
This statement is False.
A single Entry System is an ancient method of recording business transactions. It is a simple method of book-keeping. It is not a scientific and accurate system of Accounting. This system has no proper set of rules to be followed.

Question 3.
All transactions are recorded in the Single Entry System.
Answer:
This statement is False.
All transactions are not recorded in a single entry system. Only cash books and personal accounts of debtors and creditors are maintained. All transactions are recorded in the Double Entry System of Book-Keeping and Accountancy.

Question 4.
Arithmetical accuracy cannot be checked in Single Entry.
Answer:
This statement is True.
All transactions and accounts are not recorded in the Single Entry System. So it is impossible to prepare a Trial balance under this system without which Arithmetical accuracy cannot be checked.

Question 5.
Drawings made during the year decrease the profit under the Single Entry System.
Answer:
This statement is False.
Drawings made during the year are added to the closing capital in the statement of profit, it increases the profit under the Single Entry System.

5. Do you agree with the following statements?

Question 1.
The single Entry System of Book-keeping is a scientific method of books of accounts.
Answer:
Disagree

Question 2.
The single Entry System is useful only for large organizations.
Answer:
Disagree

Question 3.
Statement of Affairs is just like a profit and loss account.
Answer:
Disagree

Question 4.
The difference between Assets and Liabilities is called net profit.
Answer:
Disagree

Question 5.
The single Entry System follows the golden rules of accounts.
Answer:
Disagree

6. Fill in the Blanks.

Question 1.
In _____________ Book-keeping system, only Cash/Bank A/c and Personal accounts of Debtors and Creditors are opened.
Answer:
Single Entry

Question 2.
Capital is the difference between _____________ and _____________
Answer:
Assets, Liabilities

Question 3.
Single Entry System of Book-keeping is _____________ system of books of accounts.
Answer:
Conventional Accounting

Question 4.
_____________ accuracy is not guaranteed under Single Entry System.
Answer:
Arithmetical

Question 5.
In statement of profit or loss, profit on sale of assets are _____________ to closing capital.
Answer:
Added

Question 6.
Bad debts are _____________ from closing capital in statement of profit or loss.
Answer:
Deducted

Question 7.
_____________ unscientific system of Book-keeping.
Answer:
Single Entry System

Question 8.
Under the Single Entry System, profit or loss is calculated by deducting the opening capital balance from _____________ at the end of the year.
Answer:
the closing capital balance

7. Find the odd one.

Question 1.
Stock in trade, Bank overdraft, Bills receivable.
Answer:
Bank overdraft

Question 2.
Interest on Loan, Interest on Investment, Income receivable.
Answer:
Interest on Loan

Question 3.
Bad debts, Reserve for Bad debts, Reserve for a discount on creditors.
Answer:
Reserve for a discount on creditors

Question 4.
Income received in advance, Prepaid Expenses, Outstanding Expenses.
Answer:
Prepaid Expenses

8. Complete the following table:

Question 1.

Answer:
₹ 13,000

Question 2.

Answer:
₹ 45,000

Question 3.

Answer:
₹ 85,000

Question 4.

Answer:
₹ 40,000, ₹ 18,000

Question 5.

Answer:
₹ 6,000

Balbharti Maharashtra State Board 11th Commerce Book Keeping & Accountancy Important Questions Chapter 9 Final Accounts of a Proprietary Concern Important Questions and Answers.

Maharashtra State Board 11th Commerce BK Important Questions Chapter 9 Final Accounts of a Proprietary Concern

1. Answer in One Sentence.

Question 1.
What do you mean by pre-received income?
Answer:
Income that is received before it is due for receipt is called pre-received income.

Question 2.
What do you mean by bad debts?
Answer:
The debts which are not recoverable in spite of repeated efforts to collect the same are called bad debts.

Question 3.
What is Capital?
Answer:
Amount invested by the proprietor from time to time in business is known as capital.

Question 4.
What are the adjustments?
Answer:
Adjustments are additional information given below the trial balance and are to be considered for arriving at the correct profit or loss.

Question 5.
State the meaning of Current assets.
Answer:
Assets that are purchased with the intention of converting them into cash during the operating year are called current assets.
E.g. stock of goods.

2. Give a word, term, or phrase which can substitute each of the following statements:

Question 1.
Debit balance of Trading Account.
Answer:
Gross Loss

Question 2.
The credit balance of the Trading Account.
Answer:
Gross Profit

Question 3.
Debit balance of Profit and Loss Account.
Answer:
Net Loss

Question 4.
The credit balance of Profit and Loss Account.
Answer:
Net Profit

Question 5.
A debt that cannot be recovered.
Answer:
Bad debts

Question 6.
Reduction in the value of fixed assets due to its continuous use.
Answer:
Depreciation

Question 7.
Carriage paid on the purchase of goods.
Answer:
Carriage Inwards

Question 8.
Statement of balances of various ledger accounts.
Answer:
Trial Balance

Question 9.
An amount withdraws by a proprietor from a business in cash or kind.
Answer:
Drawings

Question 10.
Account prepared to find out gross profit or gross loss.
Answer:
Trading A/c

Question 11.
Income received before it is due.
Answer:
Pre-received Income

Question 12.
Unpaid expenses of a business.
Answer:
Outstanding Expenses

Question 13.
Account prepared on the basis of direct expenses and direct income of the business.
Answer:
Trading A/c

Question 14.
Account prepared on the basis of indirect expenses and indirect incomes of the business.
Answer:
Profit and Loss A/c

Question 15.
Group of accounts which gives the result of business activities.
Answer:
Final Accounts

3. Select the most appropriate alternatives given below and rewrite the sentence:

Question 1.
A list of balances of all the accounts in ledger is called _______________
(a) Balance Sheet
(b) Profit and Loss A/c
(c) Trading A/c
(d) Trial Balance
Answer:
(d) Trial Balance

Question 2.
Opening stock is entered in a Trading Account on the _______________ side.
(a) credit
(b) debit
(c) asset
(d) liabilities
Answer:
(b) debit

Question 3.
Drawing account is closed by transferring the balance to the _______________ account.
(a) Drawing
(b) Liabilities
(c) Assets
(d) Capital
Answer:
(d) Capital

Question 4.
Outstanding expenses is a _______________ account.
(a) Real
(b) Personal
(c) Nominal
(d) None of them
Answer:
(b) Personal

Question 5.
Depreciation is always charged on _______________ assets.
(a) Current
(b) Fixed
(c) Fictitious
(d) Intangible
Answer:
(b) Fixed

Question 6.
Pre-received income is shown on _______________ side of Balance sheet.
(a) Assets
(b) Liabilities
(c) Credit
(d) Debit
Answer:
(b) Liabilities

Question 7.
Royalty on production is a _______________ expenses.
(a) direct
(b) indirect
(c) capital
(d) none of them
Answer:
(a) direct

Question 8.
Interest on investment is _______________ of business concern.
(a) a profit
(b) a loss
(c) an expense
(d) an income
Answer:
(d) an income

Question 9.
All items of indirect income are shown on the credit side of the _______________ Account.
(a) Balance Sheet
(b) Profit and Loss
(c) Manufacturing
(d) None of them
Answer:
(b) Profit and Loss

Question 10.
Reserve for discount on debtor has a _______________ balance.
(a) credit
(b) debit
(c) nil
(d) positive
Answer:
(a) credit

4. State True or False with reasons:

Question 1.
Closing Stock is valued at cost or market price whichever is more.
Answer:
This statement is False.
Closing stock is valued at cost or market price whichever is less. It is based on the theory of anticipated profit is not brought with the account before actual realization or the Principle of conservatism.

Question 2.
Income received in advance is a liability.
Answer:
This statement is True.
Income received in advance is the liability to the business because it has not yet earned the money and the business has an obligation to deliver the goods or services to the customer.

Question 3.
Prepaid expenses are a liability.
Answer:
This statement is False.
Prepaid means paid in advance for the future period. It is the amount paid but has not yet been used up or has not yet expired. So prepaid expenses are an asset.

Question 4.
A balance Sheet is a real account.
Answer:
This statement is False.
The balance sheet is a statement prepare at the end of the financial or accounting year. It is not an Account. It gives an idea of Total Assets and liabilities on a particular day.

Question 5.
Depreciation need not be provided if the asset is not in use.
Answer:
This statement is False.
The working life of fixed assets decreases with passes of time. The value of these assets decreases every year as new technology introduced in the market old becomes outdated so it is necessary to depreciate an asset even it is not in use.

5. Fill in the blanks:

Question 1.
A Copy Right is _______________ Asset.
Answer:
An intangible

Question 2.
Wages paid for installation of Machinery should be debited to _______________ A/c.
Answer:
Machinery

Question 3.
A provision made for debts irrecoverable from debtors is called _______________
Answer:
Reserve for doubtful debts

Question 4.
In the absence of information interest on Drawings is charged for _______________ months.
Answer:
six

Question 5.
Return outward are deducted from _______________
Answer:
purchases

Question 6.
Net profit is transferred to _______________
Answer:
Balance Sheet Capital A/c

Question 7.
If cash/goods withdrawn by proprietor for domestic use, it is called _______________
Answer:
Drawings

Question 8.
Payment made in advance are shown on _______________ side of Balance Sheet.
Answer:
Asset

Question 9.
Royalty on production is debited to _______________ A/c of final A/c.
Answer:
Trading

Question 10.
General Expenses are recolored to the debit side of _______________ A/c when Office expenses, Sundry expenses, or General expenses are given in the trial balance.
Answer:
Trading

6. Find the odd one:

Question 1.
Salary, Sundry expenses, General Expenses.
Answer:
General Expenses

Question 2.
Creditors, Bank Loan, Investment.
Answer:
Investment

Question 3.
Royalty on purchases, Octroi, Discount Allowed.
Answer:
Discount Allowed

Question 4.
Rent, Factory Lighting, Freight.
Answer:
Rent

Question 5.
Outstanding Salary, Accrued Interest, Outstanding Rent.
Answer:
Accrued Interest

7. Do you agree or disagree with the following statement:

Question 1.
Software expenses paid for the installation of the computer should be debited to Software A/c.
Answer:
Disagree

Question 2.
In absence of information interest on the drawing is charged for twelve months.
Answer:
Disagree

Question 3.
Only carriage means carriage on sales.
Answer:
Disagree

Question 4.
Final accounts are prepared at the end of the month.
Answer:
Disagree

Question 5.
Return Inwards means purchase return.
Answer:
Disagree

8. Correct and Rewrite the following statements:

Question 1.
Bank overdraft is an Asset of the business concern.
Answer:
Bank overdraft is a liability of business concern.

Question 2.
Discount allowed is an income for business
Answer:
Discount allowed is an expense for the business.

Question 3.
To Goods withdrawn by proprietor A/c
Capital A/c……………Dr
(Being goods withdrawn by the proprietor for personal use)
Answer:
To Goods withdrawn by proprietor A/c
To Capital A/c………….Dr
(Being goods withdrawn by the proprietor for use)

Question 4.
Sundry Debtors A/c……………Dr
To Bad debts A/c
(Being Bad debts written off)
Answer:
Bad Debts A/c……………Dr
To Sundry Debtors A/c
(Being Bad debts written off)

Question 5.
Opening stock A/c…………….Dr
Direct expenses A/c…………….Dr
Purchase A/c………………Dr
To Trading A/c
(Being Opening Stock, Direct expenses, and purchase transferred to Trading A/c)
Answer:
Trading A/c……….Dr
To Opening stock A/c
To Direct expenses A/c
To Purchase A/c
(Being opening stock, Direct expenses and purchase transferred to Trading A/c)

Balbharti Maharashtra State Board 11th Commerce Book Keeping & Accountancy Important Questions Chapter 8 Rectification of Errors Important Questions and Answers.

Maharashtra State Board 11th Commerce BK Important Questions Chapter 8 Rectification of Errors

1. Answer in One Sentence:

Question 1.
What is an Arithmetical error?
Answer:
An error committed to totaling the amount columns of journal and ledger is called arithmetical error.

Question 2.
What do you mean by one-sided errors?
Answer:
One-sided errors are those errors that either affect the debit or credit aspect of the transaction. It affects the agreement of the trial balance.

Question 3.
What do you mean by two-sided errors?
Answer:
Two-sided errors are those errors that affect both the aspects of a transaction i.e. debit and credit. It does not affect the agreement of the trial balance.

Question 4.
What is a suspense account?
Answer:
An account that is opened to transfer the difference in the totals of the trial balance is known as a suspense account.

Question 5.
What are accounting errors?
Answer:
Mistakes or errors committed while writing the books of accounts are known as accounting errors.

2. Give one word/term or phrase for each of the following statements.

Question 1.
Transactions remained to be recorded at all in the books of account.
Answer:
Errors of omission

Question 2.
Errors are always rectified by passing rectification entries.
Answer:
Two-sided errors

Question 3.
Errors that affect the debit and credit side unequally.
Answer:
One-sided errors

Question 4.
Errors that affect the debit and credit side equally.
Answer:
Two-sided errors

Question 5.
An error in which the transaction is entered in the original book but not posted into the ledger.
Answer:
The error of posting/partial omission

Question 6.
Error in the process of transferring the entry from original books into the ledger.
Answer:
Error of posting

Question 7.
Errors can be rectified without passing rectification entries.
Answer:
One-sided errors

3. Select the most appropriate alternative from those given below and rewrite the sentence.

Question 1.
Wages paid for the installation of machinery wrongly debited to wages account is an error of ___________
(a) omission
(b) principle
(c) commission
(d) duplication
Answer:
(b) principle

Question 2.
If the trial balance shows a short credit the suspense account will have a ___________ balance.
(a) debit
(b) zero
(c) credit
(d) nil
Answer:
(c) credit

Question 3.
If the trial balance does not agree the difference of the trial balance is placed in ___________ account.
(a) Personal
(b) Suspense
(c) Rectification
(d) Real
Answer:
(b) Suspense

Question 4.
Errors which compensate the effect of each other are called ___________ errors.
(a) compensating
(b) one-sided
(c) two sided
(d) clerical
Answer:
(a) compensating

Question 5.
One sided errors are disclosed by ___________
(a) Trial Balance
(b) Suspense Account
(c) Journal
(d) Ledger Account
Answer:
(a) Trial Balance

4. State whether the following statements are True or False with reasons.

Question 1.
Errors of principle are not disclosed by the Trial Balance.
Answer:
This statement is True.
The error of Principle is those where some basic principles of bookkeeping and accountancy are not Properly Followed while recording a business transaction. Such errors can be rectified by passing journal entries.
Eg.: Capital expender showed as revenue expenditure or vice versa. It won’t affect the Trial balance. If will agreed.

Question 2.
Transaction not recorded in the books is an error of principle.
Answer:
This statement is False.
Transaction not recorded in the books is an error of omission and not an error of principle.

Question 3.
If the purchase hook is undermasted, the purchase account is debited in rectification.
Answer:
This statement is True.
Purchases are expenses. All expenses are debited as per the rule of nominal account. When purchases are underacted they can be corrected by debiting in rectification.

Question 4.
When a transaction is not recorded according to the principles of book-keeping the error is said to be an error of principle.
Answer:
This statement is True.
The error of Principle is those where some basic principles of bookkeeping and accountancy are not properly followed while recording a business transaction.
Eg.: Capital expenditure is shown as revenue expenditure or Vice-a-Varsa and they are called an error of principle.

Question 5.
The error of omission is disclosed by the Trial Balance.
Answer:
This statement is False.
The complete omission of a transaction will bot disclosed by a trial balance. Trial balance, balances will be agreed with such errors. So the omission of transaction or an error of omission will not be disclosed by Trial Balance.

5. Do you agree or disagree with the following statements.

Question 1.
A temporary account opened to rectify the entry is known as suspense A/c.
Answer:
Agree

Question 2.
Rectified entries are passed in Ledger.
Answer:
Disagree

Question 3.
Compensating errors affect the agreement of Trial Balance.
Answer:
Disagree

Question 4.
There is only one type of error.
Answer:
Disagree

Question 5.
Transaction recorded without following the accounting principles and rules are known as Errors of Principle.
Answer:
Agree

6. Complete the following sentences.

Question 1.
___________ sided errors affect the total of Trial Balance.
Answer:
One

Question 2.
___________ sided errors do not affect the Trial Balance.
Answer:
Two

Question 3.
One sided error do not require ___________ entry.
Answer:
Rectification

Question 4.
Errors which are committed in writing the accounts are called error of ___________
Answer:
Posting

Question 5.
Under casting of Sales book is corrected by ___________ Sales Account.
Answer:
Crediting

Question 6.
The disagreement of Trial Balance indicates that an ___________ has been committed.
Answer:
Error

Question 7.
An asset has been purchased for the firm. However, the amount was debited to the purchase account. It is an error of ___________
Answer:
Principle

Question 8.
___________ account is necessary for rectification of one-sided error.
Answer:
Suspense A/c

Question 9.
An item of ₹ 95 has been debited to a personal account as ₹ 59. It is an error of ___________
Answer:
Commission

Question 10.
Rectification entries are passed in ___________
Answer:
Journal Proper

Question 11.
Two sided errors are rectified by passing ___________ entry.
Answer:
Rectification

Question 12.
If the Trial Balance does not tally, its difference is transferred to ___________ Account.
Answer:
Suspense

Question 13.
Under casting of an account is ___________ sided error.
Answer:
One

Question 14.
If the transaction is not at all recorded in the books, it is called an error of ___________
Answer:
Complete Omission

Question 15.
If the total balance shows short a credit, the suspense account will have a ___________ balance.
Answer:
Credit

Question 16.
An error that affects debit as well as credit side, it is called as ___________ errors.
Answer:
Two-Sided

Question 17.
Wages paid for installation of machinery debited to Wages Account is an error of ___________
Answer:
Principle

Question 18.
Errors which cancel out the effect of one another is called ___________ errors.
Answer:
Compensating

Question 19.
One sided errors are disclosed by ___________
Answer:
Trial Balance

Question 20.
In an error of omission, the debit and credit are ___________
Answer:
Equal

Practical Problems

Question 1.
The trial balance of Sagar did not agree. It showed an excess credit of ₹ 7,550. Sagar put the difference to the suspense account. He located the following errors:
1. Sales return book was overcast by ₹ 1,200.
2. Purchase book was undercast by ₹ 750.
3. Goods returned to Mahesh ₹ 1,000 were recorded through the sales book.
4. Credit purchases from Mahadev ₹ 6,000 were recorded through the sales book.
5. Credit purchases from Damodhar ₹ 4,000 were recorded through the sales book. However, Damodhar’s account was correctly credited.
6. Salary paid ₹ 3,500 was debited to the employee’s personal account.
Give journal entries to rectify the above errors and prepare Suspense Account.
Solution:
Journal Proper

Question 2.
The trial balance of Radhika did not agree. Radhika put the difference to the suspense account. Subsequently, she located the following errors.
1. Furniture purchased for ₹ 6,000 was posted to the purchases account as ₹ 600.
2. Repairs to Machinery ₹ 500 were debited to the Machinery account.
3. Wages paid for the installation of Machinery ₹ 750 was posted to wages account.
4. Purchased material ₹ 8,000 and Wages ₹ 2,000 were used for construction of the building. No adjustment was made in the books.
5. Total of sales returns book ₹ 2,000 was not posted to the ledger.
6. Old Furniture sold to Dinesh at its book value of ₹ 2,500 was recorded through sales book.
Give journal entries and prepare Suspense Account.
Solution:
Journal Proper

Balbharti Maharashtra State Board 11th Commerce Book Keeping & Accountancy Important Questions Chapter 7 Depreciation Important Questions and Answers.

Maharashtra State Board 11th Commerce BK Important Questions Chapter 7 Depreciation

1. Answer in One Sentence only.

Question 1.
What is the Reducing Balance Method of charging depreciation?
Answer:
A method of charging depreciation in which depreciation is charged on fixed assets at a fixed percentage on its opening balance every year is called the reducing balance method.

Question 2.
Under which method of depreciation the amount of depreciation remains constant every year?
Answer:
Under the Fixed Instalment Method of depreciation, an amount of depreciation remains constant every year.

Question 3.
Under which method of depreciation does the number of depreciation change every year?
Answer:
Under the Reducing Balance Method of depreciation amount of depreciation changes every year.

Question 4.
Which method of depreciation would you suggest for depreciating a five years lease?
Answer:
For depreciating a five years lease fixed installment Method of depreciation is suggested.

Question 5.
What is meant by the cost of assets?
Answer:
The sum total of the purchase price of a fixed asset and its installation charges are called the cost of the asset.

2. Write the word/term/phrase which can substitute each of the following statements:

Question 1.
The method of charging depreciation under which depreciation is calculated on the original cost of an asset.
Answer:
Fixed Instalment Method

Question 2.
The method of charging depreciation under which depreciation is calculated on the balance amount.
Answer:
Reducing Balance Method

Question 3.
The Latin word for reduction or decline in the value of a fixed asset due to its use.
Answer:
Depretium

Question 4.
An amount to which the balance in the depreciation account is transferred.
Answer:
Profit and Loss A/c

Question 5.
Transport charges, coolie charges, charges for electrification, etc. incurred for the erection of machinery.
Answer:
Installation Charges

3. Select the most appropriate answers from the alternatives given below and rewrite the sentences.

Question 1.
Wages paid for installation of machinery is debited to ____________ account.
(a) Profit and Loss
(b) Trading
(c) Wages
(d) Machinery
Answer:
(d) Machinery

Question 2.
Depreciation arises because of ____________
(a) wear and tear
(b) inflation
(c) loss in business
(d) profit in business
Answer:
(a) wear and tear

Question 3.
The profit on sale of an asset is debited to ____________ A/c.
(a) Profit and Loss
(b) Reserve
(c) Asset
(d) Balance sheet
Answer:
(c) Asset

Question 4.
By the amount of depreciation the value of asset ____________
(a) decreases
(b) increases
(c) becomes zero
(d) remains constant
Answer:
(a) decreases

Question 5.
In fixed instalment system the amount of depreciation is ____________ every year.
(a) constant
(b) fluctuating
(c) increased
(d) decreased
Answer:
(a) constant

Question 6.
Under ____________ method depreciation is calculated on written down value.
(a) Fixed Instalment
(b) Reducing Balance
(c) Revaluation
(d) Depletion
Answer:
(b) Reducing Balance

Question 7.
Under the ____________ system of depreciation, the amount of depreciation does not change from year to year.
(a) Fixed Instalment
(b) Reducing Balance
(c) Depletion
(d) Machine Hour Rate
Answer:
(a) Fixed Instalment

Question 8.
Depreciation = \(\frac{Cost of Asset (-) ………….}{Estimated life of Asset}\)
(a) Purchase price
(b) Scrap value
(c) Installation charges
(d) months
Answer:
(b) Scrap value

4. State whether the following statements are True or False with reasons.

Question 1.
There is no need to provide depreciation if the asset is maintained with care.
Answer:
This statement is False.
There is no relation between good maintenance of assets and depreciation working life of fixed assets decreases with the passage of time and the introduction of new technology. So even assets are maintained with care depreciation is provided.

Question 2.
Under the Reducing Balance, method depreciation is charged on the original cost.
Answer:
This statement is False.
Underwritten down value method depreciation is calculated at a certain fixed rate of percentage every on the balance of the asset which is brought forward from the previous year.

5. Complete the following sentence.

Question 1.
____________ is the major cause for Depreciation.
Answer:
Normal and Natural wear of Tear

Question 2.
Depreciation is ____________ to the business.
Answer:
Loss

Question 3.
Depreciation is necessary to make provision for ____________ of old assets.
Answer:
replacement

Question 4.
Depreciation enables the business to compute and pay the correct amount of ____________ to the Government.
Answer:
Tax

Question 5.
____________ cost concept is use for depreciation of Assets.
Answer:
Historical

Question 6.
Fixed Installment Method of depreciation is also known as ____________ cost method.
Answer:
Original

Question 7.
____________ method of depreciation is recognised by Tax/Law.
Answer:
Written Down

Question 8.
____________ account is credited when incidental expenses paid on acquiring Assets.
Answer:
Cash/Bank

Question 9.
Balance of depreciation A/c is transferred to ____________ A/c at the end of financial year.
Answer:
profit and loss

Question 10.
Depreciation is ____________ expenses.
Answer:
non cash

6. Do you agree or disagree with the following statements.

Question 1.
Depreciation is charged on current Assets only.
Answer:
Disagree

Question 2.
Depreciation is not charged on Intangible assets.
Answer:
Disagree

Question 3.
No depreciation is charged on Land.
Answer:
Agree

Question 4.
Written Down value of the asset is calculated by adding depreciation for a period of use of assets.
Answer:
Disagree

Question 5.
No depreciation is charged on assets purchased on credit.
Answer:
Disagree

7. Correct the following statement and rewrite the statement.

Question 1.
Depreciation is cash expenses.
Answer:
Depreciation is a non-cash expense.

Question 2.
The depreciation account is a Real account.
Answer:
The depreciation account is a Nominal account.

Question 3.
Wages paid on the installation of Machinery is Debited to wages A/c.
Answer:
Wages paid on the installation of Machinery is Debited to Machinery A/c.

Question 4.
Depreciation is charged only when the business is making a loss.
Answer:
Depreciation is charged whether a business is making a profit or loss.

Question 5.
Depreciation increases the value of an asset.
Answer:
Depreciation reduces the value of the Asset.

Balbharti Maharashtra State Board 11th Commerce Book Keeping & Accountancy Important Questions Chapter 6 Bank Reconciliation Statement Important Questions and Answers.

Maharashtra State Board 11th Commerce BK Important Questions Chapter 6 Bank Reconciliation Statement

1. Answer in one sentence.

Question 1.
What is a Bank Reconciliation Statement?
Answer:
Bank Reconciliation Statement is a statement that shows the causes of disagreement between the balance shown by passbook and the balance shown by Cash Book under the column as on a particular date.

Question 2.
What is a Bank passbook?
Answer:
A Bank passbook is a copy of a Customer’s A/c in the Bank’s ledger.

Question 3.
What do you mean by the debit balance of Pass Book?
Answer:
Debit balance of passbook means overdraft as per passbook.

Question 4.
Which account is opened by a trader in Bank for his business operation?
Answer:
A current account is opened by a trader in Bank for his business operation.

Question 5.
On which side of the Cash Book interest on investment is to be shown?
Answer:
Interest on investment is to be shown on the debit/receipt side in the Cash Book.

Question 6.
On which side of the passbook, the direct deposit made by a customer is recorded?
Answer:
A direct deposit made by a customer is recorded on the credit side of the passbook.

Question 7.
What does the credit balance of Cash Book indicate?
Answer:
A credit balance of Cash Book indicates overdraft as per Cash Book.

2. Give one word/term/phrase which can substitute each of the following statements:

Question 1.
Excess of a total of debit side over a total of credit side of Cash Book, Bank column.
Answer:
Bank Balance as per Cash Book

Question 2.
An unfavourable balance is shown by the passbook.
Answer:
Overdraft

Question 3.
A copy of the customer’s account issued by the bank.
Answer:
Pass Book

Question 4.
Booklet or a statement that is used to record the banking transactions.
Answer:
Pass Book

Question 5.
The credit balance of the bank column of the Cash Book.
Answer:
Overdraft

Question 6.
Refusal by the bank to make payment of a cheque.
Answer:
Dishonour of Cheque

Question 7.
Document used to withdraw cash from the bank.
Answer:
Withdrawal Slip

Question 8.
Excess of a total of credit side over a total of debit side in the passbook.
Answer:
Balance as per Pass Book

Question 9.
Document used by the account holder to deposit cash and/or cheques into the bank.
Answer:
Pay-in-Slip

Question 10.
Document used by the account holder to withdraw cash from the bank and for making payment to outside parties through the bank.
Answer:
Cheque

3. Do you agree or disagree with the following statements:

Question 1.
Bank Reconciliation Statement is prepared by Bank.
Answer:
Disagree

Question 2.
Overdraft Facility is available to savings Bank Account.
Answer:
Disagree

Question 3.
The bank account holder can make payments to a third party by use of a pay-in slip.
Answer:
Disagree

Question 4.
Bank does not charge any interest on an overdraft balance.
Answer:
Disagree

Question 5.
Credit balance in Pass Book represents overdraft balance.
Answer:
Disagree

Question 6.
In the cash book of a trader Bank record the entries.
Answer:
Disagree

Question 7.
In the passbook, entries are made by the account holder.
Answer:
Disagree

Question 8.
Through mobile banking account holder can deposit physical cash into his account.
Answer:
Disagree

Question 9.
The right-hand side of the pay-in-slip is known as a counterfoil.
Answer:
Disagree

Question 10.
A cash withdrawal slip is used to deposit a cheque or cash into a bank account.
Answer:
Disagree

4. Select the most appropriate alternative from those given and rewrite the following statements:

Question 1.
Pass Book is _____________ of account holders transactions with bank.
(a) an extract
(b) balance sheet
(c) balance
(d) mode
Answer:
(a) an extract

Question 2.
When cheque is _____________ into bank Cash Book is debited.
(a) written
(b) issued
(c) deposited
(d) dishonoured
Answer:
(c) deposited

Question 3.
Overdraft facility is allowed to _____________ account.
(a) saving
(b) recurring
(c) current
(d) fixed deposit.
Answer:
(c) current

Question 4.
Overdraft means _____________ balance of Pass Book.
(a) opening
(b) debit
(c) credit
(d) closing
Answer:
(b) debit

Question 5.
Interest on bank overdraft is recorded on _____________ side of Pass Book.
(a) debit
(b) credit
(c) any
(d) both
Answer:
(a) debit

Question 6.
Credit balance in the Pass Book represents _____________
(a) overdraft
(b) bank balance
(c) loan borrowed
(d) negative
Answer:
(b) bank balance

Question 7.
Direct deposit by a customer will be recorded on _____________ side of Pass Book.
(a) debit
(b) credit
(c) left hand
(d) any
Answer:
(b) credit

Question 8.
Normally the Bank Reconciliation Statement is prepared at the end of a _____________
(a) day
(b) week
(c) year
(d) month
Answer:
(d) month

Question 9.
Bank charges charged by bank are recorded on _____________ side of Pass Book.
(a) debit
(b) credit
(c) any
(d) both
Answer:
(a) debit

5. Complete the following statements:

Question 1.
Bank issue _____________ to current account holders as record or summary for bank transactions.
Answer:
Bank statement

Question 2.
To deposit cash or cheque _____________ is used.
Answer:
Pay in Slip

Question 3.
Directly deposited by a customer in bank account appears an _____________ side of pass book.
Answer:
Credit

Question 4.
____________ is an unfavorable balance as per Pass Book.
Answer:
overdraft

Question 5.
Check deposited into Bank but not cleared is called _____________ cheque.
Answer:
Dishonoured

Question 6.
Expenses paid by the Bank as per standing instructions will be recorded at _____________ side of the passbook.
Answer:
Debit

Question 7.
Dividend collected by the bank will be recorded at _____________ side of cash book.
Answer:
Debit

Question 8.
_____________ type of bank account is open by trader.
Answer:
Current

6. State whether the following statements are True or False with reasons:

Question 1.
Bank Reconciliation Statement is prepared by the Bank.
Answer:
This statement is False.
A Bank Reconciliation statement shows the causes of disagreement between the balances shown by the bank passbook and the bank balance shown by the cash book, for a particular period of time generally a month. It is prepared by the trader as he has both the books to compare and find the differences.

Question 2.
Bank Reconciliation Statement is prepared at the end of every month.
Answer:
This statement is True.
Monthly preparation of Bank Reconciliation Statement assists in the regular monitoring of cash flows of a business and identification of accounting errors.

Question 3.
Overdraft facility is allowed to Proprietor’s Personal A/c.
Answer:
This statement is False.
Overdraft facility is allowed only to business current A/c and not to Proprietor’s Personal A/c.

Question 4.
The debit balance of Pass Book represents overdraft.
Answer:
This statement is True.
Debit Column of a passbook means withdrawals from the bank, When withdrawals are more than deposits it means the excess amount is withdrawn from the bank. It is a temporary loan payable by the trader to the bank. So the debit balance of Pass Book represents overdraft.

Question 6.
Bank charges debited by Bank increase bank balance as per Pass Book.
Answer:
This statement is False.
Bank charges are expenses for the business. Expenses decrease the bank balance as per Pass Book. Bank charges debited by the bank decrease the bank balance as per Pass Book.

Question 6.
Interest credited in PassBook is an income to the customer.
Answer:
This statement is True.
All incomes are shown on the credit side of the passbook. It is a deposit. So Interest Credited in Passbook is an income to the customer.

Question 7.
Bank Reconciliation Statement is prepared to detect the errors that take place in accounting.
Answer:
This statement is True.
A businessman maintains a cash book with a bank column to record his bank transactions whereas the bank also maintains a customer’s ledger account and issues him a Bank statement. There could be differences as per the bank balance in the cash book and bank balance in the passbook. To detect the errors that take place in accounting Bank Reconciliation Statement is prepared.

Question 8.
Overdraft as per Cash Book means debit balance as per Cash Book.
Answer:
This statement is False.
Overdraft as per Cash Book means credit balance as per cash book. Cashbook debit means deposits. When cash book debit balance is greater it means Bank Balance as per Cash Book.

Question 9.
Cheque deposited into Bank increases the Bank balance as per Cash Book.
Answer:
This statement is True.
The Debit side of the cash book means deposits. So cheque deposited into the Bank increases the Bank Balance as per Cash Book.

Question 10.
Payments made by the bank as per standing instructions are recorded on the Debit balance of the Pass Book.
Answer:
This statement is True.
The Debit side of the passbook represents payments. So any payments made by the bank, Bank debits the customer’s account and records on the Debit side of the passbook.

Question 11.
Bank column in Cash Book represents Proprietor’s Savings A/c.
Answer:
This statement is False.
Cashbook records only business transactions and not the personal A/c of the trader. The Bank column in Cash Book represents Business Current A/c and not the proprietor’s savings A/c.

7. Correct and rewrite the following statements.

Question 1.
Overdraft as per cash book means debit balance as per cash book.
Answer:
Normal bank balance as per cash book means debit balance as per cashback.

Question 2.
Bank column in cash book represents proprietors saving A/c.
Answer:
The Bank column in cashback represents the business’s current account.

Question 3.
Fixed deposit A/c is opened by traders for day-to-day business bank transactions.
Answer:
The current account is opened by traders for day-to-day business bank transactions.

Question 4.
The bank account is a real account.
Answer:
A bank account is a personal account

Question 5.
Interest charged by the bank on overdraft A/c is income for the business.
Answer:
Interest charged by the bank on overdraft A/c is an expense for the business.

8. Complete the following table.

Question 1.


Answer:

Balbharti Maharashtra State Board 11th Commerce Book Keeping & Accountancy Important Questions Chapter 5 Subsidiary Books Important Questions and Answers.

Maharashtra State Board 11th Commerce BK Important Questions Chapter 5 Subsidiary Books

Objective Type Questions & Answers

1. Answer the following questions in one sentence.

Question 1.
Which transactions are recorded in the Return Outward Book?
Answer:
Return of goods purchased on credit to the suppliers is only recorded in the Return Outward Book.

Question 2.
Which transactions are recorded in the Return Inward Book?
Answer:
Goods sold on credit when returned by the customers due to certain reasons are only recorded in the Return Inward Book.

Question 3.
Who is a payee in case of cheque?
Answer:
A person to whom the amount of cheque is payable or paid is called a payee.

Question 4.
What is a dishonour of cheque?
Answer:
When the bank refuses to pay the amount of cheque on its presentation to the payee for certain reasons, the cheque is said to be dishonoured.

Question 5.
What is Pass Book?
Answer:
A bank passbook is a small booklet in which the details of all ledger entries in respect of banking transactions appearing in the books of the bank are entered for the knowledge of the account holder.

Question 6.
What is a Bank Book?
Answer:
A book maintained by businessmen to record only banking transactions is called Bank Book.

Question 7.
What do you mean by crossed cheque?
Answer:
A cheque on which two parallel transverse lines are drawn on its face at the left-hand top corner with or without any word is called crossed cheque.

Question 8.
What is meant by Bank Overdraft?
Answer:
The amount withdrawn by the account holder from his current account in excess of the balance standing in that account up to the specified limit is known as ‘Bank overdraft’.

Question 9.
What do you mean by analytical petty cash book?
Answer:
A petty cash book that had many sub-columns on the payment side for recording expenses that are repetitive in nature is called an analytical/columnar petty cash book.

Question 10.
What are opening entries?
Answer:
Entries passed at the beginning of the financial year to bring the assets and liabilities in the books of account are known as opening entries.

Question 11.
What are closing entries?
Answer:
Entries passed at the end of the financial year to close the accounts of expenses and incomes are called closing entries.

Question 12.
What are transfer entries?
Answer:
Entries passed to transfer the balance of one account to another account are known as transfer entries.

Question 13.
What are adjustment entries?
Answer:
The accounting entries are passed into the books of accounts to bring certain items which do not appear in the trial balance.
e.g. depreciation, further bad debts, closing stock, incomes receivable, etc. are called adjustment entries.

Question 14.
What is a cheque?
Answer:
A cheque is a written order given by the account holder to the bank to pay the sum of money specified there into himself or to the person in whose favour the cheque is issued.

Question 15.
What is a ‘Pay-in slip’?
Answer:
Pay-in-slip is a document used by the account holder for depositing cash as well as cheque into the bank.

Question 16.
What is a ‘Debit Note’?
Answer:
A document that is prepared to give debit if less debit is given earlier or to cancel the wrong credit or extra credit given is called a debit note.

Question 17.
What is a ‘Credit Note’?
Answer:
A document that is prepared to give credit if less credit is given earlier or to cancel the wrong debit or extra debit given is called a credit note.

2. Give a word/term or phrase for each of the following statements:

Question 1.
Signing on the backside of the cheque to transfer its ownership.
Answer:
Endorsement of Cheque

Question 2.
An extract of customer’s account maintained by the bank.
Answer:
Pass Book

Question 3.
A type of cheque whose payment is done across the counter of the bank.
Answer:
Bearer Cheque

Question 4.
Bank on whom a cheque is drawn.
Answer:
Drawee

Question 5.
Document used for depositing cash or cheque into the bank.
Answer:
Pay-in-slip

Question 6.
Subsidiary book in which only credit sale of goods is recorded.
Answer:
Sales Book

Question 7.
Subsidiary book in which return of goods purchased on credit is recorded.
Answer:
Purchase Return

Question 8.
Source document on the basis of which Purchase Book is prepared.
Answer:
Inward Invoice

Question 9.
Source document on the basis of which Sales Book is prepared.
Answer:
Outward Invoice

Question 10.
Source document on the basis of which Purchase Return Book is prepared.
Answer:
Debit Note

Question 11.
Source document on the basis of which Sales Return Book is prepared.
Answer:
Credit Note

Question 12.
Accounting entries passed in the journal proper in the beginning of the financial year.
Answer:
Opening Entries

Question 13.
Accounting entries are passed in the journal proper at the end of the financial year.
Answer:
Closing Entries

Question 14.
Bank’s refusal to pay the amount of cheque to the payee.
Answer:
Dishonour of Cheque

Question 15.
Book in which small payments are recorded.
Answer:
Petty Cash Book

Question 16.
Type of bank account in which money is deposited for a fixed period of time.
Answer:
Fixed Deposit Account

Question 17.
A written order is issued by the account holder to the bank to pay a certain amount from his account.
Answer:
Cheque

Question 18.
A cheque on which two parallel transverse lines are drawn on its face at the left-hand top corner with or without certain words.
Answer:
Crossed Cheque

Question 19.
A person who endorses the cheque.
Answer:
Endorser

Question 20.
A person in whose favour the cheque is endorsed.
Answer:
Endorsee

3. State whether the following statements are True or False with reasons:

Question 1.
The total of the payment side can be greater than the total of the receipt side in the case of the bank column.
Answer:
This statement is True.
It is an overdraft on the current account.

Question 2.
A cheque received and deposited into the bank on the same day is a contra entry.
Answer:
This statement is False.
A cheque received and deposited on the same day is not a contra entry.

Question 3.
Interest on overdraft charged by the bank is recorded in the cash column.
Answer:
This statement is False.
Interest on overdraft charged by the bank is recorded in the bank column.

Question 4.
It is not necessary to record dishonour of cheques in the cash book.
Answer:
This statement is False.
It is necessary to record dishonour of cheques in the cash book.

Question 5.
Businessman generally operates savings bank account.
Answer:
This statement is False.
Businessman generally operates a current account with the bank.

4. Do you agree with the following statements.

Question 1.
Issue of Bearer cheque record on payments side of cash book in Bank Column.
Answer:
Agree

Question 2.
Subsidiary books are the books of secondary entry.
Answer:
Disagree

Question 3.
Cash Discount is recorded in the cash book with cash and Bank columns.
Answer:
Disagree

Question 4.
Credit sale of goods to Mr. Harsh ₹ 12,000 at 5% cash discount recorded on the receipts side of cash book.
Answer:
Disagree

Question 5.
All Business transactions are recorded in the cash book only.
Answer:
Disagree

Question 6.
Subsidiary books are useful for small trades only.
Answer:
Disagree

Question 7.
The big amount of payment of the organization is recorded in Petty Cash Book.
Answer:
Disagree

Question 8.
Sale of the old computer on credit recorded in the sales journal.
Answer:
Disagree

Question 9.
Cashbook cash column debit side is always greater than credit side.
Answer:
Disagree

Question 10.
When goods are returned by the buyer to the seller, Seller sends a credit note.
Answer:
Agree

5. Complete the following sentences:

Question 1.
Cash book is a ___________ book.
Answer:
Subsidiary

Question 2.
Only ___________ transactions are recorded in Simple Cash Book.
Answer:
Cash

Question 3.
Purchase book always shows ___________ balance.
Answer:
Debit

Question 4.
Sales book shows ___________ balance.
Answer:
Credit

Question 5.
Cash column of cash book can never have a ___________ balance.
Answer:
Credit

Question 6.
The source document for recording sales book is ___________
Answer:
Outward Invoice

Question 7.
___________ columns of a cash book are never balanced.
Answer:
discount

Question 8.
Credit purchase of goods are recorded in ___________
Answer:
purchase book

Question 9.
A person who draws a cheque is called ___________
Answer:
drawer

Question 10.
All expenses are recorded on the ___________ side of Cashbook.
Answer:
payment

Question 11.
When a bank refuses to make the payment of the cheque, it is said to be ___________
Answer:
dishonoured

Question 12.
The person who keeps a record of small payments is known as ___________
Answer:
petty cashier

Question 13.
In ___________ small cash payment of expenses are recorded.
Answer:
petty cash book

Question 14.
In ___________ petty cash book, on payment side there are many sub columns.
Answer:
analytical

Question 15.
___________ advance is given to the petty cashier.
Answer:
Petty

Question 16.
___________ means fixed amount of petty advance.
Answer:
Imprest

Question 17.
___________ petty cash book is not popular in the business world.
Answer:
Simple

Question 18.
Petty cash book is balanced at the end of every ___________
Answer:
month

Question 19.
Only ___________ discount is recorded in the books of accounts.
Answer:
cash

Question 20.
Cash book is book of ___________ entry.
Answer:
prime

Question 21.
___________ book is an extract of customer’s account in the ledger of bank.
Answer:
pass

Question 22.
The debit side of the passbook is called ___________ side.
Answer:
receipt

Question 23.
To draw 2 parallel lines on the face of the cheque is called ___________ of the cheque.
Answer:
crossing

Question 24.
Discount received is recorded on ___________ side of cash book.
Answer:
credit

Question 25.
The documents from which the returns to suppliers are recorded is known as ___________
Answer:
debit note

Question 26.
Sales Return book is also called as ___________
Answer:
return inward book

Question 27.
Purchase of goods on credit basis are recorded in ___________
Answer:
purchase book

Question 28.
Account in which there is restriction on withdrawals are called ___________ account.
Answer:
savings

Question 29.
___________ Entry is recorded on both the sides of cash with and bank columns.
Answer:
Contra

Question 30.
In sale journal goods sold on ___________ are recorded.
Answer:
Credit

Question 31.
Machinery purchase on credit will be recorded in ___________ subsidiary book.
Answer:
Journal Proper

Question 32.
Return of goods sold on credit by the customers will be entered in ___________ journal.
Answer:
Sales Return

Question 33.
Cash discount is recorded in ___________ book.
Answer:
Journal Proper

Question 34.
___________ Note is prepared when goods are returned to supplier.
Answer:
Debit

Question 35.
___________ is used to deposit cash on cheque in the bank.
Answer:
Pay-in-slip

Question 36.
___________ Cheque is more safer for payments.
Answer:
Cross Account Payee

6. Correct the following sentences and rewrite them same.

Question 1.
Credit sale of goods recorded in cash book receipts side.
Answer:
Cash sale of goods recorded in cash book receipts side.

Question 2.
Journal proper book is used to record cash transactions.
Answer:
Cashbook is used to record cash transactions.

Question 3.
Pay-in-slip is us to withdraw money from Bank.
Answer:
Pay-in-slip is us to deposit the money into the Bank.

Question 4.
The dividend received is a loss for the business.
Answer:
The dividend received is profit for the business.

7. Complete the following Table.

Question 1.

Answer:
62,500

Question 2.

Answer:
3,500

Question 3.

Answer:
2,05,000

Question 4.

Answer:
26,500

Question 5.

Answer:
1,25,000

Question 6.

Answer:
3,50,000

Question 7.

Answer:
4,50,000

Question 8.

Answer:
550

Question 9.

Answer:
1,990

Solved Problems

Simple/Single Column Cash Book

Question 1.
Prepare a simple cash book from the following information:
2019 January
1 Mr. Ashvin started the business with cash of ₹ 95,000.
3 Purchased furniture for office use ₹ 17,500.
4 Purchased goods worth ₹ 11,000.
7 Purchased machinery for ₹ 15,000.
10 Sold goods of ₹ 14,300 to Sandeep Traders for cash.
13 Received from Suyash ₹ 9,000.
15 Withdrew ₹ 2,500 from business for personal use.
19 Borrowed loan from Mr. Tilak ₹ 40,000.
22 Purchased goods of ₹ 14,000 at 5% trade discount.
26 Paid salary to staff ₹ 18,000.
29 Paid carriage on goods purchased ₹ 1,400.
30 Paid electricity bill ₹ 4,980.
31 Deposited into bank ₹ 7,000.
Solution:
In the books of Mr. Ashvin

Working Notes:
1. 22nd Jan.:
Net Purchase Price = Purchase Price – 5% Trade Discount
= 14,000 – 5% of 14,000
= 14,000 – 700
= ₹ 13,300

2. Balance of Cash on 31st Jan. = Total of Receipt side – Total of Payment side
= 1,58,300 – 90,680
= ₹ 67,620

Question 2.
Prepare a simple cash book of Mr. Shriram from the following details:
2019 Feb.
1 Balance of cash ₹ 65,500.
2 Brought additional capital ₹ 12,000.
4 Received from Nilesh on account ₹ 3,800.
7 Purchased goods from United Ltd. ₹ 16,000 and paid half the amount immediately.
9 Received commission from Aarti Traders ₹ 2,650.
10 Paid to Prithviraj Traders on account ₹ 17,800.
13 Purchased stationery for office use ₹ 2,460.
17 Received rent ₹ 4,900.
20 Paid ₹ 1,750 for insurance premium.
22 Sold goods for cash ₹ 13,800.
25 Purchased 10% debentures of ₹ 20,000
27 Paid telephone bill ₹ 3,000 and electricity bill ₹ 2,340.
28 Deposited into the bank all cash in excess of ₹ 11,000.
Solution:
In the books of Mr. Shriram

Working Note:
Dates: 28th February 2011:
Excess Cash Deposited = Total of Receipt Side – Total of Payment side including Closing Cash balance
= 1,02,650 – 66,350
= ₹ 36,300

Two Column Cash Book

Question 3.
Enter the following transaction in a cash book with cash and bank columns for the month of April 2019:
2019 April
1 Started business with cash ₹ 30,000.
2 Opened a current account with the bank and deposited ₹ 9,000.
5 Received ₹ 4,850 for Cash Sales and discount allowed ₹ 50.
6 Purchased goods of ₹ 3,000 @ 10% cash discount and half the amount was paid by cash and remaining by cheque.
9 Received a crossed cheque for ₹ 7,775 from Megha Associates and discount allowed ₹ 25.
12 Purchased machinery of ₹ 13,300 and paid for installation ₹ 700.
15 Received a bearer cheque of ₹ 735 from Rahul in full settlement of his account ₹ 800.
17 Deposited into the bank ₹ 2,000.
20 Transferred ₹ 8,000 from Savings Account to Current Account.
22 Received a hearer cheque from Vinod ₹ 2,230.
24 Deposited the cheque received from Vinod into the bank.
29 Bank informed that cheque received from Vinod is dishonoured.
30 Paid for printing bill book ₹ 660.
31 Withdrew from the bank for office use ₹ 1,000.
Solution:
In the books of ___________

Working Notes:
1. Transaction dated 6th April 2019.
Cash Discount = 10% of Goods Purchased
= 10% of 3,000
= ₹ 300
Net Cash Payable = 3,000 – 300 = ₹ 2,700
Amount paid in cash = \(\frac{1}{2}\) of 2,700 = ₹ 1,350
Amount paid by cheque = \(\frac{1}{2}\) of 2,700 = ₹ 1,350

2. Dated: 12th April, 2019.
Cost of Machinery = Purchase Price + Installation Charges
= 13,300 + 700
= ₹ 14,000

3. Transaction dated: 29th April, 2019.
Entry for dishonour of Vinod’s Cheque:
Earlier Entries:

Question 4.
Enter the following transaction of Hariram Bros, in a cash book with cash and bank column for the month of May 2019.
2019 May
1 Cash Balance ₹ 33,000
Bank Balance ₹ 8,000
3 Received from Prerna cash ₹ 2,750 and a bearer cheque for ₹ 645.
6 Paid to Arjun ₹ 5,300 by cheque and discount received ₹ 125.
8 Cash sales ₹ 5,645 and discount allowed ₹ 55.
10 Cheque received on 3 May 2011 deposited into the bank for collection.
12 Deposited into bank ₹ 4,000.
15 Cheque received from Prerna returned dishonoured.
18 Purchased goods from Indrajit ₹ 4,000 at an 8% trade discount and paid half the amount immediately.
20 Bank paid insurance premium under our standing instruction ₹ 1,950 and collected interest on investment ₹ 3,650.
22 Cheque issued to Arjun was dishonoured.
24 Lucky Stores directly deposited into our bank ₹ 9,500.
25 Paid salaries by cheque ₹ 5,700.
26 Withdrew by cheque ₹ 2,000 for office use and ₹ 1,500 for personal use.
31 Deposited into the bank all cash in excess of ₹ 5,000.
Solution:
In the books of Hariram Bros.

Working Notes:
1. Transaction dated 3rd May 2019:
Receipt of bearer cheque of ₹ 645 is debited to Cash A/c
Hence, Cash A/c is debited by 2,750 + 645 = ₹ 3,395

2. Transaction dated 10th May 2019:
Entry for deposit of cheque ₹ 645
Bank A/c ……………. Dr. 645
To Cash A/c 645

3. Transaction dated 15th May 2019:
Entry for dishonour of Prerna’s cheque.

When reverse entries are reconciled Cash A/c’s gets cancelled.
? Entry for dishonour of cheque is
Prerna’s A/c…………..Dr. 645
To Bank A/c 645

4. Transaction dated 18th May, 2019:
Net Price of goods purchased = Purchase Price – Trade discount
= 4,000 – 8% of 4,000
= 4,000 – 320
= ₹ 3,680
Amount Paid = \(\frac{1}{2}\) 3,680 = ₹ 1,840

5. Date: 31st May 2019:
Excess Cash deposited = Total of a debit column of cash – Total of credit column of cash including the closing balance
= 44,040 – 11,485
= ₹ 32,555

Question 5.
Enter the following transaction of Mr. Chavan in a cash book with cash and bank column for the month of April 2019.
2019 April
1 Cash Balance ₹ 56,000
Bank Overdraft ₹ 11,000
3 Purchased goods for ₹ 13,000 for cash at 2% cash discount and amount paid by cheque.
6 Received a bearer cheque for ₹ 13,250 in full settlement of ₹ 13,500 from Govind Traders.
9 Purchased 100 shares of Amar Ltd. of ₹ 100 each at ₹ 110 each and paid by cheque.
11 Sold goods of ₹ 7,000 at a 5% cash discount to Pramod and he paid half the amount immediately.
14 Deposited into bank ₹ 11,000.
17 Received a crossed cheque for ₹ 18,000 from Gajanan Traders.
20 Bank paid our telephone bill ₹ 3,230.
21 Bank charged ₹ 540 as interest on overdraft.
22 Paid by cheque to Urmila ₹ 8,000.
25 Deposited into the bank the cheque received from Govind Traders.
27 Received a bearer cheque for ₹ 3,460 for rent which was deposited into the bank.
29 Bank informed that the cheque received for rent was dishonoured.
30 Paid life insurance premium of Mr. Chavan ₹ 4,250 by cash and electricity bill ₹ 7,400 by cheque.
Solution:
In the books of Mr. Chavan

Working Notes:
1. Transaction dated 3rd April 2019:
Net payment made on cash purchases = Purchase Price – Cash discount
= 13,000 – 2% on 13,000
= 13,000 – 260
= ₹ 12,740

2. Transaction dated 9th April 2019:
Amount paid by cheque for purchase of shares = No. of shares purchased × Market value
= 100 × 110
= ₹ 11,000

3. Closing balance of Cash book
Cash balance = 72,575 – 28,500 = ₹ 44,075
Bank overdraft balance = 57,370 (Cr. column) – 45,710 (Dr. column)
Overdraft = ₹ 11,660

Petty Cash Book

Question 6.
Enter the Following transaction in a petty cash book having analysis columns for the month of October 2019.
2019 Oct.
1 Received cash from head cashier ₹ 1,350.
3 Paid packing charges ₹ 102.
6 Paid for postage ₹ 43.
9 Purchased 3 office files of ₹ 25 each.
13 Gave a tip to watchman ₹ 20.
18 Gave advance to clerk Mr. Shrikant ₹ 280.
22 Paid for printing ₹ 162.
25 Paid for advertisement ₹ 274.
27 Paid cleaning and washing charges ₹ 46.
29 Gave donation for Diwali celebration ₹ 150.
31 Purchased revenue stamps ₹ 65.
Solution:
Analytical Petty Cash Book of ___________

Question 7.
Enter the following transaction in an analytical petty cash book under the imprest system for the month of February 2019.
2019 Feb.
1 Received cheque from Head Cashier ₹ 2,700.
4 Purchased pencils for ₹ 45, inkpot ₹ 25, and papers ₹ 55.
6 Paid for repairs ₹ 190.
10 Paid taxi fare to Manager ₹ 168.
13 Paid subscription for newspaper ₹ 212.
17 Paid for refreshments to customers ₹ 175.
19 Paid to Ranjeet in settlement of his account ₹ 230.
21 Paid wages to casual labour ₹ 220.
24 Paid electricity bill ₹ 525.
26 Paid for carriage ₹ 105.
27 Purchase a wooden chair for ₹ 275.
Solution:
Analytical Petty Cash Book of ___________

Question 8.
Mr. Shrinath maintains a columnar petty cash book on the Imprest system. The Imprest amount is ₹ 850. The following information, show how his Petty Cash Book would appear for the week ended 7th September. 2019.
2019 Sept.
1 Balance in hand ₹ 125.
Postage ₹ 28.
Stationery ₹ 35.
Refreshment expenses ₹ 20.
3 Travelling and Conveyance ₹ 34.
Miscellaneous Expenses ₹ 5.
Refreshment expenses ₹ 25.
4 Repairs charges ₹ 170.
Paid for Postage ₹ 21.
5 Refreshment expenses ₹ 22.
Travelling expenses ₹ 32.
Stationery ₹ 47.
6 Refreshment expenses ₹ 19.
7 Miscellaneous Expenses ₹ 12.
Paid for Postage ₹ 7.
Repair charges ₹ 75.
Solution:
Analytical Petty Cash Book of Mr. Shrinath

Purchase Book, Sales Book, Purchase Return Book, and Sales Return Book

Question 9.
Prepare Purchase Book and Sales Book, M/s. S.K. Traders dealer in ready-made garments, Mumbai.
2019 April
1 Purchased goods from M/s. Jalna Traders, Delhi for ₹ 10,000 at 10% T.D.
4 Sold goods to M/s Kalpana Stores, Ahmedabad for ₹ 15,000 at 5% T.D.
10 Bought goods from M/s. Raj Enterprise, Patna for ₹ 5,000.
15 Sold goods to M/s Sagar Traders, Kanpur for ₹ 20,000 at 20% T.D.
25 Bought goods from M/s. Rakesh Stores, Banglore for ₹ 12,000 @ 5% T.D.
Rate of GST applicable on ready made garments are CGST @ 9%, SGST @ 9% and IGST @ 18%.
Solution:
In the books of M/s. S.K. Traders, Mumbai
Purchase Book (Analytical)

Sales Book (Analytical)

Note: In the case of inter-state sales IGST is used.

Journal Proper

Question 10.
Journalise the following transactions in the Journal Proper of Mr. Mahadev.
1 Pass opening entries: Debtors ₹ 20,000; Creditors ₹ 30,000; Computer ₹ 50,000 and Capital ₹ 40,000.
2 Pass closing entries: Purchases ₹ 10,000; Sales ₹ 25,000; Salaries ₹ 20,000 and Carriage ₹ 2,000.
3 Pass adjustment entries: Outstanding Wages ₹ 1,000 and Prepaid Insurance ₹ 500.
4 Pass transfer entries: Gross Profit ₹ 15,000; Net loss ₹ 2,000 and Drawings ₹ 4,000
5 Bought Machinery on credit from M/s. Tech ltd. for ₹ 50,000.
6 Allowed cash discount of ₹ 1,000 to Ajay.
Solution:
In the books of Mr. Mahadev
Journal Proper

Balbharti Maharashtra State Board 11th Commerce Book Keeping & Accountancy Important Questions Chapter 4 Ledger Important Questions and Answers.

Maharashtra State Board 11th Commerce BK Important Questions Chapter 4 Ledger

1. Answer in one sentence only.

Question 1.
State the meaning of ‘Debit Balance’.
Answer:
Excess of the debit total of an account over its credit total is called debit balance.

Question 2.
What do you mean by Credit Balance?
Answer:
Excess of credit total of an account over its debit total is called credit balance.

Question 3.
What is the balance of Outstanding Salary A/c?
Answer:
The balance of Outstanding Salary A/c is a credit balance.

Question 4.
What is the balance of Cash A/c?
Answer:
The balance of Cash A/c is always a debit balance.

Question 5.
Where is the balance of Salaries A/c transferred at the end of the year?
Answer:
At the end of the year, the balance of Salaries A/c is transferred to Profit and Loss A/c.

Question 6.
From which books of accounts posting is made in the Ledger?
Answer:
From Journal and Subsidiary books posting is made in the ledger.

Question 7.
What do you mean by the head of an Account?
Answer:
The name of the account which is written on the top of the ledger account in the middle is called “Head of an account”.

2. Write the word, term, phrase, which can substitute each of the statements.

Question 1.
A bound book of Account.
Answer:
Ledger

Question 2.
The credit balance of the Bank Account.
Answer:
Bank Overdraft

Question 3.
Recording of transactions from Journal to Ledger.
Answer:
Ledger Posting

Question 4.
Page number of Ledger.
Answer:
L.F. No.

Question 5.
The right-hand side of an account.
Answer:
Credit Side

Question 6.
The left-hand side of an account.
Answer:
Debit Side

Question 7.
Excess of a debit total of an account over its credit total.
Answer:
Debit Balance

Question 8.
Excess of credit total of an account over its debit total.
Answer:
Credit Balance

Question 9.
A secondary book of account in which entries are recorded from Journal or Subsidiary books.
Answer:
Ledger

Question 10.
Page of the account book.
Answer:
Folio

Question 11.
A book of accounts in which all ledger accounts are maintained.
Answer:
Ledger

Question 12.
Type of accounts that are not balanced but transferred to Trading Account or P/L A/c.
Answer:
Nominal Accounts

Question 13.
An account where the total purchase book is posted.
Answer:
Purchases Account

Question 14.
A statement of accounts’s prepared from the balances of the ledger account.
Answer:
Trial Balance

3. Select appropriate alternatives from those given below and rewrite the sentences.

Question 1.
_______________ is the act of transferring an entry from journal to ledger.
(a) Journalising
(b) Casting
(c) Balancing
(d) Posting
Answer:
(d) Posting

Question 2.
Cash account always shows _______________ balance.
(a) Credit
(b) Negative
(c) Minus
(d) Debit
Answer:
(d) Debit

Question 3.
Bank overdraft means _______________ balance of Bank A/c.
(a) Debit
(b) Credit
(c) Positive
(d) Nil
Answer:
(b) Credit

Question 4.
Real accounts generally shows _______________ balance.
(a) Debit
(b) Credit
(c) Negative
(d) Nil
Answer:
(a) Debit

Question 5.
Excess of debit total of an account over it’s credit total indicates _______________ balance.
(a) Negative
(b) Positive
(c) Debit
(d) Credit
Answer:
(c) Debit

Question 6.
When goods are sold on credit _______________ account is credited.
(a) Buyer’s A/c
(b) Cash A/c
(c) Sales A/c
(d) Seller’s A/c
Answer:
(c) Sales A/c

Question 7.
When the total of debit side of an account exceeds credit side, it is called _______________ balance.
(a) Debit
(b) Credit
(c) Nil
(d) Real
Answer:
(a) Debit

Question 8.
Machinery A/c shows _______________ balance.
(a) Credit
(b) Debit
(c) Positive
(d) Negative
Answer:
(b) Debit

Question 9.
Left hand side of an account is called _______________
(a) Credit
(b) Debit
(c) Middle
(d) Centre
Answer:
(b) Debit

Question 10.
_______________ is prepared from the balances in the ledger accounts.
(a) List
(b) Journal
(c) Book
(d) Trial Balance
Answer:
(d) Trial Balance

Question 11.
Total of Sales book is _______________ to sales account.
(a) entered
(b) moved
(c) posted
(d) given
Answer:
(c) posted

Question 12.
Wages A/c is transferred to _______________ A/c.
(a) Trading A/c
(b) Profit & Loss A/c
(c) Trial Balance
(d) Any
Answer:
(a) Trading A/c

Question 13.
All entries are posted from Journal to _______________
(a) Ledger
(b) Balance Sheet
(c) Trial Balance
(d) Cash A/c
Answer:
(a) Ledger

4. State whether the following statements are ‘True or False’ with reasons.

Question 1.
Ledger accounts are balanced every day.
Answer:
This statement is False.
Ledger accounts are balanced on a particular period of time or on the accounting year of the firm. They are not balanced every day.

Question 2.
Every account is divided into two sides.
Answer:
This statement is True.
Every account is divided into two sides i.e. Debit and Credit to do ledger pasting from a journal which follows the rules of double-entry book-keeping.

Question 3.
The discount allowed is a real account.
Answer:
This statement is False.
Discount allowed is an expense for the business. All expenses come under the Nominal account. So the discount allowed is a Nominal account.

Question 4.
The bank is a Nominal A/c.
Answer:
This statement is False.
A bank is an Artificial person created by law. The bank is personal accounts.

Question 5.
Accounts of expenses may show a credit balance.
Answer:
This statement is False.
Accounts of expenses always show debit balance. They fall under the nominal account and its Golden rule is to Debit all Expenses.

Question 6.
A Debtors A/c always show a credit balance.
Answer:
This statement is False.
A Debtor A/c always shows a Debit balance. The debtor is a personal account and as per the rule of personal account Debit the receiver.

Question 7.
When goods are sold for cash, the personal a/c of the buyer is debited.
Answer:
This statement is False.
In a cash transaction, there is no Personal A/c. The personal account comes in a credit transaction. So when goods are sold for cash, the cash account is debited. A cash account is a real account and as per rule debit what comes in.

Question 8.
Capital a/c is a nominal a/c.
Answer:
This statement is False.
Capital is a Personal account. Capital is the amount invested by the proprietor in his business. A proprietor is a person. Capital is also personal A/c.

Question 9.
Drawing a/c is a personal a/c.
Answer:
This statement is True.
Drawings mean cash or goods withdrawn by the proprietor for his personal or family use he is a person. So drawing is personal A/c.

Question 10.
Narration is not necessary for a ledger.
Answer:
This statement is False.
Narration is necessary for a Journal book and not in Ledger. Ledgers are self-narrative as every ledger has headed.

Question 11.
All a/c’s are closed down at the end of the accounting year.
Answer:
This statement is True.
All ledger accounts are closed an accounting year or Financial year to prepare the Trial balance and Financial statements of the year.

Question 12.
Recording of a transaction in the journal is called posting.
Answer:
This statement is False.
The process of recording a transaction in the Journal is called Journalising. Posting means transferring journal entries to respective ledger accounts.

Question 13.
Balance of personal a/c is brought down for the next year.
Answer:
This statement is True.
Personal accounts are the account of Debtors or Creditors. The business has to collect or pay amounts on personal accounts. Current year collections or payments are done in the following year. So balances of personal accounts are brought for the next year.

Question 14.
All transactions are recorded directly in the ledger.
Answer:
This statement is False.
First, every transaction is recorded in a Journal book or Subsidiary book and from there they are posted to respective ledger accounts. No transaction can be recorded directly in the ledger.

Question 15.
Ledger Folio and index are necessary for the ledger.
Answer:
This statement is True.
The index is necessary to final particular account on its page number and ledger folio number is also necessary for cross-checking with the journal book. This makes handling convenient and easier.

Question 16.
Ledger posting is not necessary for journal proper.
Answer:
This statement is False.
Ledger posting is necessary for journal proper. From Ledger trial balance and financial statements are prepared for the accounting year. Without posting of journal proper Trial balance and financial statements will not be tally and can’t give true and fair accounting.

Question 17.
Ledger Folio is recorded in the journal.
Answer:
This statement is True.
Ledger folio is a page of the ledger, where posting is made from a journal book. For cross-reference, the ledger folio is recorded in the journal.

Question 18.
Ledger posting is made before journal entry.
Answer:
This statement is False.
Ledger posting is made after journal entry. First, all transactions are recorded to Journal and from the journal, posting is made to Ledger.

5. Fill in the blanks.

Question 1.
Debtors A/c shows _______________ balance.
Answer:
Debit

Question 2.
Left hand side of an account is called _______________ side.
Answer:
Debit

Question 3.
_______________ is prepared from the balances in the Ledger A/c.
Answer:
Trial Balance

Question 4.
Total of salary A/c is transfered to _______________ A/c.
Answer:
Profit and loss A/c

Question 5.
b/d (brought down) balance indicates _______________ balance.
Answer:
Opening

Question 6.
_______________ Balance on Nominal Account shows Inconies or gains.
Answer:
Credit

Question 7.
Debtors A/c shows _______________ balance.
Answer:
Debit

Question 8.
Drawing A/c shows _______________ balance.
Answer:
Debit

Question 9.
Wages A/c balance transferred to _______________ A/c.
Answer:
Profit and Loss

Question 10.
Discount allowed shows _______________ Balance.
Answer:
Debit

Question 11.
Dividend received shows _______________ Balance.
Answer:
Credit

Question 12.
Ledger is the _______________ book of Accounts.
Answer:
Principal

6. Complete the following table.

Question 1.

Answer:
Credit balance

Question 2.

Answer:
Ledger

Question 3.

Answer:
Credit Balance

Question 4.

Answer:
Livestock A/c

Question 5.

Answer:
Output GST

7. Put ‘✓’ mark for the nature of balance for the following.

Question 1.

Answer:

Balbharti Maharashtra State Board 11th Commerce Book Keeping & Accountancy Important Questions Chapter 3 Journal Important Questions and Answers.

Maharashtra State Board 11th Commerce BK Important Questions Chapter 3 Journal

1A. Answer in One Sentence:

Question 1.
What do you mean by Journalising?
Answer:
Journalisation means a process of recording two-fold effects of business transactions in the summarized form of debit and credit in the journal.

Question 2.
Which column in a journal is not filled in at the time of journalising?
Answer:
Ledger Folio column in a journal is not filled in at the time of journalising.

Question 3.
Which account is credited when Salary is paid by cheque?
Answer:
Bank Account is credited when salary is paid by cheque.

Question 4.
Why is a journal called the book of prime entry?
Answer:
Journal is called a book of prime entry because all the business transactions are recorded first in the journal in a chronological order i.e. in the order of their occurrence.

Question 5.
In which order the transactions are recorded in a journal.
Answer:
The transactions are recorded in a journal in chronological order i.e. in the order of their occurrence or taking place.

Question 6.
Which account is debited, when goods are destroyed by fire?
Answer:
When goods are destroyed by fire, the Loss by Fire Account is debited.

2. Correct the following statements and rewrite the statements.

Question 1.
Transactions can be recorded in any order in the Journal.
Answer:
Transactions must be recorded in chronological order in the Journal.

Question 2.
Trade discount is recorded in the books of accounts.
Answer:
A cash discount is recorded in the books of accounts.

Question 3.
Trade discount is calculated after cash discount while calculating discount on purchase or sales.
Answer:
Trade discount is calculated before cash discount while calculating discount on purchase or sales.

Question 4.
Trade discount is allowed for prompt payments.
Answer:
A cash discount is allowed for prompt payments.

Question 5.
The process of entering or recording the transactions in the Journal is called posting.
Answer:
The process of entering or recording the transaction in a Journal is called Journalising.

3. Do you agree or disagree with the following statements

Question 1.
Purchase of Assets should be debited to purchase A/c.
Answer:
Disagree

Question 2.
A cash discount is recorded in the books of Accounts.
Answer:
Agree

Question 3.
GST is imposed by the local body.
Answer:
Disagree

Question 4.
Capital is an asset for business organisations.
Answer:
Disagree

Question 5.
With NEFT, RTGS Transaction Cash A/c is affected.
Answer:
Disagree

Question 6.
On purchase of goods or assets output, GST A/c is credited.
Answer:
Disagree

Question 7.
5% GST Charge on luxury cars.
Answer:
Disagree

Question 8.
GST Generates income to Central Government only.
Answer:
Disagree

Question 9.
Ledger Folio column in Journal filled while passing Journal entry only.
Answer:
Disagree

Question 10.
Purchase of shares of TATA Ltd should be debited to TATA Ltd’s A/c.
Answer:
Disagree

Balbharti Maharashtra State Board 11th Commerce Book Keeping & Accountancy Important Questions Chapter 2 Meaning and Fundamentals of Double Entry Book-Keeping Important Questions and Answers.

Maharashtra State Board 11th Commerce BK Important Questions Chapter 2 Meaning and Fundamentals of Double Entry Book-Keeping

1. Answer in one sentence only.

Question 1.
State the meaning of the accounting equation.
Answer:
An equation that indicates or shows that the total assets of a business are always equal to the total liabilities of a business plus capital is called the accounting equation.

Question 2.
What do you mean by debt?
Answer:
To debit an account means to enter the entry or write on the left-hand side of an account.

Question 3.
Give two examples of personal accounts.
Answer:
Two examples of personal accounts are stated below:

1. Mr. Raghuvir Sharma’s Account
2. The Bank of India’s Account.

Question 4.
What is a Nominal Account?
Answer:
The account relating to business expenses, incomes, and gains is called a nominal account.
e.g. Rent A/c.

Question 5.
Give two examples of real accounts.
Answer:
Two examples of real accounts are:

1. Cash A/c
2. Goodwill A/c

Question 6.
State whether drawings increase or decrease owner’s equity.
Answer:
Drawings made by the owner of the business decrease its equity.

Question 7.
What is a conventional cash book?
Answer:
A cash book that is prepared to record not only cash transactions but all types of transactions such as credit purchase or sale, banking transactions, opening, and closing entries, adjustments entries is called a conventional cash book.

Question 8.
Explain the term dual aspect.
Answer:
Every transaction has two aspects i.e. for every debit there is corresponding and equal credit.

Question 9.
State the meaning of impersonal account.
Answer:
The account which is not of a person is called an impersonal account.

Question 10.
Write the rule of Real account.
Answer:
The rule of real account states that Debit what comes in and Credit what goes out.

Question 11.
Which account will be debited when goods are sold to Ram on credit?
Answer:
When goods are sold to Ram, Ram’s A/c will be debited.

Question 12.
Which account will be debited when Mr. Shyam has paid cash to you?
Answer:
Cash A/c will be debited when Mr. Shyam has paid cash to us.

2. Write one word/term or phrase which can substitute each of the following statements.

Question 1.
Expenses are paid before it is due.
Answer:
Prepaid Expenses

Question 2.
Income due but not yet received.
Answer:
Accrued Income

Question 3.
Carriage paid on the sale of goods.
Answer:
Carriage Outward

Question 4.
Statement of Assets & Liabilities.
Answer:
Balance Sheet

Question 5.
Account prepared to know Net Profit or Net Loss.
Answer:
Profit & Loss Account

Question 6.
Value of goods remaining unsold at the end of the year.
Answer:
Closing Stock

Question 7.
The provision was made to compensate the loss on account of likely debts.
Answer:
Provision for Bad & Doubtful Debts

Question 8.
The accounts are prepared at the end of the accounting year to know the profit or loss and financial position of the business.
Answer:
Final Accounts

Question 9.
An amount spent on promoting the sale of goods.
Answer:
Selling Expenses

Question 10.
Additional information is provided below the Trial Balance.
Answer:
Adjustments

3. Select the most appropriate alternatives from those given below and rewrite the statements.

Question 1.
___________ is excess of assets over liabilities.
(a) Goodwill
(b) Capital
(c) Investments
(d) Drawings
Answer:
(b) Capital

Question 2.
Discount earned is transferred to credit side of ___________ account.
(a) Current A/c
(b) Profit & Loss Account
(c) Trading
(d) Capital
Answer:
(b) Profit & Loss Account

Question 3.
___________ is a statement that shows the financial position of a business on a specific date.
(a) Trading account
(b) Trial Balance
(c) Profit & Loss A/c
(d) Balance Sheet
Answer:
(d) Balance Sheet

Question 4.
Outstanding expenses are shown on the ___________ side of Balance Sheet.
(a) Assets
(b) Liability
(c) Both
(d) None of these
Answer:
(b) Liability

Question 5.
Interest on Drawing is credited to ___________ Account.
(a) Trading
(b) Profit & Loss Account
(c) Capital
(d) All
Answer:
(b) Profit & Loss Account

Question 6.
Debit balance of Trading Account means ___________
(a) Gross Loss
(b) Net Loss
(c) Net Profit
(d) Gross Profit
Answer:
(a) Gross Loss

Question 7.
Carriage Inward is debited to ___________ Account.
(a) Trading A/c
(b) Profit & Loss
(c) Capital
(d) Bank
Answer:
(a) Trading A/c

Question 8.
Excess of credit over to debit in Profit & Loss Account indicates ___________
(a) Net Profit
(b) Gross Profit
(c) Gross Loss
(d) Net Loss
Answer:
(a) Net Profit

Question 9.
Closing stock is always valued at cost or market price which is ___________
(a) more
(b) less
(c) zero
(d) equal
Answer:
(b) less

Question 10.
When a specific date is not given, in that case, interest on the drawing is charged for ___________ month.
(a) Four
(b) Six
(c) Eight
(d) Nine
Answer:
(b) Six

4. Fill in the blanks.

Question 1.
Gross Profit is transferred to ___________ account.
Answer:
Profit & Loss Account

Question 2.
Debit Balance of Trading Account indicates ___________
Answer:
Gross Loss

Question 3.
Income Receivable appears on ___________ side of Balance Sheet.
Answer:
Asset

Question 4.
Interest on Bank Loan is debited to ___________ A/c.
Answer:
Profit & Loss Account

Question 5.
Profit and Loss Account is prepared to find out ___________ results of the business.
Answer:
Networking

Question 6.
All indirect/operating expenses are transferred to ___________ account.
Answer:
Profit and Loss Account

Question 7.
Interest of proprietor’s drawing is credited to ___________ account.
Answer:
Profit & Loss Account

Question 8.
An excess of debit over credit in the Profit & Loss A/c represents the ___________
Answer:
Net Loss

Question 9.
All direct expenses are transferred to ___________ account.
Answer:
Trading A/c

Question 10.
Balance Sheet is ___________ of assets & liabilities.
Answer:
Statement

5. Classify the following accounts under the types of Personal, Real, and Nominal accounts.

Question 1.
Investments A/c
Answer:
Real Account

Question 2.
Creditors A/c
Answer:
Personal Account

Question 3.
Land A/c
Answer:
Real Account

Question 4.
Purchase Returns A/c
Answer:
Personal Account

Question 5.
Cash A/c
Answer:
Real Account

Question 6.
Building A/c
Answer:
Real Account

Question 7.
Capital A/c
Answer:
Personal Account

Question 8.
Goodwill A/c
Answer:
Real Account

Question 9.
Interest received A/c
Answer:
Nominal Account

Question 10.
Depreciation A/c
Answer:
Nominal Account

Question 11.
Stationery A/c
Answer:
Nominal Account

Question 12.
Salary A/c
Answer:
Nominal Account

Question 13.
Excise duty A/c
Answer:
Nominal Account

Question 14.
Bank Loan A/c
Answer:
Personal Account

Question 15.
Bank Overdraft A/c
Answer:
Personal Account

Question 16.
Sales A/c
Answer:
Nominal Account

Question 17.
Return Inwards A/c
Answer:
Personal Account

Question 18.
Rent received A/c
Answer:
Nominal Account

Question 19.
Wages A/c
Answer:
Nominal Account

Question 20.
Discount received A/c
Answer:
Nominal Account

Question 21.
Debtors A/c
Answer:
Personal Account

Question 22.
Furniture & Fixtures A/c
Answer:
Nominal Account

Question 23.
Purchases A/c
Answer:
Nominal Account

Question 24.
Bad Debts A/c
Answer:
Nominal Account

Question 25.
Dadar Library A/c
Answer:
Personal Account

Question 26.
Rent paid A/c
Answer:
Nominal Account

Question 27.
Prepaid Insurance A/c
Answer:
Personal Account

Question 28.
Carriage Outwards A/c
Answer:
Nominal Account

Question 29.
Rent Receivable A/c
Answer:
Personal Account

Question 30.
Profit on sale of machinery A/c
Answer:
Nominal Account

Question 31.
Bills Payable A/c
Answer:
Personal Account

Question 32.
Bank of India A/c
Answer:
Personal Account

Question 33.
Carriage Inwards A/c
Answer:
Nominal Account

Question 34.
Stock A/c
Answer:
Real Account

Question 35.
Accrued Interest A/c
Answer:
Personal Account

Question 36.
Bank A/c
Answer:
Personal Account

Question 37.
12% Government Bonds A/c
Answer:
Real Account

Question 38.
Carriage A/c
Answer:
Nominal Account

Question 39.
Advertisement A/c
Answer:
Nominal Account

Question 40.
Conveyance A/c
Answer:
Nominal Account

Question 41.
Premises A/c
Answer:
Real Account

Question 42.
Octroi A/c
Answer:
Nominal Account

Question 43.
Postage A/c
Answer:
Nominal Account

Question 44.
Electricity Charges A/c
Answer:
Nominal Account

Balbharti Maharashtra State Board 11th Commerce Book Keeping & Accountancy Important Questions Chapter 1 Introduction to Book Keeping and Accountancy Important Questions and Answers.

Maharashtra State Board 11th Commerce BK Important Questions Chapter 1 Introduction to Book Keeping and Accountancy

1. Answer in One Sentence:

Question 1.
What is Transaction?
Answer:
The exchange of goods or services for money or money’s worth is called a transaction.

Question 2.
What is Cash Discount?
Answer:
The amount which is deducted by the seller from the amount due at the time of the receipt is called cash discount.

Question 3.
What is the entity concept?
Answer:
The business entity concept states that a business has a separate entity and has an independent legal existence distinct from the person who owns it.

Question 4.
What is the money measurement concept?
Answer:
The money measurement concept implies that every business transaction must be recorded in a common unit of measurement i.e. in terms of money only.

Question 5.
What is the consistency concept?
Answer:
The consistency concept implies that any policy adopted for accounting should be continuous or consistent throughout the business and it need not be changed generally unless and until circumstances demand.

Question 6.
What is conservatism?
Answer:
The concept of conservatism states that while deciding the policy of the enterprise the businessman has to anticipate no profit but provide for all possible losses.

Question 7.
What is accounting?
Answer:
Accounting is a process of recording, classifying, summarising, analyzing, and interpreting financial transactions and communicating the result thereof to the users of such information.

Question 8.
Name the financial statements prepared by a business.
Answer:
A businessman prepares the financial statements such as income statements i.e. Trading Account and Profit and Loss Account and Position Statement i.e. Balance Sheet.

Question 9.
Explain the term ‘Profit’.
Answer:
Excess of revenue income over revenue expenditure is termed as profit.

Question 10.
Explain the term ‘Cost Concept’.
Answer:
The concept according to which assets are recorded in the books of accounts at the price at which they are acquired or purchased is called the cost concept.

2. Give the word term or phrase which can substitute each of the following statements:

Question 1.
Dealings between two persons.
Answer:
Transaction

Question 2.
Business transaction in which cash is not paid or received immediately.
Answer:
Credit Transaction

Question 3.
An allowance is given by the receiver of the cash to the giver of cash at the time of payment.
Answer:
Cash Discount

Question 4.
Liability depends on the happening or not happening a certain event.
Answer:
Contingent Liability

Question 5.
Expenditure on fixed assets increases the earning capacity of the business.
Answer:
Capital Expenditure

Question 6.
System in which entry is recorded for cash as well as credit transactions.
Answer:
Accrual System

Question 7.
The concept under which comparison of one accounting period with the other period is possible.
Answer:
Consistency Concept

Question 8.
A science and art of correctly recording in the books of accounts, all those business transactions that result in the transfer of money or money’s worth.
Answer:
Bookkeeping

Question 9.
Exchange of goods and services either for cash or any other goods or services.
Answer:
Transaction

Question 10.
Sale or purchase of goods or services for immediate cash payment.
Answer:
Cash Transaction

Question 11.
Sale or purchase of goods or services for a certain value to be receivable or payable in the future.
Answer:
Credit Transaction

Question 12.
Commodity purchased or produced for sale.
Answer:
Goods

Question 13.
Excess of assets over liabilities.
Answer:
Capital

Question 14.
Excess of profit over normal profit.
Answer:
Super Profit

Question 15.
The total amount of goods and services are withdrawn by the proprietor for self-use.
Answer:
Drawings

Question 16.
Amount of discount deducted from the invoice price.
Answer:
Trade discount

Question 17.
The reputation of a business is expressed in terms of money.
Answer:
Goodwill

Question 18.
The concept states that assets when purchased should be recorded at cost price.
Answer:
Cost concept

Question 19.
The concept states that business operations will continue forever.
Answer:
Concept of Going Concern

Question 20.
A concept on which a double-entry bookkeeping system is based.
Answer:
Dual Aspect Concept

Question 21.
Rules of conduct are accepted universally to record business transactions.
Answer:
Accounting Principles

Question 22.
General ideas which convey certain meanings.
Answer:
Concepts

Question 23.
The general notion or abstract ideas on which accounting is based.
Answer:
Accounting Concept

Question 24.
The accounting concept suggests that a business has a separate identity from its owner.
Answer:
Business Entity Concept

Question 25.
The accounting concept states that monetary transactions are only recorded in the books of accounts.
Answer:
Money Measurement Concept

Question 26.
The money value for which assets are acquired or manufactured.
Answer:
Cost

Question 27.
Proprietor’s contribution to the business.
Answer:
Capital

Question 28.
Valuable things are owned by the business.
Answer:
Assets

Question 29.
Period of time for which accounts of the business are prepared.
Answer:
Financial year/Accounting year

Question 30.
Amount received after selling of goods or services.
Answer:
Revenue

Question 31.
Excess of revenue over its cost.
Answer:
Profit

Question 32.
Name the accounting concept on the basis of which the income statement is prepared.
Answer:
Accrual Accounting Concept

3. Select the most appropriate alternatives from those given below and rewrite the statements.

Question 1.
Money value of the reputation of business is known as ____________
(a) Copyright
(b) Goodwill
(c) Patents
(d) Trademark
Answer:
(b) Goodwill

Question 2.
Heavy advertising expenditure for launching a new product is called as ____________
(a) Capital expenditure
(b) Revenue Expenditure
(c) Deferred Revenue Expenditure
(d) None of these
Answer:
(c) Deferred Revenue Expenditure

Question 3.
Expenditure incurred on purchase of fixed asset is ____________
(a) Revenue Expenditure
(b) Capital Expenditure
(c) Deferred Revenue Expenditure
(d) None of these
Answer:
(b) Capital Expenditure

Question 4.
Concept which provides a line between present and future is known as ____________
(a) Going Concern Concept
(b) Cost Concept
(c) Accrual Concept
(d) Entity Concept
Answer:
(a) Going Concern Concept

Question 5.
Totalling of Journal or Ledger is called as ____________
(a) Posting
(b) Folio
(c) Casting
(d) Journalising
Answer:
(c) Casting

Question 6.
In cash transaction, goods or services are exchanged for ____________
(a) other goods
(b) other services
(c) immediate cash
(d) grains
Answer:
(c) immediate cash

Question 7.
The work of book-keeping is of ____________ nature.
(a) competitive
(b) primary/basic
(c) secondary
(d) none of these
Answer:
(b) primary/basic

Question 8.
Capital is ____________ of the business.
(a) asset
(b) liability
(c) property
(d) goodwill
Answer:
(b) liability

Question 9.
The work of accounting depends upon ____________
(a) book-keeping
(b) cash book
(c) subsidiary books
(d) ledger
Answer:
(a) book-keeping

Question 10.
____________ is the amount invested by the owner of a business.
(a) Cash
(b) Money
(c) Asset
(d) Capital
Answer:
(d) Capital

Question 11.
Revenue expenditure is ____________ in nature.
(a) capital
(b) outstanding
(c) recurring
(d) contingent
Answer:
(c) recurring

Question 12.
Amount withdrawn by the owner for his personal expenses is called ____________
(a) Drawings
(b) Personal expenses
(c) Cash
(d) Assets
Answer:
(a) Drawings

Question 13.
Financial statements are a part of ____________
(a) Book keeping
(b) Planning
(c) Accounting
(d) None of these
Answer:
(c) Accounting

Question 14.
A ____________ liability is an uncertain liability.
(a) Long term
(b) Contingent
(c) Current
(d) Fixed
Answer:
(b) Contingent

Question 15.
A Derson who is unable to nay his debts, is called ____________
(a) insolvent
(b) solvent
(c) well to do
(d) poor
Answer:
(a) insolvent

Question 16.
According to ____________ concept business shall go on for a long time.
(a) going concerned
(b) consistency
(c) materiality
(d) dual aspects
Answer:
(a) going concerned

Question 17.
According to ____________ concept, every business transaction has two aspects.
(a) going concerned
(b) materiality
(c) business entity
(d) dual aspects
Answer:
(d) dual aspects

Question 18.
According to ____________ concept revenue is recognised when it is earned.
(a) Realisation
(b) Accounting period
(c) Accrual
(d) Matching cost
Answer:
(c) Accrual

Question 19.
According to ____________ convention, while preparing planning anticipate losses.
(a) Materiality
(b) Consistency
(c) Conservatism
(d) disclosure
Answer:
(c) Conservatism

Question 20.
Customs and traditions which guide the accountants to prepare accounting statements are called ____________
(a) Conventions
(b) Principles
(c) Concepts
(d) Procedure
Answer:
(a) Conventions

Question 21.
According to ____________ concept, assets are recorded at a price paid to acquire them.
(a) Cost
(b) Money measurement
(c) Entity
(d) Dual aspect
Answer:
(a) Cost

4. State whether the following statements are true or false with reasons:

Question 1.
The trading concern is established for rendering services to society.
Answer:
This statement is False.
The main objective of trading concern is to earn profit. It is for traders’ livelihood, so the trading concern is not established for rendering services to the society.

Question 2.
Book-keeping is an art as well as a science.
Answer:
This statement is True.
Book-keeping is also considered as an art of recording business transactions because the writing of accounts in a specific style and format requires education, knowledge, training, skill, and experience. From another point of view, Book-keeping is a continuous process of collecting, analyzing, classifying, summarising, and recording the different types of business transactions. In brief, bookkeeping may be defined as “A science as well as an art of collecting, analyzing, classifying, summarising and recording all types of business transactions in a significant manner and in terms of money in a separate set of books.”

Question 3.
In Book-keeping & Accountancy non-monetary transactions are also recorded.
Answer:
This statement is False.
Only monetary transactions are recorded in Book-keeping & Accountancy. It is done to find financial results for the purpose of analyzing and interpreting.

Question 4.
Perpetual succession is explained by the concept of the entity.
Answer:
This statement is False.
The concept of entity is different from the perpetual succession. Entity means separate existence of business from the owner whereas perpetual succession means long life and continuation.

Question 5.
Accounting is useful only to the owner.
Answer:
This statement is False.
Accounting is not only useful for the owner but also to the suppliers, government, customers, lenders, etc.

Question 6.
Writing of account does not require specific skill and knowledge.
Answer:
This statement is False.
Writing of account requires specific skill and knowledge as book-keeping is an art and science of correctly recording business transactions.

Question 7.
The main objective of Bookkeeping is to keep permanent records of business transactions.
Answer:
This statement is True.
The record of business transactions is prepared for a specific period of time i.e. one year and it is preserved for a long period of time.

Question 8.
In credit transactions, goods or services are purchased for cash only.
Answer:
This statement is False.
In credit transactions, goods and services are purchased and sold for credit only. Credit means post-pone payments for a future date.

Question 9.
In barter transactions, goods or services are purchased for other goods or services.
Answer:
This statement is True.
Barter means exchange of goods or services for goods or services. No money is involved in barter transactions.

Question 10.
In cash transactions, goods or services are purchased for a certain value to be paid in the future.
Answer:
This statement is False.
In a cash transaction, goods or services are purchase or sold for spot payments or receipts. No credit is allowed.

Question 11.
Good is a commodity that is purchased for self-use.
Answer:
This statement is False.
Good is a commodity that is purchased for resale purposes. It is an article or a commodity in which businessman deals.

Question 12.
Amount due from other person is known as debt.
Answer:
This statement is True.
Debt is a total sum of money due from a person with whom the business has dealings. Accordingly, a person from whom such debt is due to a business is called the debtor.

Question 13.
Liabilities represent the debts or obligations that a business must receive in terms of money.
Answer:
This statement is False.
Liabilities refer to the total amount of obligations that a business has to pay in the future. Liability means the total amount owed by the business to other persons.

Question 14.
Capital = Liabilities – Assets.
Answer:
This statement is False.
Excess of business assets over business liabilities is called capital.
Capital = Assets – liabilities.

Question 15.
Drawings made by the businessman increase his capital.
Answer:
This statement is False.
Drawing means cash or goods withdrawn by the proprietor for his personal or family use. Drawings made by the businessman decreases his capital.

Question 16.
A person whose assets are equal to or greater than liabilities is known as insolvent.
Answer:
This statement is False.
Insolvent means a person whose liabilities are greater than assets is known as ‘Insolvent’.

Question 17.
A person whose assets are less than business liabilities is known as insolvent.
Answer:
This statement is True.
When a person is not able to pay liabilities is called insolvent. Liabilities are greater than assets.

Question 18.
The cost or sacrifice which is incurred to run the business is known as an income.
Answer:
This statement is False.
The cost or sacrifice which is incurred to run the business is known as an expenditure.

Question 19.
Benefits which are given by giver to the receiver is known as discount.
Answer:
This statement is False.
Discount is a concession given by the seller to the buyer. There are two types of discount,

• Cash discount
• Trade discount

Question 20.
Posting implies recording a transaction in a journal.
Answer:
This statement is False.
Posting means transferring or recording journal entries from the journal to the respective ledger accounts. Ledger is the main book of accounting.

Question 21.
Contingent liabilities can also be called doubtful liabilities.
Answer:
This statement is True.
The contingent liabilities are the liabilities whose occurrence depends upon the happening of a certain event that may or may not take place. So a contingent liabilities can also be called doubtful liabilities.

Question 22.
A sports club is a trading concern.
Answer:
This statement is False.
The sports club is a nontrading concern as they do not work for profit-making. They work for the promotion of sports.

Question 23.
A cash discount is an incentive allowed for the speedy recovery of income.
Answer:
This statement is True.
A cash discount is given by the creditor or seller to the debtor or buyer to induce him to make prompt payment. It is given at the time of cash payment.

Question 24.
Excess of revenue over expenses is called loss.
Answer:
This statement is False.
Excess of revenue over expenses is called profit. Your income is less and expenditures are less so you get profit.
Income ₹ 50,000 – Expenses ₹ 35,000 = Profit is ₹ 15,000.

Question 25.
Excess of liabilities over assets represents the solvency of a business.
Answer:
This statement is False.
Excess of liabilities over assets represents insolvency of business. A trader cannot pay his debts as liabilities are greater than his assets.
Liabilities ₹ 1,50,000 Assets ₹ 80,000.
₹ 1,50,000 – ₹ 80,000 = ₹ 70,000 deficiency.

Question 26.
A business can not run without bookkeeping.
Answer:
This statement is False.
Book-keeping is a recording of business financial transactions which is useful to prepare ledger, trial balance, financial statements. All the above are useful to take decisions, planning, liabilities, and assets so a businessman cannot run his business without book-keeping.

Question 27.
Bookkeeping is necessary only for organizing with profit objectives.
Answer:
This statement is False.
Books of accounts are maintained by trading and non-trading concerns. Non-trading concerns do not earn any profits so book-keeping is not necessary only with the objective of profit.

Question 28.
The figures of profit and net worth are disclosed by books of accounts.
Answer:
This statement is True.
The purpose of preparing books of accounts is to know financial details of organization from journal ledger, trial balance, final accounts proprietor to get an idea of his financial status. The purpose of financial books of accounts is to get profit and net worth etc.

Question 29.
Financial statements are an effective weapon in the hands of management.
Answer:
This statement is True.
With help of financial statements, management does planning, decision-making for the future. The past record gives ideas to the management to improve financial decisions like more profit better financial conditions etc. so financial statements are effective weapons in the hands of management.

Question 30.
Irregularities, frauds, and misappropriations can be detected only because of books accounts.
Answer:
This statement is False.
Irregularities frauds and misappropriations can be detected by auditing. Continuous and periodical auditing will detect the irregularities frauds and misappropriations which is done by a chartered accountant.

5. Do you agree or disagree with the following statements:

Question 1.
Goodwill is a tangible asset.
Answer:
Disagree

Question 2.
For income tax purposes an accounting year starts on 1st January and ends on 31st March.
Answer:
Disagree

Question 3.
Earning profits is an aim of Not for Profit Concern.
Answer:
Disagree

Question 4.
Trade discount is recorded in the books of accounts.
Answer:
Disagree

Question 5.
Wages paid on installation of machinery are revenue expenditures.
Answer:
Disagree

Question 6.
An amount that is not recoverable from debtors is called bad debt.
Answer:
Agree

Question 7.
The double-entry book-keeping system is invented in India.
Answer:
Disagree

Question 8.
Book-keeping does not have any rules and regulations for recording business transactions.
Answer:
Disagree

Question 9.
The owner of the business does not have any utility of book-keeping.
Answer:
Disagree

Question 10.
Bookkeeping cannot be used as financial evidence in a court of law.
Answer:
Disagree

Question 11.
It is not possible for management to plan and take decisions in business with help of book-keeping and accountancy.
Answer:
Disagree

Question 12.
Cash-withdrawn by the proprietor from his business for personal use is called capital.
Answer:
Disagree

Question 13.
A person who has to pay the business for getting goods and services on credit is known as the debtor.
Answer:
Agree

Question 14.
Trade discount is not recorded in the books of accounts.
Answer:
Agree

Question 15.
Purchase of goods is revenue expenditure.
Answer:
Agree

Question 16.
Heavy expenditure on advertising is deferred revenue expenditure.
Answer:
Agree

Question 17.
A solvent person’s assets are more than his liabilities.
Answer:
Agree

Question 18.
Net Worth = Total Assets – Outsiders Liabilities
Answer:
Agree

Question 19.
Conservatism’s concept means to play safe.
Answer:
Agree

Question 20.
The dual aspect means every transaction has two effects i.e. debit and credit.
Answer:
Agree

6. Complete the following sentences:

Question 1.
In barter transaction goods are exchange for ____________
Answer:
Goods

Question 2.
Asset is ____________ of the business.
Answer:
property

Question 3.
Capital expenditures are ____________ in nature.
Answer:
Non Recurring

Question 4.
A ____________ liability is an uncertain liability.
Answer:
Contingent

Question 5.
A person whose liabilities are more than his assets is known as ____________
Answer:
Insolvent

Question 6.
An article or a commodity which is purchase for resale in business is called ____________
Answer:
Goods

Question 7.
Customs and traditions which guide the accountants to prepare accounting systems are called ____________
Answer:
Conventions

Question 8.
Discount given by the creditor to the debtor on payment of cash is called ____________
Answer:
Cash discount

Question 9.
For tax purpose an year starts on 1st April and ends on 31st March is called ____________
Answer:
Accounting year

Question 10.
An institution which provides standard of accounting in India called ____________
Answer:
Institute of Chartered Accountants of India

Question 11.
Which accounting standard is followed for depreciation on fixed assets ____________
Answer:
AS-6

Question 12.
Brief explanation of an entry is called as ____________
Answer:
Narration

Question 13.
Businessman open ____________ type of bank account.
Answer:
Current

Question 14.
The main objective of business concern ____________
Answer:
making profits

Question 15.
Assets which are held in the business for a period of less than one year ____________
Answer:
Current Assets

Question 16.
10 years loan taken from bank by organisation is ____________ term loan.
Answer:
long

Question 17.
Heavy expenses paid on formation of an organisation is known as ____________ expenditure.
Answer:
Deferred Revenue

Question 18.
Dividend received on shares is ____________ income.
Answer:
Revenue

Question 19.
Loss on sale of old machine is ____________ loss.
Answer:
Capital