Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Accountancy Guide Pdf Chapter 14 Computerised Accounting Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Accountancy Solutions Chapter 14 Computerised Accounting

11th Accountancy Guide Computerised Accounting Text Book Back Questions and Answers

Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting

I. Multiple Choice Questions

Choose the correct answer.

Question 1.
n accounting, computer is commonly used in the following areas:
a) Recording of business transactions
b) Payroll accounting
c) Stores accounting
d) All the above
Answer:
d) All the above

Question 2.
Customised accounting software is suitable for ________.
a) Small, conventional business
b) Large, medium business
c) Large, typical business
d) None of the above
Answer:
b) Large, medium business

Question 3.
Which one is not a component of computer system?
a) Input unit
b) Output unit
c) Data
d) Central Processing Unit
Answer:
c) Data

Question 4.
An example of output device is ________.
a) Mouse
b) Printer
c) Scanner
d) Keyboard
Answer:
b) Printer

Question 5.
One of the limitations of computerised accounting system is ________.
a) System failure
b) Accuracy
c) Versatility
d) Storage
Answer:
a) System failure

Question 6.
Expand CAS ________.
a) Common Application Software
b) Computerised Accounting System
c) Centralised Accounting System
d) Certified Accounting System
Answer:
b) Computerised Accounting System

Question 7.
Which one of the following is not a method of codification of accounts?
a) Access codes
b) Sequential codes
c) Block codes
d) Mnemonic code
Answer:
a) Access codes

Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting

Question 8.
TALLY is an example of ________.
a) Tailor-made accounting software
b) Ready-made accounting software
c) In-built accounting software
d) Customised accounting software
Answer:
b) Ready-made accounting software

Question 9.
People who write codes and programmes are called as ________.
a) System analysts
b) System designers
c) System operators
d) System programmers
Answer:
d) System programmers

Question 10.
Accounting software is an example of ________.
a) System software
b) Application software
c) Utility software
d) Operating software
Answer:
b) Application software

II. Very Short Answer Questions

Question 1.
What is a computer?
Answer:

  1. A computer can be described as an electronic device designed to accept raw data as input, processes them and produces meaningful information as output.
  2. It has the ability to perform arithmetic and logical operations as per given set of instructions called program.

Question 2.
What is CAS?
Answer:

  1. Computerised accounting system refers to the system of maintaining accounts using computers.
  2. It involves the processing of accounting transactions through the use of hardware and software in order to keep and produce accounting records and reports.
  3. Computerised accounting system takes accounting transactions as inputs that are processed through accounting software.

Question 3.
What is hardware?
Answer:

  1. The physical components of a computer constitute its hardware.
  2. Hardware consists of input devices and output devices that make a complete computer system.
  3. Examples of input devices are keyboard, optical scanner, mouse, joystick, touch screen and stylus which are used to feed data into the computer.
  4. Output devices such as monitor and printer are media to get the output from the computer.

Question 4.
What is meant by software?
Answer:
A set of programs that form an interface between the hardware and the user of a computer system are referred to as software.

Question 5.
What is accounting software?
Answer:
Accounting software describes a type of application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, journal, general ledger, payroll, and trial balance. It functions as an accounting information system

Question 6.
Name any two accounting packages.
Answer:

  1. Readymade software
  2. Customised software
  3. Tailormade software

Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting

Question 7.
Give any two examples of readymade software.
Answer:

  1. Tally ERP
  2. Profit Books

Question 8.
What is coding?
Answer:

  1. Coding refers to creating computer programming code.
  2. The process of assigning something for classification or identification is known as coding.

Question 9.
What is grouping of accounts?
Answer:

  1. Each minor head in accounting have number of sub-heads.
  2. After classification of accounts into various groups namely, major, minor and sub-heads and allotting codes to each account these are programmed into the computer system.
  3. A proper codification requires a systematic grouping of accounts.
  4. The major groups or heads could be Assets, Liabilities, Revenues and Expenses.
  5. The sub-groups or minor heads could be capital, non-current liabilities, current assets, sales and so on.

Question 10.
What are mnemonic codes?
Answer:

  1. A mnemonic is a term, symbol or name used to define or specify a computing function.
  2. Assembly language also uses a mnemonic to represent machine operation, or opcode.
  3. Example are SJ – Sales Journals ; HQ – Head Quarters.

Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting

III. Short Answer Questions

Question 1.
What are the various types of accounting software?
Answer:
1. Readymade software:

  • These packages are standardised or readymade packages which can be used by the business enterprises immediately on procurement. These packages are used by small and conventional business enterprises.
  • Cost of installation and maintenance is very low. Training cost is negligible and sometimes the vendor provides free of cost training.
  • This software’s are used by those enterprises where financial transactions are simple, uniform and routine in nature. Few examples of such type of software are Tally, Busy, Marg, and Profit books.

2. Customised software:

  • Many a time, it is not possible that ready-to-use packages suit the requirements of the business enterprise.
  • In such circumstances, customised packages may help the business enterprise for fulfilling their requirements. Customised packages can be modified according to the need of the enterprise.
  • For example, software can record attendance of the employees and on the requirement of the customer it can also count the absence of employees in a month, etc.

3. Tailor made software:

  • Large enterprises have their own way of functioning.
  • For effective management information system, varied and specific information is frequently required by many users which may not be needed in case of small or medium scale enterprises.
  • In such enterprises, depending upon their functioning, need based software’s known as tailored packages are installed.
  • The cost of these packages is very high and specific training for using these packages is also required.

Question 2.
Mention any three limitations of computerised accounting system.
Answer:
1. Heavy cost of installation – Computer hardware needs replacement and software needs to be updated from time to time with the availability of newer versions.

2. Cost of training – To ensure effective and efficient use of computerised system of accounting, newer versions of hardware and software are to be introduced. These require special training and hence, cost is incurred to train the staff personnel.

3. Fear of unemployment – On account of the introduction of computerised accounting system, the employees feel insecure that they may lose employment and show less interest in computer related work.

4. Disruption of work – When computerised system is introduced, the existing process of accounting and other works are interrupted. This results in certain changes in the working environment.

5. System failure – The danger of a system crashing due to some failure in hardware can lead to subsequent interruption of work. This is more when no back-up is made.

Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting

Question 3.
State the various types of coding methods.
Answer:
Following are the three methods of codification.
(a) Sequential codes – In sequential code, numbers and/or letters are assigned in consecutive order. These codes are applied primarily to source documents such as cheques, invoices, etc. A sequential code can facilitate document search.
For example:

  • Code – Accounts
  • CL001 – ABC LTD
  • CL002 – XYZ LTD
  • CL003 – SCERT

(b) Block codes – In a block code, a range of numbers is partitioned into a desired number of sub-ranges and each sub- range is allotted to a specific group. In most of the cases of block codes, numbers within a sub – range follow sequential coding scheme, i.e., the numbers increase consecutively.
For example:

  • Code       – Dealer type
  • 100 – 199 – Small pumps
  • 200 – 299 – Medium pumps
  • 300 – 399 – Pipes
  •  400 – 499 – Motors

(c) Mnemonic codes – A mnemonic code consists of alphabets or abbreviations as symbols to codify a piece of information.
For example:

  • Code – Information
  • SJ – Sales Journals
  • HQ – Head Quarters

Question 4.
List out the various reports generated by computerised accounting system.
Answer:
Computerised accounting system takes accounting transactions as inputs that are processed through accounting software to generate the following reports:

  1. Day books /Journals
  2. Trading account
  3. Ledger
  4. Profit and loss account
  5. Trial balance
  6. Balance sheet, etc.

Question 5.
Tate the input and output devices of a computer system,
Answer:
1. Input devices – Examples of input devices are keyboard, optical scanner, mouse, joystick, touch screen and stylus which are used to feed data into the computer.

2. Output devices – Examples Output devices such as monitor and printer are media to get the output from the computer.

Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting

11th Accountancy Guide Computerised Accounting Additional Important Questions and Answers

I. Choose the correct answer.

Question 1.
An example of input device is ________.
a) Mouse
b) Printer
c) Monitor
d) Headphone
Answer:
a) Mouse

Question 2.
The facts and figures that are fed into a computer for further processing are called ________.
a) Procedure
b) Connectivity
c) Data
d) Reliability
Answer:
c) Data

Question 3.
________ packages are used by small and conventional business enterprises.
a) Readymade software
b) Customised software
c) Tailor made software
d) None of these
Answer:
a) Readymade software

Question 4.
________ packages c n be modified according to the need of the enterprise.
a) Readymade software
b) Customised software
c) Tailor made software
d) None of these
Answer:
b) Customised software

Question 5.
________ packages are used by medium or large nature business enterprises.
a) Readymade software
b) Customised software
c) Tailor made software
d) None of these
Answer:
b) Customised software

Question 6.
________ is a step by step series of instructions to per! rm a specific function and achieve desired output.
a) Procedure
b) Connectivity
c) Data
d) Reliability
Answer:
a) Procedure

Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting

Question 7.
The physical components of a computer constitute it ________.
a) Hardware
b) Software
c) Data
d) Procedure
Answer:
a) Hardware

Question 8.
A set of tools and programs to manage the overall working of a computer using a defined set of hardware components is called an ________.
a) Programming software
b) Utility software
c) Application software
d) Operating system
Answer:
d) Operating system

Question 9.
________ are designed specifically for managing the computer device and its resources.
a) Programming software
b) Utility software
c) Application software
d) Operating system
Answer:
b) Utility software

Question 10.
________ is an identification mark.
a) Hardware
b) Software
c) Data
d) Code
Answer:
d) Code

Question 11.
________ codes are applied primarily to source documents such as cheques, invoices, etc.
a) Sequential codes
b) Block codes
c) Mnemonic codes
d) None of these
Answer:
a) Sequential codes

Question 12.
________ code can facilitate document search.
a) Mnemonic codes
b) Block codes
c) Sequential codes
d) None of these
Answer:
c) Sequential codes

Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting

Question 13.
________ code, a range of numbers is partitioned into a desired number of sub-ranges and each sub-range is allotted to a specific group.
a) Mnemonic codes
b) Block codes
c) Sequential codes
d) None of these
Answer:
b) Block codes

Question 14.
________ code consists of alphabets or abbreviations as symbols to codify a piece of information.
a) Mnemonic codes
b) Block codes
c) Sequential codes
d) None of these
Answer:
a) Mnemonic codes

Question 15.
________ consists of input devices and output devices that make a complete computer system.
a) Hardware
b) Software
c) Data
d) Code
Answer:
a) Hardware

Question 16.
How many formats are available white exporting a file?
a) 2
b) 3
c) 5
d) 7
Answer:
b) 3

Question 17.
Tally package was developed by ________.
a) Tally solutions
b) Microsoft
c) Apple Solutions
d) None of the above
Answer:
a) Tally solutions

Question 18.
Which device of computer operation dispenses with the use of the keyboard?
a) Joystick
b) Mouse
c) Light Pen
d) Touch pen
Answer:
b) Mouse

Question 19.
Which of the following device primarily used to provide hard copy?
a) CRT
b) Pen drive
c) Printer
d) Card Reader
Answer:
c) Printer

Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting

Question 20.
Which of the following produces high-quality output?
a) Impact Printer
b) Non-Impact Printer
c) Both (a) and (b)
d) one of the above
Answer:
b) Non-Impact Printer

Question 21.
Which of the following is not a hardware?
a) Printer
b) Scanner
c) Interpreter
d) All of the above
Answer:
c) Interpreter

Question 22.
The copimonly used input device is the ________.
a) Mouse
b) Monitor
c) Keyboard
d) None of the above
Answer:
c) Keyboard

Question 23.
The shortcut to use calculator is ________.
a) Ctrl + M
b) Ctrl + N
c) Ctrl + O
d) Ctrl + C
Answer:
b) Ctrl + N

Question 24.
Suspense account is grouped under ________.
a) Assets
b) Liabilities
c) Income
d) Expenses
Answer:
b) Liabilities

Question 25.
________ is a step by step series of instructions to perform a specific function and achieve desired output.
a) Procedure
b) Data
c) Connectivity
d) All the above
Answer:
a) Procedure

Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting

II. Short Answer Questions

Question 1.
What is Operating system?
Answer:
A set of tools and programs to manage the overall working of a computer using a defined set of hardware components is called an operating system. It is the interface between the user and the computer system.
Example: DOS, Windows, UBUNTU, Imac, etc.

Question 2.
What is Programming software?
Answer:
Special software to accept data and interpret them in the form of machine/assembly language under-standable by a computer.
Example: C, PASCAL, COBOL, etc.

Question 3.
What is Utility software?
Answer:
These are designed specifically for managing the computer device and its resources.
Example: File manager, Anti-virus software, etc.

Question 4.
Give any two examples of Application software?
Answer:

  1. General purpose software.
  2. Specific purpose software.

Question 5.
Give any two examples of System software?
Answer:

  1. Operating system.
  2. Programming software.
  3. Utility software.

Question 6.
What is data?
Answer:
The facts and figures that are fed into a computer for further processing are called data. Data are raw input until the computer system interprets them using machine language, stores them in memory, classifies them for processing and produces results in conformance with the instructions given to it. Processed and useful data are called information which is used for decision making.

Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting

Question 7.
What are sequential codes? ‘
Answer:
In sequential code, numbers and/or letters are assigned in consecutive order. These codes are applied primarily to source documents such as cheques, invoices, etc. A sequential code can facilitate document search.
For example:
Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting 1

Question 8.
What are sequential codes?
Answer:
In a block code, a range of numbers is partitioned into a desired number of sub-ranges and each sub-range is allotted to a specific group. In most of the cases of block codes, numbers within a sub-range follow sequential coding scheme, i.e., the numbers increase consecutively.
For example:
Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting 2

Question 9.
What is General purpose software?
Answer:
This type of application can be used for a variety of tasks and not limited to one particular function.
Example: MS-Office.

Question 10.
What is Specific purpose software?
Answer:
This software is created to execute one specific task and they are customised to the needs of user.
Example:
Accounting software, payroll software, etc.

Question 11.
Explain the basic Features of computerised accounting system.
Answer:
i) Simple and integrated – CAS is designed to automate and integrate ail the business operations such as purchase, sales, finance, inventory and manufacturing. The CAS may be integrated with enhanced Management Information System (MIS), multi-lingual and data organisation capabilities to simplify all the business processes of the organisation easily and cost-effectively.

ii) Speed – It can perform functions at much higher speed than doing the same manually.

iii) Accuracy – Computers perform functions with high degree of accuracy. If hardware, software and input by people are proper, the computerised accounting system can assure of accurate outcome.

iv) Reliability – Computers are used to process large volumes of data and hence, data provided by it are reliable.

v) Versatility – Computer and accounting software have the ability to perform diverse tasks. For example, by simply recording accounting entries through accounting software, one can get trial balance, trading account, profit and loss account, balance sheet and diverse reports.

vi) Transparency – With computerised accounting, the organisation will have greater transparency of day-to-day business operations and access to the vital information.

vii) Scalability – CAS enables processing of any volume of data in tune with the change in the size of the business.

viii) On-line facility – CAS offers online facility to store and process transaction and data so as to retrieve information to generate and view financial reports in any part of the world.

Question 12.
Discuss the Advantages of Computerised Accounting System.
Answer:
i) Faster processing – Computers require far less time than human beings in performing a particular task. Therefore, accounting data are processed faster using a computerised accounting system.

ii) Accurate information – There is less space for error because only one account entry is needed for each transaction unlike repeated posting of the same accounting data in manual system.

iii) Reliability – Computer systems are immune to boredom, tiredness or fatigue. Therefore, these can perform repetitive functions effectively and are highly reliable.

iv) Easy availability of information – The data are easily available and can be communicated to different users at the same time.

v) Up-to-date information – Account balances will always be up to date since the records are automatically updated as and when accounting data are entered or stored.

vi) Efficiency – The computer based accounting system ensures better use of time and resources.

vii) Storage and retrieval – Computer based systems require a fractional amount of physical space as compared to the books of accounts in the form of journals, ledgers and accounting registers.

viii) Works as a motivator to employees – Employees using computer systems feel more valued as they are trained and specialised for the job.

Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting

Question 13.
Explain the Components of Computerised Accounting System.
Answer:
i) Hardware – The physical components of a computer constitute its hardware. Hardware consists of input devices and output devices that make a complete computer system. Examples of input devices are keyboard, optical scanner, mouse, joystick, touch screen and stylus which are used to feed data into the computer. Output devices such as monitor and printer are media to get the output from the computer.

ii) Software – A set of programs that form an interface between the hardware and the user of a computer system are referred to as software.

iii) People – The most important element of a computer system is its users. They are also called live-ware of the computer system.

iv) Procedure – Procedure is a step by step series of instructions to perform a specific function and achieve desired output.

v) Data – The facts and figures that are fed into a computer for further processing are called data. Data are raw input until the computer system interprets them using machine language, stores them in memory, classifies them for processing and produces results in conformance with the instructions given to it. Processed and useful data are called information which is used for decision making.

vi) Connectivity – When two or more computers are connected to each other, they can share information and resources such as sharing of files (data/music, etc), sharing of printer, sharing of facilities like the internet. This sharing is possible using wires, cables, satellite, infra-red, Bluetooth, microwave transmission, etc.

Question 14.
Differences between manual and computerised accounting system.
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting 3

Question 15.
Compare ready to use software, customised software and tailor made software.
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 14 Computerised Accounting 4

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Accountancy Guide Pdf Chapter 12 Final Accounts of Sole Proprietors – I Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Accountancy Solutions Chapter 12 Final Accounts of Sole Proprietors – I

11th Accountancy Guide Final Accounts of Sole Proprietors – I Text Book Back Questions and Answers

I. Multiple Choice Questions

Choose the correct answer.

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 1.
Closing Stock is an item of ________.
a) Fixed Asset
b) Current asset
c) Fictitious Asset
d) Intangible asset
Answer:
b) Current asset

Question 2.
Balance sheet is ________.
a) An account
b) A statement
c) Neither a statement nor an account
d) None of the above
Answer:
b) A statement

Question 3.
Net profit of the business increases the ________.
a) Drawings
b) Receivables
c) Debts
d) Capital
Answer:
d) Capital

Question 4.
Carriage inwards will be shown ________ .
a) In the trading account
b) In the profit and loss account
c) On the liabilities side
d) On the assets side
Answer:
a) In the trading account

Question 5.
Bank overdraft should be shown ________.
a) In the trading account
b) Profit and loss account
c) On the liabilities side
d) On the assets side
Answer:
c) On the liabilities side

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 6.
Balance sheet shows of the business ________.
a) Profitability
b) Financial position
c) Sales
d) Purchases
Answer:
b) Financial position

Question 7.
Drawings appearing in the trial balance is ________.
a) Added to the purchases
b) Subtracted from the purchases
c) Added to the capital
d) Subtracted from the capital
Answer:
d) Subtracted from the capital

Question 8.
Salaries appearing in the trial balance is shown on the ________.
a) Debit side of trading account
b) Debit side of profit and loss account
c) Liabilities side of the balance sheet
d) Assets side of the balance sheet
Answer:
b) Debit side of profit and loss account

Question 9.
Current assets does not include ________.
a) Cash
b) Stock
c) Furniture
d) Prepaid expenses
Answer:
c) Furniture

Question 10.
Goodwill is classified as ________.
a) A current asset
b) A liquid asset
c) A tangible asset
d) An intangible asset
Answer:
d) An intangible asset

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

II. Very Short Answer Type Questions

Question 1.
Write a note on trading account.
Answer:

  1. Trading refers to buying and selling of goods with the intention of making profit.
  2. Trading account is a nominal account which shows the result of buying and selling of goods for an accounting period.
  3. It is prepared to find out the difference between the revenue from sales and cost of goods sold.

Question 2.
What are wasting assets?
Answer:

  1. When the asset is used regularly, it depreciates, eventually having little or no residual value.
  2. During the period of depreciation, the asset is called a “wasting asset”.
  3. Example, natural resources, such as gas and timber, are wasting assets that eventually are used and then have no remaining value.

Question 3.
What are fixed assets?
Answer:

  1. Fixed assets are those assets which are acquired or constructed for continued use in the business and last for many years such as land and building, plant and machinery, motor vehicles, furniture etc.
  2. It is classified into a. Tangible Assets and b. Intangible Assets.

Question 4.
What is meant by purchases returns?
Answer:

  1. Purchases returns or returns outwards, are a normal part of business.
  2. Goods may be returned to supplier if they carry defects or if they are not according to the specifications of the buyer.

Question 5.
Name any two direct expenses and indirect expenses. .
Answer:

  1. Direct Expenses: Carriage inwards, Wages, Import Duty, and Royalty
  2. Indirect Expenses: Office Expenses, Selling Expenses, Administrative Expenses

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 6.
Mention any two differences between trial balance and balance sheet.
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 1

Question 7.
What are the objectives of preparing trading account?
Answer:

  1. Trading account provideds information about gross profit and gross loss.
  2. It provides an opportunity to safeguard against possible losses.
  3. It provides information about direct expenses and direct incomes.

Question 8.
What is the need for preparing profit and loss account?
Answer:

  1. Ascertainment of net profit and net loss
  2. To compare the profits
  3. To have a control on expenses
  4. It is used to prepare the balance sheet

III. Short Answer Questions

Question 1.
What are final accounts? What are its constituents?
Answer:

  1. The business entities are interested in knowing periodically the results of business operations carried on and the financial soundness of the business.
  2. In other words, they want to know the profitability and the financial position of the business.
  3. These can be ascertained by preparing the final accounts or financial statements.
  4. The final accounts are usually prepared at the end of the accounting period on the basis of balances of ledger accounts shown by the trial balance.

The final accounts or financial statements include the following:

  1. Income Statement or Trading and Profit and Loss Account and
  2. Position Statement or Balance Sheet.

The purposes of preparing the financial statements are:

  1. To ascertain the financial performance of an enterprise and
  2. To ascertain the financial position of an enterprise.
  3. The income statement and balance sheet are prepared for these purposes respectively.
  4. Income statement gives the manner in which the profit or loss for an accounting period is arrived at.
  5. Hence, at the close of the accounting period, all nominal accounts (i.e. expenses, losses, revenues, gains, purchases, purchases returns, sales and sales returns) are to be closed by transferring to the income statement or trading and profit and loss account.

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 2.
What is meant by closing entries? Why are they passed?
Answer:
1. Balances of all the nominal accounts are required to be closed on the last day of the accounting year to facilitate the preparation of trading and profit and loss account.

2. It is done by passing necessary closing entries in the journal proper.

3. Purchases have debit balance and a purchases return has credit balance.

4. At the end of the accounting year, the balance in purchases returns account is closed by transferring to purchases account.

5. Similarly, sales account has credit balance and sales returns have debit balance.

6. At the end of the accounting year, the balance in sales returns account is closed by transferring to sales account.

7. The various closing entries are as follows
(e.g.) for closing purchases returns account
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 2

Question 3.
What is meant by gross profit and net profit?
Answer:
Gross profit:

  1. The difference between the totals of two sides of the trading account indicates either gross profit or gross loss.
  2. If the total of the credit side is more, the difference represents gross profit.
  3. On the other hand, if the total of the debit side is higher, the difference represents gross loss.
  4. The gross profit or gross loss is transferred to profit and loss account.

Net profit:

  1. After debiting indirect expenses and losses and crediting all indirect incomes and gains, if the total of the credit side of the profit and loss account exceeds the debit side, the difference is termed as net.
  2. profit.
  3. On the other hand, if the total in the debit side exceeds the credit side, the difference is termed as net loss. Net profit or net loss is transferred to the capital account.

Question 4.
“Balance sheet is not an account”- Explain.
Answer:
1. A balance sheet is a part of the final accounts. However, the balance sheet is a statement and not an account. It has no debit or credit sides and as such the words ‘To’ and ‘By’ are not used before the names of the accounts shown therein.

2. A balance sheet is a summary of the personal and real accounts, which have balances. Personal and real accounts having debit balances are shown on the right hand side known as assets side, whereas personal and real accounts having credit balances are shown on the left hand side known as liabilities side.

3. The totals of the two sides of the balance sheet must be equal. If the totals are not equal, it indicates existence of error. It must satisfy the accounting equation, i.e., Assets = Capital + Liabilities, following the dual aspect concept.

4. Balance sheet is prepared on a particular date and not for a fixed period. It discloses the financial position of a business on a particular date. It gives the balances only for the date on which it is prepared.

5. It shows the financial position of the business according to the going concern concept.

Question 5.
What are the advantages of preparing a balance sheet?
Answer:
1. The main purpose of preparing a balance sheet is to ascertain the true financial position of the business at a particular point of time.

2. It helps in comparing the cost of various assets of the business such as the amount of closing stock, amount due from debtors, amount of fictitious assets, etc.

Moreover as assets and liabilities of similar nature are grouped and presented in balance sheet, a comparative study of these assets and liabilities is facilitated. It helps in comparing the various liabilities of the business.

3. It helps in finding out the solvency position of the firm. The firm’s solvency position is favourable if the assets exceed the external liabilities. The firm’s solvency position is not favourable it the external liabilities exceed the assets.

Question 6.
What is meant by grouping and Marshalling of assets and liabilities?
Answer:

  1. The assets and liabilities shown in the balance sheet are grouped and presented in a particular order.
  2. The term ‘grouping’ means showing the items of similar nature under a common heading.
  3. For example, the amount due from various customers will be shown under the head ‘Sundry debtors/ Similarly, under the head ‘Current assets’, the balance of cash, bank, debtors, stock and other current assets will be shown.
  4. ‘Marshalling’ is the arrangement of various assets and liabilities in a proper order.
  5. Marshalling can be made in one of the following two ways:

a) In the order of liquidity:

  • According to this method, an asset which is most easily convertible into cash, i.e., cash in hand is shown first and then will follow those assets which are comparatively less easily convertible, So that the least liquid asset i.e., goodwill is shown last.
  • In the same way, the liabilities which are to be paid at the earliest will be shown first. In other words, current liabilities are shown first, then fixed or long-term liabilities and finally the proprietor’s capital.

b) In the order of permanence:

  • This method is exactly the reverse of the first method.
  • Asset which is more permanent, i.e., goodwill is shown first followed by assets which are less permanent. Similarly, those liabilities which are to be paid last will be shown first.
  • In other words, the proprietor’s capital is shown first, then fixed or long-term liabilities and lastly the current liabilities. Joint stock companies are required under the Companies Act to prepare their balance sheet in the order of permanence.

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

IV. Exercises

Question 1.
Prepare trading account in the books of Sivashankar from the following figures
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 3
Solution:
Trading account
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 4

Question 2.
Prepare trading account in the books of Mr. Sanjay for the year ended 31st December 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 5
Solution:
Trading account as on 31st Dec 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 6

Question 3.
From the following balances taken from the books of Saravanan, calculate gross profit for the year ended December 31, 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 7
Solution:
Trading account as on 31st Dec 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 8

Question 4.
From the following details for the year ended 31st March, 2018, prepare trading account.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 9
Solution:
Trading account as on 31st Mar 2018
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 10

Question 5.
Ascertain gross profit or gross loss from the following:
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 11
Solution:
Trading account
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 12

Question 6.
From the following balances taken from the books of Victor, prepare trading account for the t year ended December 31, 2017:
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 13
Solution:
Trading account as on 31st Dec 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 14

Question 7.
Compute cost of goods sold from the following information
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 15
Solution:
Compute cost of goods sold from the following information.
Cost of goods sold = Opening stock + Net purchases + Direct expenses – Closing stock
= 10,000 + 80,000 + 7,000 -15,000 .
= ₹ 82,000

Question 8.
Find out the amount of sales from the following information:
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 16
Solution:
Find out the amount of sales from the following information:
Cost of goods sold = Opening stock + Net purchases – Closing stock
= 30,000 + 2,00,000 – 20,000
= ₹ 2,10,000
Let the sales be = 100
Less: Gross profit (30% on sales i.e,100) = 30
Cost of goods sold = ₹ 70
Therefore percentage of gross profit on cost of goods sold is \(\frac { 30 }{ 70 }\) x 100
= 42.86%
Gross profit = 42.86% on ₹ 2,10,000
i.e = \(\frac { 42.86 }{ 100 }\) x 2,10,000
= 90,000
Sales = Cost of goods sold + Gross profit
= 2,10,000 + 90,000
Sales = ₹ 3,00,000

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 9.
Prepare profit and loss account in the books of Kirubavathi for the year ended 31st December, 2016 from the following information:
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 17
Solution:
Trading account as on 31st Dec 2016
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 18

Question 10.
Ascertain net profit or net loss from the following:
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 19
Solution:
Trading account
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 20

Question 11.
From the following details, prepare profit and loss account.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 21
Solution:
Trading account
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 22

Question 12.
From the following information, prepare profit and loss account for the year ending 31st December, 2016.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 23
Solution:
Trading account as on 31st Dec 2016
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 24

Question 13.
From the following balances obtained from the books of Mr. Ganesh, prepare trading and profit and loss account.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 26
Solution:
Trading and Profit & loss account
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 27

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 14.
From the following balances extracted from the books of a trader, ascertain gross profit and net profit for the year ended March 31st, 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 28
Closing stock on December 31.12.2017 was ₹ 4,500
Solution:
Trading and Profit & loss A/c for the year ended 31st Mar 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 29

Question 15.
From the following particulars, prepare balance sheet in the books of Bragathish as on 31st December, 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 30
Solution:
Balance Sheet as on 31st Dec 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 31

Question 16.
Prepare trading and profit and loss account in the books of Ramasundari for the year ended 31st December, 2017 and balance sheet as on that date from the following information:
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 32
Solution:
Trading and Profit & loss A/c for the year ended 31st Dec 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 33
Balance Sheet as on Ramasundari on 31st  December 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 34

Question 17.
From the Trial balance, given by Saif, prepare final accounts for the year ended 31st March, 2018 in his books.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 35
Closing stock (31-12-2017) ₹ 14,500
Solution:
Trading and Profit & loss A/c for the year ended 31st Mar 2018
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 36
Balance sheet of saif on 31st Mar 2018
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 37

Question 18.
Prepare trading and profit and loss account and balance sheet in the books of Deri, a trader, from the following balances as on March 31, 2018.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 38
Closing stock (31st March, 2018) ₹ 8,000
Solution:
Trading and Profit & loss A/c for the year ended 31st Mar 2018
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 39
Balance sheet of Deri as on 31st March 2018.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 40

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

11th Accountancy Guide Final Accounts of Sole Proprietors – I Additional Important Questions and Answers

I. Choose the correct answer.

Question 1.
Carriage outwards will be shown ________.
a) In the trading account
b) In the profit and loss account
c) On the liabilities side
d) On the assets side
Answer:
b) In the profit and loss account

Question 2.
Opening stock is ________.
a) Debited in trading account
b) Credited in trading account
c) Credit ¡n profit and loss account
d) Debited in profit and loss account
Answer:
a) Debited in trading account

Question 3.
___________ account enables the trader to find out gross profit or loss.
a) Trading Account
b) Profit and loss Account
c) Balance sheet
d) Trial balance
Answer:
a) Trading Account

Question 4.
__________ account enables the trader to find out Net profit or loss.
a) Trading Account
b) Profit and loss Account
c) Balance sheet
d) Trial balance
Answer:
b) Profit and loss Account

Question 5.
Fixed assets does not include ________.
a) Plant
b) Stock
c) Furniture
d) Computer
Answer:
c) Furniture

Question 6.
Current Liabilities does not include ________.
a) Sundry Creditors
b) Bills Payable
c) Debentures
d) Outstanding Expenses
Answer:
c) Debentures

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 7.
All incomes are ________ in the profit and loss account.
a) Debited
b) Credited
c) Assets
d) Liabilities
Answer:
b) Credited

Question 8.
Bad debt is a ________ expense.
a) Office expenses
b) Administrative expenses
c) Selling expenses
d) Distribution expenses
Answer:
c) Selling expenses

Question 9.
Wages is an example of ________.
a) Capital expenses
b) Indirect expenses
c) Direct expenses
d) Revenue expenses
Answer:
c) Direct expenses

Question 10.
Fixed assets have ________.
a) Short life
b) long life
c) no life
d) All of these
Answer:
b) long life

Question 11.
________ refers to buying and selhng of goods with the intention of making profit.
a) Trading
b) Trial balance
c) Profit and loss account
d) Balance sheet
Answer:
a) Trading

Question 12.
The goods remaining unsold at the end of the accounting period are known as _________
a) Opening stock
b) Closing stock
c) Average stock
d) None of these
Answer:
b) Closing stock

Question 13.
________ is the arrangement of various assets and liabilities in a proper order.
a) Marshalling
b) Grouping
c) Recording
d) Packing
Answer:
a) Marshalling

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 14.
Net profit or Net loss ¡s traflsferred to the ________ account.
a) Trading
b) Profit and loss
c) Capital
d) None of these
Answer:
c) Capital

Question 15.
Gross profit or Grosš loss is transferred to the _______ account.
a) Trading
b) Profit and loss
c) Capital
d) None of these
Answer:
b) Profit and loss

II. Very Short Answer Type Questions

Question 1.
Definition of trading accounting?
Answer:
According to J. R. Batliboi, “The trading account shows the results of buying and selling of goods. In preparing this account, the general establishment charges are ignored and only the transactions in goods are included.”

Question 2.
What is opening stock?
Answer:
The stock of goods remaining unsold at the end of the previous year is the opening stock of the current year. This item will not be there in a newly started business. It will not appear if it is adjusted with pur-chases. As opening stock would have been sold during the year, the cost of opening stock is included in trading account.

Question 3.
What do you mean by direct expenses?
Answer:
All the expenses incurred on the purchase of goods and for bringing the goods to the go down or place of business and to make them to saleable condition are known as direct expenses.

Question 4.
What is Carriage inwards or Freight inwards?
Answer:
Amount paid for transporting the goods purchased to the go down or business premises is called carriage inwards or carriage on purchases or freight inwards.

Question 5.
What is Wages?
Answer:
Amount paid to workers who are directly engaged in loading, unloading and handling of goods purchased is known as wages.

Question 6.
What is Dock Charges?
Answer:
These are the charges levied for shipping the cargo while entering or leaving docks. When they are paid on import of goods, they are treated as direct expenses.

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 7.
What do you mean by direct expenses?
Answer:
The goods remaining unsold at the end of the accounting period are known as closing stock. They are valued at cost price or net realisable value (market price) whichever is lower.

Question 8.
Definition of Profit and Loss?
Answer:
According to Prof. Carter, “A Profit and Loss Account is an account into which all gains and losses are collected, in order to ascertain the excess of gains over the losses or vice-versa”.

Question 9.
Definition of Balance Sheet?
Answer:
According to J.R. Batliboi, “A Balance Sheet is a statement prepared with a view to measure the exact financial position of a business on a certain fixed date.”

Question 10.
State Methods of drafting a balance sheet.
Answer:
The balance sheet of business concern can be presented in the following two forms.

  1. Horizontal form
  2. Vertical form

Question 11.
Explain the Tangible fixed assets?
Answer:
Tangible fixed assets are those which have physical existence or which can be seen and felt. Examples: plant and machinery, building and furniture.

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

III. Short Answer Questions

Question 1.
What do you mean by current assets?
Answer:

  1. Current assets are those assets which are either in the form of cash or can be easily converted into cash in the normal course of business or within one year.
  2. In the words of Howard and Upton, “The current assets are usually defined as those assets which are convertible into cash through the normal course of business within a short time, ordinarily in a year.”
  3. Current assets include cash in hand, cash at bank, short-term investments, bills receivable, debtors, prepaid expenses, accrued income, closing stock, etc.
  4. Among these, closing stock is valued at cost or realisable value whichever is lower and debtors are shown after deducting a reasonable provision for bad and doubtful debts.

Question 2.
Explain the Intangible fixed assets?
Answer:

  1. Intangible fixed assets are those which do not have any physical existence or which cannot be seen or touched.
  2. Examples: goodwill, trade-marks, copy rights and patents. Intangible assets are as much valuable as tangible assets because they also help the firm in earning profits.
  3. For example, goodwill helps in attracting customers and patents represent the know-how which helps in producing the goods.

Question 3.
What is the Need for preparation of trading account?
Answer:
i) Provides information about gross profit or gross loss:

  • It shows the gross profit or gross loss of the business for an accounting year.
  • This helps the business persons to find out gross profit ratio by expressing the gross profit as a percentage of sales.
  • It helps to compare and analyse with the ratios of the previous years.
  • Thus, it provides data for com-parison, analysis and planning for a future period.

ii) Provides an opportunity to safeguard against possible losses:

  • If the ratio of gross profit has decreased in comparison to the preceding years, effective measures can be taken to safeguard against future losses.
  • For example, the sale price of goods may be increased or steps may be taken to analyse and control the direct expenses.

iii) Provides information about direct expenses and direct incomes:

  • All the expenses incurred on the purchase of goods are direct expenses. They are recorded in the trading account.
  • Trading account also shows sales revenue, which is a direct income. With the help of trading account, percentage of such expenses on sales revenue can be calculated and compared with similar ratios of the previous years.
  • Thus, it enables the management to have control over the direct expenses.

Question 4.
What is the Need for preparation of profit and loss account?
Answer:
i) Ascertainment of net profit or net loss:

  • The profit and loss account discloses the net profit available to the proprietor or net loss to be borne by him.
  • Ascertainment of profitability helps in planning for the growth and efficiency of a business enterprise.
  • Inter-firm comparison and intra-firm comparison of profit and loss account items help in assessing efficiency in comparison with other enterprises and other departments of the same enterprise respectively.

ii) Comparison of profit – The net profit of the current year can be compared with the profit of the previous years. It helps to know whether the business is conducted efficiently or not.

iii) Control on expenses – Profit and loss account helps in comparing various expenses with the expenses of the previous years. The percentage of individual expenses to net sales can be calculated and compared with the similar ratios of previous years. Such a comparison will be helpful in taking effective steps for controlling unnecessary expenses.

iv) Helpful in the preparation of balance sheet – A balance sheet can be prepared only after ascertaining the net profit or loss through profit and loss account. Net profit or loss is shown in the balance sheet. Thus, it facilitates preparation of balance sheet.

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 5.
What is the Need for preparation of balance sheet?
Answer:
a) The main purpose of preparing a balance sheet is to ascertain the true financial position of the business at a particular point of time.

b) It helps in comparing the cost of various assets of the business such as the amount of closing stock, amount due from debtors, amount of fictitious assets, etc.

Moreover as assets and liabilities of similar nature are grouped and presented in balance sheet, a comparative study of these assets and liabilities is facilitated. It helps in comparing the various liabilities of the business.

c) It helps in finding out the solvency position of the firm. The firm’s solvency position is favourable if the assets exceed the external liabilities. The firm’s solvency position is not favourable it the external liabilities exceed the assets.

Question 6.
What are the Characteristics of balance sheet?
Answer:
a) A balance sheet is a part of the final accounts. However, the balance sheet is a statement and not an account. It has no debit or credit sides and as such the words ‘To’ and ‘By’ are not used before the names of the accounts shown therein.

b) A balance sheet is a summary of the personal and real accounts, which have balances. Personal and real accounts having debit balances are shown on the right hand side known as assets side, whereas personal and real accounts having credit balances are shown on the left hand side known as liabilities side.

c) The totals of the two sides of the balance sheet must be equal. If the totals are not equal, it indicates existence of error. It must satisfy the accounting equation, ie., Assets = Capital + Liabilities, following the dual aspect concept.

d) Balance sheet is prepared on a particular date and not for a fixed period. It discloses the financial position of a business on a particular date. It gives the balances only for the date on which it is prepared.

e) It shows the financial position of the business according to the going concern concept.

Question 7.
What is the Classification of assets?
Answer:
a) Fixed assets – Fixed assets are those assets which are acquired or constructed for continued use in the business and last for many years such as land and building, plant and machinery, motor vehicles, furniture, etc. According to Finley and Miller, “Fixed assets are assets of a relatively permanent nature used in the operations of business and not intended for sale”.

b) Current assets – Current assets are those assets which are either in the form of cash or can be easily converted into cash in the normal course of business or within one year. In the words of Howard and Upton, “The current assets are usually defined as those assets which are convertible into cash through the normal course of business within a short time, ordinarily in a year.”

Current assets include cash in hand, cash at bank, short-term investments, bills receivable, debtors, prepaid expenses, accrued income, closing stock, etc.

c) Liquid assets – Liquid assets are the assets which are either in the form of cash or which can be immediately converted into cash within a very short period of time, such as cash at bank, bills receivable, short-term investments, debtors and accrued incomes.

In other words, if prepaid expenses and closing stock are excluded from current assets, the balance is known as liquid assets.

d) Investments – Amount invested outside the business in shares, debentures, bonds and other securities is called investments.

If it is invested for a period more than a year they are called long-term investments. If they are invested for a period less than a year they are short term investments and shown under current assets.

e) Wasting assets – These are the assets which get exhausted gradually in the process of excavation. Examples: mines and quarries.

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 8.
Explain the type of liabilities.
Answer:
a) Fixed or long-term liabilities – The liabilities which are to be repaid after one year or more are termed as long-term liabilities. Example: Long-term loans.

b) Current or short-term liabilities – The liabilities which are expected to be paid within the normal operating cycle or one year are termed as current or short-term liabilities. These include bank overdraft, creditors, bills payable, outstanding expenses, etc.

c) Contingent liabilities – These are the liabilities which are not certain at the time of preparation of balance sheet. These liabilities may or may not occur.

These are the liabilities which will become payable only on the happening of some specific event which itself is not certain, otherwise these need not be paid. Such liabilities are as follows:

IV. Problems and solutions

Question 1.
From the following particulars prepare the trading account and calculate the gross profit.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 41
Solution:
Trading Account
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 42

Question 2.
From the following figures, ascertain the gross profit
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 43
Solution:
Trading Account
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 44

Question 3.
Front the information given below prepare trading account.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 45
Solution:
Trading Account
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 46

Question 4.
From the following particulars calculate gross profit.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 47
Solution:
Trading Account
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 48

Question 5.
Calulate the Grose profit from the fllowing figures
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 49
Solution:
Trading Account
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 50

Question 6.
Prepare profit and loss account for the year ending 31.3.2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 51
Solution:
Trading Account
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 52

Question 7.
From the following information, prepare the Profit and Loss Account of a Trader for the year ending 31st March, 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 53
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 54

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 8.
Prepare Trading and Profit Si Loss account from the following information:
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 55
Solution:
Trading and Profit & loss A/c Cr
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 56

Question 9.
From the following information, prepare a Balance Sheet of Mr.A as at 31st March 2016.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 57
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 58

Question 10.
From the following information prepare balance sheet
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 59
Solution:
Balance Sheet
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 60

Question 11.
From the following information prepare trading account for the year ended 31.12.2016.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 61
Solution:
Trading A/c for the year ended 31st Dec 2016
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 62

Question 12.
From the following balance extracted from the books of M/S Lavanya and sons, prepare trading account for the year ended 31st March 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 63
Solution:
Trading A/c for the year ended 31st Mar 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 64

Question 13.
Prepare trading account for the year ended 31st December 2017 from the following.
 Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 65
Closing stock is valued at ₹ 6,00,000
Solution:
Trading A/c for the year ended 31st Dec 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 66
Note: Selling expenses, carriage on sales advertisement and office rent will not appear in trading account as they are indirect expenses.

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 14.
Following in then extract of a trial balance as on 31st December 2017 prepare trading account.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 67
Solution:
Trading A/c for the year ended 31st Dec 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 68
Note:
Closing stock will not appear

Question 15.
From the following information prepare trading account for the year ending 31st December, 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 69
Solution:
Trading A/c for the year ended 31st Dec 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 70

Question 16.
Compute cost of goods sold from the following.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 71
Solution:
Cost of goods sold = Opening stock + Net purchases + Direct expenses – Closing stock
= 8,000 + 60,000 + 5,000 – 9,000
= ₹ 64,000

Note : Indirect expenses do not form part of cost of goods sold.

Question 17.
Find the amount of sales from the following.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 72
Solution:
Cost of goods sold = Opening stock + Net purchases + Direct expenses – Closing stock
= 20,000 + 70,000 + 10,000 – 30,000
= ₹ 70,000
Let the sales be less Gross profit (20% on sales i.e,100) (100 – 20 = 80)
cost of goods sold
Therefore percentage of Gross profit on cost of goods sold is \(\frac { 20 }{ 80 }\) x 100 = 25%
Gross profit = 25% on 70,000 (Ex) \(\frac { 25 }{ 100 }\) x 70,000 = 17,500
Sales = Cost of goods sold + Gross profit
= 70,000 + 17,500
= ₹ 87,500

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 18.
Following the information prepare profit and loss account for 31st March 2018.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 73
Solution:
Profit and loss account for the year ended 31st march 2018
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 74

Question 19.
Prepare the profit and loss account for the year ended 31st December 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 75
Solution:
Profit and loss account for the year ended 31st December 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 76
Note: Carriage inwards will not appear in profit and loss account as is a direct expense.

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

V. Long Answers

Question 1.
The following trial balance of Mr.A is extracted on 31.12.2017. Prepare Trading and Profit and Loss account. The closing stock is valued at ₹ 35,000,
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 77
Solution:
Trading and Profit & loss A/c for the year ended 31 Dec 2017
 Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 78
Balance Sheet of Mr. A as on 31.12.2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 79

Question 2.
From the following balances extracted from the accounts of Shri & Co for year ending 31.03.2018, prepare Trading and Profit & loss account and also Balance sheet as on that date.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 80
Solution:
Trading Account of Shri & Co for the year ended 31 Mar 2018
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 81
Balance Sheet as on 31 Mar 2018
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 82

Question 3.
From the trial balance f Thiru.Vetri for the year ending 31.12.2017 prepare trading & profit & Loss account for that period and also Balance sheet as on that date.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 83
Closing stock Rs. 1,970; outstanding rent ₹ 60
Solution:
Trading and Profi & loss A/c of Mr. Vetri for the year ended 31 Dec 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 84
Balance Sheets as on 31 Dec 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 85

Question 4.
The following particulars prepare profits and loss account year ended 31st December 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 86
Solution:
Profit and loss account for the year ended 31st Dec 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 87

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 5.
Following balance of Niruban, prepare balance sheet as on 31st December 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 88
Solution:
Balance Sheet as on 31st Dec 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 89

Question 6.
Prepare trading and profit and loss A/c of about Rahuman for the year ending 31st December, 2016 and balance sheet as on that date. The closing stock on 31st December 2016 was valued at ₹ 2,000
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 90
Solution:
Balance Sheet as on 31st Dec 2016
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 91
Balance sheet as on 31st December, 2016
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 92

Question 7.
Trial balance of sharn, prepare trading and profit and loss account for the year ending 31st December 2013 was valued at 25,00,000
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 93
Solution:
Profit and loss account for the year ended 31st Dec 2013
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 94
Balance sheet as on sharan 31st December 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 95

Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I

Question 8.
The trial balance of Ms. Kalpana shows the following balance on March 31.2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 96
Adjustment:
The closing stock was valued at ₹ 60,000
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 97
Balance sheet of Ms. Kalpana as on 31st March 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 12 Final Accounts of Sole Proprietors – I 98

Samacheer Kalvi 11th Accountancy Guide Chapter 11 Capital and Revenue Transactions

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Accountancy Guide Pdf Chapter 11 Capital and Revenue Transactions Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Accountancy Solutions Chapter 11 Capital and Revenue Transactions

11th Accountancy Guide Capital and Revenue Transactions Text Book Back Questions and Answers

Samacheer Kalvi 11th Accountancy Guide Chapter 11 Capital and Revenue Transactions

I. Multiple Choice Questions

Choose the correct answer.

Question 1.
Amount spent on increasing the seating capacity in a cinema hall is _______.
a) Capital expenditure
b) Revenue expenditure
c) Deferred revenue expenditure
d) None of the above.
Answer:
a) Capital expenditure

Question 2.
Expenditure incurred ₹ 20,000 for trial run of a newly installed machinery will be _______.
a) Preliminary expense
b) Revenue expenditure
c) Capital expenditure
d) Deferred revenue expenditure
Answer:
c) Capital expenditure

Question 3.
Interest on bank deposits is _______.
a) Capital receipt
b) Revenue receipt
c) Capital expenditures
d) Revenue expenditures
Answer:
b) Revenue receipt

Question 4.
Amount received from IDBI as a medium term loan for augmenting working capital _______.
a) Capital expenditures
b) Revenue expenditures
c) Revenue receipts
d) Capital receipt
Answer:
d) Capital receipt

Samacheer Kalvi 11th Accountancy Guide Chapter 11 Capital and Revenue Transactions

Question 5.
Revenue expenditure is intended to benefit _______.
a) Past period
b) Future period
c) Current period
d) Any period
Answer:
c) Current period

Question 6.
Pre – operative expenses are _______.
a) Revenue expenditure
b) Prepaid revenue expenditure
c) Deferred revenue expenditure
d) Capital expenditure
Answer:
d) Capital expenditure

Samacheer Kalvi 11th Accountancy Guide Chapter 11 Capital and Revenue Transactions

II. Very Short Answer Type Question

Question 1.
What is meant by revenue Expenditure?
Answer:

  1. The expenditure incurred for day to day running of the business or for maintaining the earning capacity of the business is known as revenue expenditure.
  2. It is recurring in nature. It is incurred to generate revenue for a particular accounting period. The revenue expenditure may be incurred in relation with revenue or in relation with a particular accounting period.
  3. For example, cost of purchases is a revenue expenditure related to sales revenue. Rent and salaries are related to a particular accounting period.

Question 2.
What is capital expenditure?
Answer:

  1. It is an expenditure incurred during an accounting period, the benefits of which will be available for more than one accounting period.
  2. It includes any expenditure resulting in the acquisition of any fixed asset or contributes to the revenue earning capacity of the business. It is non- recurring in nature.

Question 3.
What is capital profit?
Answer:
Capital profit is the profit which arises not from the normal course of the business. Profit on sale of fixed asset is an example for capital profit.

Question 4.
Write a short note on revenue receipt.
Answer:
Receipts which are obtained in the normal course of business are called revenue receipts. It is recurring in nature. The amount received is generally small.

Examples:

  • Proceeds from sale of goods
  • Interest on investments received
  • Respet Received
  • Dividend from investment in shares.

Question 5.
What is meant by deferred revenue expenditure?
Answer:

  1. An expenditure, which is revenue expenditure in nature, the benefit of which is to be derived over a subsequent period or periods is known as deferred revenue expenditure.
  2. The benefit usually accrues for a period of two or more years. It is for the time being, deferred from being charged against income. It is charged against income over a period of certain years.

Samacheer Kalvi 11th Accountancy Guide Chapter 11 Capital and Revenue Transactions

III. Short Answer Questions

Question 1.
Distinguish between capital expenditure and revenue expenditure.
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 11 Capital and Revenue Transactions 1

Question 2.
Distinguish between capital receipt and revenue receipt.
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 11 Capital and Revenue Transactions 2

Question 3.
What is deferred revenue expenditure? Give two examples.
Answer:
1. An expenditure, which is revenue expenditure in nature, the benefit of which is to be derived over a subsequent period or periods is known as deferred revenue expenditure.

2. The benefit usually accrues for a period of two or more years. It is for the time being, deferred from being charged against income. It is charged against income over a period of certain years.

Examples:

  • Considerable amount spent on advertising
  • Major repairs to plant and machinery

Samacheer Kalvi 11th Accountancy Guide Chapter 11 Capital and Revenue Transactions

IV. Exercises

Question 1.
State whether the following expenditures are capital, revenue or deferred revenue.

  1. Advertising expenditure, the benefits of which will last for three years.
  2. Registration fees paid at the time of registration of a building.
  3. Expenditure incurred on repairs and whitewashing at the time of purchase of an old building in order to make it usable.

Solution:

  1. Deferred revenue expenditure
  2. Capital Expenditure
  3. Capital Expenditure

Question 2.
Classify the following items into capital and revenue.

  1. Registration expenses incurred for the purchase of land.
  2. Repairing charges paid for remodeling the old building purchased.
  3. Carriage paid on goods purchased.
  4. Legal expenses paid for raising of loans

Solution:

  1. Capital
  2. Capital
  3. Revenue
  4. Capital

Question 3.
State whether they are capital and revenue.
Answer:

  1. Construction of building ₹ 10,00,000.
  2. Repairs to furniture ₹ 50,000.
  3. White-washing the building ₹ 80,000
  4. Pulling down the old building and rebuilding ₹ 4,00,000

Solution:

  1. Capital
  2. Revenue
  3. Revenue
  4. Capital

Question 4.
Classify the following items into capital and revenue.

  1. ₹ 50,000 spent for railway siding.
  2. Loss on sale of old furniture
  3. Carriage paid on goods sold.

Solution:

  1. Capital
  2. Revenue
  3. Revenue

Question 5.
State whether the following are capital, revenue and deferred revenue.

  1. Legal fees paid to the lawyer for acquiring a land ₹ 20,000.
  2. Heavy advertising cost of ₹ 12,00,000 spent on introducing a new product.
  3. Renewal of factory licence ₹ 12,000.
  4. A sum of ₹ 4,000 was spent on painting the factory.

Solution:

  1. Capital
  2. Deferred Revenue
  3. Revenue
  4. Revenue

Samacheer Kalvi 11th Accountancy Guide Chapter 11 Capital and Revenue Transactions

Question 6.
Classify the following receipts into capital and revenue.

  1. Sale proceeds of goods ₹ 75,000.
  2. Loan borrowed from bank ₹ 2,50,000
  3. Sale of investment ₹ 1,20,000.
  4. Commission received ₹ 30,000.
  5. ₹ 1,400 wages paid in connection with the erection of new machinery.

Solution:

  1. Revenue
  2. Capital
  3. Capital
  4. Revenue
  5. Capital

Question 7.
Identify the following items into capital or revenue.

  1. Audit fees paid ₹ 10,000.
  2. Labour welfare expenses ₹ 5,000.
  3. ₹ 2,000 paid for servicing the company vehicle.
  4. Repair to furniture purchased second hand ₹ 3,000.
  5. Rent paid for the factory ₹ 12,000

Solution:

  1. Revenue
  2. Revenue
  3. Revenue
  4. Capital
  5. Revenue

Samacheer Kalvi 11th Accountancy Guide Chapter 11 Capital and Revenue Transactions

11th Accountancy Guide Capital and Revenue Transactions Additional Important Questions and Answers

I. Choose the correct answer.

Question 1.
Expenses on research and development will be classified under _______.
a) Preliminary expense
b) Revenue expenditure
c) Capital expenditure
d) Deferred revenue expenditure
Answer:
d) Deferred revenue expenditure

Question 2.
Depreciation on fixed asset is a _______ expenditure.
a) Capital expenditure
b) Revenue expenditure
c) Deferred revenue expenditure
d) None of the above.
Answer:
b) Revenue expenditure

Question 3.
Revenue receipts are _______ in the business.
a) non-recurring
b) recurring
c) neither of the above
d) A AND B
Answer:
b) recurring

Question 4.
An plant worth ₹ 8,000 is sold for ₹ 8,500 the capital receipt amounts to _______.
a) ₹ 8,000
b) ₹ 8,500
c) ₹ 500
d) ₹ 165
Answer:
c) ₹ 500

Question 5.
An asset worth ₹ 1,00,000 is sold for ₹ 85,000 the capital loss amounts to _______.
a) ₹ 85,000
b) ₹ 1,00,000
c) ₹ 15,000
d) ₹ 70000
Answer:
c) ₹ 15,000

Question 6.
An asset worth ₹ 1,00,000 is sold for ₹ 75,000 the capital loss amounts to
a) ₹ 1,75,000
b) ₹ 1,00,000
c) ₹ 75,000
d) ₹ 25,000
Answer:
c) ₹ 75,000

Samacheer Kalvi 11th Accountancy Guide Chapter 11 Capital and Revenue Transactions

Question 7.
Transaction which provide benefit to*the business for more than one year is called as _______.
a) Capital expenditure
b) Revenue expenditure
c) Deferred revenue expenditure
d) None of the above
Answer:
c) Deferred revenue expenditure

Question 8.
Revenue expenditure is intended to benefit.
a) Subsequent year
b) previous’ year
c) current year
d) None of the above
Answer:
c) current year

II. Very Short Answer Type Questions

Question 1.
What is revenue loss?
Answer:
Revenue losses are the losses that arise from the normal course of the business. In other words, ‘net loss’ – i.e., excess of revenue expenditures over revenue receipts.

Question 2.
Write a short note on Capital receipt.
Answer:
Receipt which is not revenue in nature is called capital receipt. It is non-recurring in nature. The amount received is normally substantial. It is shown on the liabilities side of the balance sheet.

Question 3.
Write the Features of capital expenditure?
Answer:

  1. It gives benefit for more than one accounting period.
  2. It includes acquisition of fixed assets and all expenditure incurred upto the point an asset is ready for use.
  3. It contributes to the revenue earning capacity of the business.
  4. It is non-recurring in nature.
  5. It is shown on the assets side of the balance sheet.

Question 4.
Write the Features of revenue expenditure?
Answer:

  1. It is recurring in nature.
  2. It is incurred for maintaining the earning capacity of the business.
  3. Its benefit expires in the same accounting period.
  4. It is shown on the debit side of the trading and profit and loss account.

Question 5.
Write the Features of deferred revenue expenditure?
Answer:

  1. It is a revenue expenditure, the benefit of which is to be derived over a subsequent period or periods.
  2. It is not fully written off in the year of actual expenditure. It is written off over a period of certain years.
  3. The balance available after writing off (i.e., Actual expenditure – Amount written off) is shown on the assets side balance sheet.

Samacheer Kalvi 11th Accountancy Guide Chapter 11 Capital and Revenue Transactions

Question 6.
Distinguish Capital, Revenue 8i Deferred revenue expenditure.
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 11 Capital and Revenue Transactions 3

III. Short Answer Questions

Question 1.
Classify the following expenditures and receipts as capital or revenue

  1. ₹ 10,000 spent as travelling expenses of the directors on trips abroad for the purchase of fixed assets.
  2. Amount received from trade receivables during the year.
  3. Amount spent on demolition of building to construct a large building on the same site.
  4. Insurance claim received on account of machinery damaged by fire.

Solution:

  1. Capital expenditure
  2. Revenue receipt
  3. Capital expenditure
  4. Capital receipt.

Question 2.
Classify the following expenses as capital or revenue.
(i) The sum of ₹ 3,200 has been spent on a machine as follows:

  • ₹ 2,000 for additions to double the output.
  • ₹ 1,200 for repairs necessitated by negligence.

(ii) Overhauling expenses of ₹ 25,000 for the engine of a motor car to get better fuel efficiency.
Solution:
(i) a. capital expenditure
b. revenue expenditure

(ii) capital expenditure.

Question 3.
State whether the following are capital or revenue items.

  1. ₹ 5,000 spent towards additions to buildings.
  2. Second-hand motor car purchased for ₹ 30,000 and paid ₹ 2,000 as repairs immediately.
  3. ₹ 10,000 was spent on painting the new factory.
  4. Freight and cartage on the new machine ₹ 150, erection charges ₹ 200.
  5. ₹ 150 spent on repairs before using a second hand car purchased recently.

Solution:

  1. Capital expenditure.
  2. Capital expenditure.
  3. Capital expenditure.
  4. Capital expenditures.
  5. Capital expenditure.

Question 4.
State whether the following are capital, revenue or deferred revenue expenditure.

  1. Carriage of ₹ 1,000 spent on machinery purchased and installed.
  2. Office rent paid ₹ 2,000.
  3. Wages of ₹ 5,000 paid to machine operators.
  4. Hire charges for the use of motor vehicle, hired for five years, but paid yearly.

Solution:

  1. Capital expenditure.
  2. Revenue expenditure.
  3. Revenue expenditure.
  4. Revenue expenditure.

Question 5.
State with reasons whether the following are capital or revenue expenditure

  1. Expenses incurred in connection with obtaining a licence for starting the factory for ₹ 25,000.
  2. A factory shed was constructed at a cost of ₹ 2,00,000. A sum of ₹ 10,000 had been incurred in the construction of temporary huts for storing building material.
  3. Overhaul expenses of second-hand machinery purchased amounted to ₹ 5,000.

Solution:

  1. Capital expenditure.
  2. Capital expenditure.
  3. Capital expenditure.

Samacheer Kalvi 11th Accountancy Guide Chapter 11 Capital and Revenue Transactions

Question 6.
State with reasons whether the following are capital or revenue or deferred revenue expenditure

  1. Advertisement expenses amounted to ₹ 10 crores to introduce a new product.
  2. Expenses on freight for purchasing new machinery.
  3. Freight and insurance on the new machinery and cartage paid to bring the new machinery to the factory.

Solution:

  1. Deferred revenue expenditure.
  2. Capital expenditure.
  3. Capital expenditure.

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Accountancy Guide Pdf Chapter 10 Depreciation Accounting Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Accountancy Solutions Chapter 10 Depreciation Accounting

11th Accountancy Guide Depreciation Accounting Text Book Back Questions and Answers

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

I. Multiple Choice Questions

Choose the correct answer.

Question 1.
Under straight line method, the amount of depreciation is _______.
a) Increasing every year
b) Decreasing every year
c) Constant for all the years
d) Fluctuating every year
Answer:
c) Constant for all the years

Question 2.
If the total charge of depreciation and maintenance cost are considered, the method that provides a uniform charge is _______.
a) Straight line method
b) Diminishing balance method
c) Annuity method
d) Insurance policy method
Answer:
b) Diminishing balance method

Question 3.
Under the written down value method of depreciation, the amount of depreciation is _______.
a) Uniform in all the years
b) Decreasing every year
c) Increasing every year
d) None of the above
Answer:
b) Decreasing every year

Question 4.
Depreciation provided on machinery is debited to _______.
a) Depreciation account
b) Machinery account
c) Trading account
d) Provision for depreciation account
Answer:
a) Depreciation account

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

Question 5.
Cash received from sale of fixed asset is credited to _______.
a) Profit and loss account
b) Fixed asset account
c) Depreciation account
d) Bank account
Answer:
b) Fixed asset account

Question 6.
Depreciation is provided on _______.
a) Fixed assets
b) Current assets
c) Outstanding charges
d) All assets
Answer:
a) Fixed assets

Question 7.
Depreciation is caused by _______.
a) Lapse of time
b) Usage
c) Obsolescence
d) a, b and c
Answer:
d) a, b and c

Question 8.
Depreciation is the process of _______.
a) Allocation of cost of the asset to the period of its useful life
b) Valuation of assets
c) Maintenance of an asset in a state of efficiency
d) Adding value to the asset
Answer:
a) Allocation of cost of the asset to the period of its useful life

Question 9.
For which of the following assets, the depletion method is adopted for writing off cost of the asset?
a) Plant and machinery
b) Mines and quarries
c) Buildings
d) Trademark
Answer:
b) Mines and quarries

Question 10.
A depreciable asset may suffer obsolescence due to _______.
a) Passage of time
b) Wear and tear
c) Technological changes
d) None of the above.
Answer:
c) Technological changes

Question 11.
Which method shall be efficient, if repairs and maintenance cost of an asset increases as it grows older.
a) Straight line method
b) Reducing balance method
c) Sinking fund method
d) Annuity method
Answer:
b) Reducing balance method

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

Question 12.
Depreciation is to be calculated from the date when _______.
a) Asset is put to use
b) Purchase order is made
c) Asset is received at business premises
d) Invoice of assets is received
Answer:
a) Asset is put to use

Question 13.
If the rate of depreciation is same, then the amount of depreciation under straight line method vis-a-written down value method will be _______.
a) Equal in all years
b) Equal in the first year but higher in subsequent years
c) Equal in the first year but lower in subsequent years
d) Lower in the first year but equal in subsequent years.
Answer:
b) Equal in the first year but higher in subsequent years

Question 14.
Residual value of an asset means the amount that it can fetch on sale at the _______ of its useful life.
a) Beginning
b) End
c) Middle
d) None
Answer:
b) End

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

II. Very Short Answer Type Questions

Question 1.
What is meant by depreciation?
Answer:

  • The process of allocation of the relevant cost of a fixed asset over its useful life is known asdepreciation.
  • It is an allocation of cost against the benefit derived from a fixed asset during an accounting period.

Question 2.
List out the various methods of depreciation.
Answer:
The following are the different methods of providing depreciation

  • Straight line method or Fixed installment method or Original cost method
  • Written down value method or Diminishing balance method
  • Sum of years of digits method
  • Machine hour rate method
  • Depletion method
  • Annuity method.
  • Revaluation method
  • Sinking fund method
  • Insurance policy method

Question 3.
Give the formula to find out the amount and rate of depreciation under straight line method of depreciation.
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 1

Question 4.
What is annuity method?
Answer:
1. Under this method, not only the original cost of the asset but also the amount of interest on the investment is taken into account while computing depreciation.

2. The idea of considering interest is that if the investment is made in any other asset instead of the relevant fixed asset, it would have earned a certain rate of interest.

3. To calculate the amount of depreciation, annuity factor is used. Annuity factor can be found out from the annuity table or by using formula.

4. Amount of depreciation is computed as follows:
Amount of depreciation = Annuity factor x Original cost of the asset

Question 5.
What is sinking fund method?
Answer:
1. Sinking fund method is adopted especially when it is desired not merely to write off an asset but also to provide enough funds to replace an asset at the end of its working life.

2. Under this method, theamount charged as depreciation is transferred to depreciation fund and invested outside thebusiness.

3. This method of depreciation is suitable for assets of higher value.

4. This method is also known as depreciation fund method.

5. This method not only takes into account depreciation but also makes provision for the replacement of the asset.

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

III. Short Answer Questions

Question 1.
What are the objectives of providing depreciation?
Answer:
Following are the objectives of providing depreciation:

1. To find out the true profit:

  • According to matching principle, the expenses incurred during a period must be matched with reve¬nue earned during that period.
  • Hence, when an asset is used for generating income for a business, the cost of the asset attributable to the use, i.e., the reduction in the book value of the asset proportionate to the benefit derived from it, should be charged against the revenue.
  • This is to be done to find out the true cost of production and profit or loss of the business for every accounting period.

2. To present the true and fair view of financial position:

  • When the depreciation is charged on fixed assets, the book value of fixed assets are reduced to that extent and the remaining value is shown in the balance sheet.
  • The balance represents the value of benefit that is yet to be derived from them.
  • The written down value is the true value of fixed assets which represent cost not yet written off.
  • The balance sheet must represent a true and fair view of financial status.
  • Hence, fixed assets must be shown at their at written downvalue.

3. To facilitate replacement of fixed assets:

  • When the depreciation is debited to profit and loss account, an equal amount is either retained in the business or invested outside the business.
  • When the useful life of an asset comes to anend, a new asset can be purchased by using the resources available in the business.

4. To avail tax benefits:

  • As per the Indian Income Tax Act, while computing tax on business income, depreciation is deductible from income.
  • Hence, depreciation is computed and charged to profit and iossaccount to reduce tax liability. (v)To comply with legal requirements:
  • Depreciation is provided on fixed assets to comply with the provisions of law apart from Income Tax Act.
  • For example, Section 123(1) of the Indian Companies Act, 2013, requires every company to provide depreciation on fixed assets before declaring dividend to its shareholders.

Question 2.
What are the causes for depreciation?
Answer:
1. Wear and Tear:

  • The physical deterioration of assets due to normal use is called wear and tear.
  • The value of the assets decreases proportionately.

2. Efflux of time:
Some kinds of assets become potentially less useful with the passage of time whether used or not.

3. Obsolescence:

  • It is a reduction in the value of assets as a result of the availability of updated alternative assets.
    This happens due to new inventions and innovations.
  • Though the original asset is in a usable condition, it is not preferred by the users and it loses its value
  • For example, preference of latest computers by the users.

4. Inadequacy for the purpose:

  • In some cases, the use of assets may be stopped due to their inadequacy for the purpose.
  • These may become inadequate due to expansion in the capacity of a firm.

5. Lack of maintenance:

  • The good maintenance naturally increase the life of the asset.
  • When there is lack of maintenance, there is possibility of more depreciation.

6. Abnormal factors:

  • Decline in the usefulness of fixed asset may be caused by abnormal factors like damage due to fire accidents, natural calamities etc.
  • This leads to the state of asset being discarded.

Question 3.
State the advantages and limitations of straight line method or depreciation.
Answer:
Following are the merits of straight line method of depreciation
Advantages:
(a) Simple and easy to understand – Computation of depreciation under this method is very simple and easy to understand.

(b) Equality of depreciation burden – Equal amount of depreciation is debited to the profit and loss account each year to reduce the burden of depreciation on the profit of each year is equal.

(c) Assets can be completely written off – The book value of an asset can be reduced to zero if there is no scrap value or to be the scrap value at the end of its useful life. The asset account can be completely written off.

(d) Suitable for the assets having fixed working life – This method is appropriate for the fixed assets having certain fixed period of working life. In such cases, the estimation of useful life is easy and in turn in helps in easy determination of rate of depreciation.

Limitations:
(a) Ignores the actual use of the asset – A fixed amount of depreciation is provided on each asset by applying the predetermined rate of depreciation on its original cost. But the actual use of the asset is not considered in computation of depreciation.

(b) Ignores the interest factor – This method does not take into account the loss of interest on the amount invested in the asset.

(c) Total charge on the assets will be more when the asset becomes older – The amount of depreciation and cost of maintenance put together is less in the initial period and goes up year after year. This method did not concentrate on this.

(d) Difficulty in the determination of scrap value – It may be quite difficult to assess the true scrap value of the asset after a long period after the date of its installation.

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

Question 4.
State the advantages and limitations of written down value method of depreciation.
Answer:
Advantages
(a) Equal Charge against income

  • In the starting period depreciation is high and repaid charges are low.
  • When the asset becomes older, the amount of depreciation charged is less but repair charges are high.
  • The total burden on profit in respect of depreciation and repairs put together remains almost similar year after year.

(b) Logical Method:

  • In the earlier years, when the asset is more productive, high depreciation is charged.
  • In the later years when the asset becomes less productive, the depreciation charge is less.

Limitations:
(a) Assets cannot be completely written off – Under this method, the value of an asset even if it becomes obsolete and useless, cannot be reduced to zero and some balance would continue in the asset account.

(b) Ignores the interest factor – This method does not take into account the loss of interest on the amount invested in the asset. The amount would have earned interest, had it been invested outside the business is not considered.

(c) Difficulty in determining the rate of depreciation – Under this method, the rate of providing depreciation cannot be easily determined. The rate is generally kept higher because it takes very long time to write off an asset down to its scrap value.

(d) Ignores the actual use of the asset – Under this method, a fixed rate of depreciation is provided on the written down value of the asset by applying the predetermined rate of depreciation on its original cost. But the actual use of the asset is not considered in the computation of depreciation.

Question 5.
Distinguish between straight line method and written down value method of providing depreciation.
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 2

IV. Exercises

Straight line Method:

Question 1.
A firm purchased plant for ₹ 40,000. Erection charges amounted to ₹ 2,000. Effective life of the plant is 5 years. Calculate the amount of depreciation per year under straight line method.
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 3

Question 2.
A company purchased a building for ₹ 50,000. The useful life of the building is 10 years and the residual value is ₹ 2,000. Find out the amount and rate of depreciation under straight line method.
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 4

Question 3.
Furniture was purchased for ₹ 60,000 on 1-7-2016. It is expected to last for 5 years. Estimated scrap at the end of five years is ₹ 4,000. Find out the rate of depreciation under straight line method.
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 5

Question 4.
Calculate the rate of depreciation under straight line method from the following information
Purchased a second hand machinery on 1.1.2018 for ₹ 38,000
On 1.1.2018 spent ₹ 12,000 on its repairs
Expected useful life of machine is 4 years
Estimated residual value ₹ 6,000
Solution:
 Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 6

Note:
Original cost = Purchases price + repairs = 38,000 + 12,000 = ₹ 50,000

Question 5.
Calculate the rate of depreciation under straight line method.
Purchase price of a machine ₹ 80,000
Expenses to be capitalized ₹ 20,000
Estimated residual value ₹ 4,000
Expected useful life 4 years
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 7
Note:
Original cost = Purchases price + Expense to be Capitalized
= 80,000 + 20,000
= ₹ 1,00,000

Question 6.
Machinery was purchased on 1st January 2015 for ₹ 4,00,000. ₹ 15,000 was spent on its erection and ₹ 10,000 on its freight charges. Depreciation is charged at 10% per annum on straight line method. The books are closed on 31st March each year. Calculate the amount of depreciation on machinery for the first two years.
Solution:
Calculation on the amout of depreciation on machinery
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 8
Amount of depreciation
31-3-2015 = ₹ 10625
31-3-2016 = ₹ 42500
Note:
Original cost = Purchases price + Erection charges + freight charges
= 4,00,000 + 15,000 + 10,000 = ₹ 4,25,000

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

Question 7.
An asset is purchased on 1.1.2016 for ₹ 25,000. Depreciation is to be provided annually according to straight line method. The useful life of the asset is iO years and its residual value is ₹ 1,000. Accounts are closed on 31st December every year. You are required to find out the rate of depreciation and give journal entries for first two years.
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 9
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 10

Question 8.
From the following particulars, give journal entries for 2 years and prepare machinery account under straight line method of providing depreciation:
Machinery was purchased on 1.1.2016
Price of the machine ₹ 36,000
Freight charges ₹ 2,500
Installation charges ₹ 1,500
Life of the machine 5 years
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 11
Journal entries:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 12
Machinary Account:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 13

Question 9.
A manufacturing company purchased on 1 April, 2010, a plant and machinery for ₹ 4,50,000 and spent ₹ 50,000 on its installation. After having used it for three years, it was sold for ₹ 3,85,000. Depreciation is to be provided every year at the rate of 15% per annum on the fixed installment method. Accounts are closed on 31st March every year.
Solution:
Calculate profit or loss on sale of machinery.
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 14
Profit on sales = sale price – Book value
= 3,85,000 – 2,75,000
= ₹ 1,10,000

Question 10.
On 1st April 2008, Sudha and Company purchased machinery for ₹ 64,000. To instal the machinery expenses incurred was ₹ 28,000. Depreciate machinery 10% p.a. under straight line method. On 30th June, 2010 the worn out machinery was sold for ₹ 52,000. The books are closed on 31st December every year. Show machinery account.
Solution:
Machinary Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 15

Question 11.
Ragul purchased machinery on April 1, 2014 for ₹ 2,00,000. On 1st October 2015, a new machine costing ₹ 1,20,000 was purchased. On 30th September 2016, the machinery purchased on April 1, 2014 was sold for ₹ 1,20,000. Books of accounts are closed on 31st March and depreciation is to be provided at 10% p.a. on straight line method. Prepare machinery account and depreciation account for the years 2014-15 to 2016-17.
Solution:
Machinery Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 16
Depreciation Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 17
Notes
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 18

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

Question 12.
An asset is purchased for ₹ 50,000. The rate of depreciation is 15% p.a. Calculate the annual depreciation for the first two years under diminishing balance method.
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 19

Question 13.
A boiler was purchased on 1st January 2015 from abroad for ₹ 10,000. Shipping and forwarding charges amounted to 12,000. Import duty ₹ 7,000 and expenses of installation amounted to ₹ 1,000. Calculate depreciation for the first 3 years @10% p.a. on diminishing balance method assuming that the accounts are dosed 31st December each year.
Solution:
Calculate the amount of Depreciation
Cost of the assets = Purchase price + shipping and forwarding charges + Import duty+Install – action charge.
= 10,000 + 2,000 + 7,000 + 1,000
= ₹ 20,000.
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 20

Question 14.
A furniture costing ₹ 5,000 was purchased on 1.1.2016, the installation charges being ₹ 1,000. The furniture is to be depreciated @10% p.a. on the diminishing balance method. Pass journal entries for the first two years.
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 21

Question 15.
A firm acquired a machine on 1st April 2015 at a cost of ₹ 50,000. Its life is 6 years. The firm writes off depreciation @ 30% p.a. on the diminishing balance method. The firm closes its books on 31st December every year. Show the machinery account and depreciation account for three years starting from 1st April 2015.
Solution:
Machinary Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 22
Depreciation Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 23

Question 16.
A firm purchased a machine for ₹ 1,00,000 on 1-7-2015. Depreciation is written off at 20% on reducing balance method. The firm closes its books on 31st December each year. Show the machinery account upto 31-12-2017.
Solution:
Machinary Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 24

Question 17.
On 1st October 2014, a truck was purchased for ₹ 8,00,000 by Laxmi Transports Ltd. Depreciation was provided @ 15% p.a. under diminishing balance method. On 31st March 2017, the above truck was sold for ₹ 5,00,000. Accounts are closed on 31st March every year. Find out the profit or loss made on the sale of the truck.
Solution:
Calculation of Profit (or) Loss on sales of assets.
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 25

Question 18.
On 1st January 2015, a second hand machine was purchased for ₹ 58,000 and ₹ 2,000 was spent on its repairs. On 1st July 2017, it was sold for ₹ 28,600. Prepare the machinery account for the years 2011 to 2013 under written down value method by assuming the rate of depreciation as 10% p.a. and the accounts are dosed on 31st December every year.
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 26
Machinery Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 27

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

Question 19.
Raj & Co purchased a machine on 1st January 2014 for ₹ 90,000. On 1st July 2014, they purchased another machine for ₹ 60,000. On 1st January 2015, they sold the machine purchased on 1st January 2014 for ₹ 40,000. It was decided that the machine be depreciated at 10% per annum on diminishing balance method. Accounts are closed on 31st December every year. Show the machinery account for the years 2014 and 2015.
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 28
Machinery Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 29

11th Accountancy Guide Depreciation Accounting Additional Important Questions and Answers

I. Choose the correct answer.

Question 1.
Depreciation is calculated on ________ under diminishing balance method.
a) Original Cost
b) Written Down Value
c) The Scrap Value
d) None of the above
Answer:
b) Written Down Value

Question 2.
Sinking Fund is also known as ________.
a) Depletion Method
b) Annuity method
c) Depreciation Fund method
d) None of the above
Answer:
c) Depreciation Fund method

Question 3.
The process of becoming out of date or obsolete is termed as ________.
a) Depletion
b) Physical Deterioration
c) Obsolescence
d) None of the above
Answer:
c) Obsolescence

Question 4.
In the process of provision method of depreciation the asset always valued at ________.
a) Market Price
b) Cost Price
c) Scrap Value
d) None
Answer:
b) Cost Price

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

Question 5.
Meaning of Salvage value is ________.
a) Cash to be paid when asset is disposed off
b) Estimated disposal value
c) Definite sale price of the asset
d) Cash to be received when life of the asset ends
Answer:
b) Estimated disposal value

Question 6.
In the accounting records, the fixed assets are normally recorded ________.
a) At Cost
b) At Book Value
c) At Scrap Value
d) At replacement value
Answer:
a) At Cost

Question 7.
A fixed asset was bought for ₹ 5,000. Its accumulated depreciation is ₹ 1,000 and rate of depreciation is 10%. What are the depreciation expenses for the current accounting period using reducing balance method?
a) ₹ 600
b) ₹ 2000
c) ₹ 500
d) ₹ 400
Answer:
c) ₹ 500

Question 8.
Under which depreciation method the amount of depreciation expenses remains same throughout the useful life of a fixed asset ________.
a) Straight Line Method
b) Reducing Balance Method
c) Number of Units produced method
d) Machine hour method
Answer:
a) Straight Line Method

Question 9.
The book value of machinery on 01.04.2016 was ₹ 70, 000. Depreciation is charged at 10% p.a under Written Down value method on 31st March every year. The machine was sold for ₹ 50, 000 on 01.8.2017;calculate the Profit/Loss on sale of machinery.
a) Profit ₹ 5,755
b) Profit ₹ 5,000
c) Profit ₹ 10,375
d) Loss ₹ 10,325
Answer:
c) Profit ₹ 10,375

Question 10.
The objectives of providing depreciation on an asset are ________.
a) To ascertain the true profit/loss of the firm
b) To provide funds for the replacement of the fixed assets
c) To show the true financial position of the firm
d) All of the above
Answer:
d) All of the above

Question 11.
Cost of an asset is ₹ 3, 00,000. Rate of depreciation is 10% on WDV method. Value of the asset at the end of the second year will be ________.
a) ₹ 2, 70,000
b) ₹ 30, 000
c) ₹ 2, 50,000
d) ₹ 2, 43,000
Answer:
d) ₹ 2, 43,000

Question 12.
Depletion method of charging depreciation is adopted for which of the following assets?
a) Plant and Machinery
b) Buildings
c) Wasting assets like mines and quarries
d) Trademarks
Answer:
c) Wasting assets like mines and quarries

Question 13.
A trader followed WDV method of depreciation; the book value of assets after 4 years is 24% of original cost. Find rate of depreciation ________.
a) 24%
b) 26%
c) 32%
d) 30%
Answer:
d) 30%

Question 14.
The older name of Straight line method is ________.
a) Annuity method
b) Revaluation method
c) Fixed Installment method
d) None
Answer:
c) Fixed Installment method

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

Question 15.
Exhaustion is a ________ for depreciation.
a) Cause
b) Non-Cause
c) Both (a) & (b)
d) None
Answer:
a) Cause

Question 16.
Under which method of depreciation, interest is also taken into consideration?
a) Revaluation method
b) Depletion method
c) Annuity method
d) None of the above
Answer:
c) Annuity method

Question 17.
For oil wells ________ method of depreciation is to be followed.
a) Exhaustion
b) Wear & Tear
c) Depletion
d) None of the above
Answer:
a) Exhaustion

Question 18.
Depreciation arises due to the following reason ________.
a) Wear & Tear
b) Fall in the market value
c) Effluxion of time
d) All the above
Answer:
d) All the above

Question 19.
When the value of fixed assets increases it is known as ________.
a) Depreciation
b) Appreciation
c) Depletion
d) None
Answer:
b) Appreciation

Question 20.
Depreciation on fixed assets is ________ expenditure.
a) Revenue Expenditure
b) Capital Expenditure
c) Deferred Revenue expenditure
d) None
Answer:
b) Capital Expenditure

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

II. Short Answer Questions

Question 1.
Define Depreciation.
Answer:

  1. According to Spicer and Pegler, “Depreciation is the measure of exhaustion of the effective life of an asset from any cause during a given period”.
  2. According to R.N. Carter, “Depreciation is the gradual and permanent decrease in the value of an asset from any cause”.

Question 2.
What is ‘residual value’?
Answer:

  1. The amount which is expected to be realised at the end of the estimated useful life of an asset is known as scrap value of the asset. It is also known as residual value.
  2. In determining the scrap value, costs to be incurred for removal and sale of the asset should be de-ducted from the estimated gross realisable value.

Question 3.
What is ‘Obsolescence’?
Answer:

  1. It is a reduction in the value of assets as a result of the availability of updated alternative assets.
  2. This happens due to new inventions and innovations.
  3. Though the original asset is in a usable condition, it is not preferred by the users and it loses its value.
  4. For example, preference of latest computers by the users.

Question 4.
Write notes on ‘Effluxion of time’.
Answer:
Certain assets whether used or not become potentially less useful with the passage of time.

Question 5.
What is ‘Straight Line Method’ of depreciation?
Answer:

  1. Under this method, a fixed percentage on the original cost of the asset is charged every year by way of depreciation. Hence it is called original cost method.
  2. As the amount of depreciation remains equal in all years over the useful life of an asset it is also called as fixed instalment method.
  3. When the amount of depreciation charged over its life is plotted on a graph and the points are joined together, the graph will show a horizontal straight line. Hence, it is called straight line method.

Question 6.
What is’Written down value’of depreciation?
Answer:

  1. Under this method, depreciation is charged at a fixed percentage on the written down value of the asset every year. Hence, it is called written down value method.
  2. Written down value is the book value of the asset, i.e., original cost of the asset minus depreciation upto the previous accounting period.
  3. As the amount of depreciation goes on decreasing year after year, it is called diminishing balance method or reducing installment method.

Question 7.
What is ‘Revaluation method’ of depreciation?
Answer:

  1. Under this method, the amount of annual depreciation is calculated by comparing the value of the assets at the end of the year and their value at the beginning of the year.
  2. The value of the asset at the end of the year is determined with the consultation of relevant experts.
  3. The excess of opening value over the closing value of the asset is the amount of depreciation for that year.
  4. This method is used for live stock, loose tools, etc.

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

Question 8.
What is ‘Insurance policy method’ of depreciation?
Answer:

  1. Under this method, an insurance policy is taken for an amount equal to the cost of replacement of the asset.
  2. The amount of depreciation is paid by way of insurance premium every year to the insurance company.
  3. On maturity of the policy, the policy amount is received from the insurance company and it is used for the purchase of new asset.

Question 9.
What are the factors determining the amount of depreciation?
Answer:
i) Actual cost of the asset:

  • Actual cost means the amount incurred in acquiring or constructing the asset.
  • It is the acquisition or construction cost or historical cost. It includes all the expenses incurred on the asset to bring the asset to present condition and location, that is, all incidental expenses incurred till it is put into use.
  • Purchase price of the asset, freight, loading charges, unloading charges, erection cost, setting up cost and expenses of trial run are included in the cost of the asset.
  • If the asset is a second-hand one, the initial repair to make the asset useable is also to be taken as part of actual cost of the asset.

ii) Estimated useful life of the asset:

  • The period for which an asset can be used in the enterprise is known as estimated useful life of an asset.
  • It can be calculated in terms of period for which the asset is expected to be used by the entity or units of output to be obtained by the use of the asset, etc.
  • In the case of intellectual properties like patents and copyrights, their legal life is taken as their estimated useful life.
  • The Indian Companies Act, 2013 has prescribed useful lives of fixed assets for the purpose of com – putation of depreciation.
  • For example, the useful lives prescribed in Part C of Section 123 for general plant and machinery and general furniture and fittings are 15 years and 10 years respectively.

iii) Scrap value of an asset:

  • The amount which is expected to be realised at the end of the estimated useful life of an asset is known as scrap value of the asset. It is also known as residual value.
  • In determining the scrap value, costs to be incurred for removal and sale of the asset should be de-ducted from the estimated gross realisable value.

iv) Other factors : Besides the above mentioned factors, legal provisions, technological factors, etc., also determine the amount of depreciation.

Question 10.
What are the Characteristics of depreciation?
Answer:

  1. Depreciation is the process of allocation of cost of depreciable asset (capital expenditure) to revenue expenditure or to profit and loss account over the useful life of the asset.
  2. It is the process of allocation of cost and not the process of valuation.
  3. It is a decrease in the book value of the asset and not the market value of the asset.
  4. It is a gradual and continuous decrease in the book value of asset over its useful life.
  5. It is calculated only for tangible depreciable fixed assets. Depreciation is not provided on intangible and wasting assets.

Question 11.
Find the amount of depreciation
Cost Price – ₹ 28,000 ; Estimated Life – 6 years; Scrap Value ₹ 4,000
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 30

Question 12.
On 1st January 2016, Anand Ltd., purchased a machine costing Rs.6, 000. It is estimated that its working life is four years and it will fetch no scrap value. The company decided to write off depreciation according to the fixed installment method. Prepare the machinery account.
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 31

Question 13.
A company purchased a plant for ₹ 2,00,000. The useful life of the asset is 10 years and the scrap value us ₹ 40, 000. Find the rate of depreciation under the straight line method.
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 32

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

III. Long Answer Questions

Question 1.
Find out the rate of depreciation under straight line method.
Cost of asset – ₹ 10,000
Scrap value – ₹ 1,000
Estimated Life 10 years
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 33

Question 2.
Find out the rate of depreciation under straight line method.
Cost of Plants – ₹ 2,30,000
Installation charges – ₹ 20,000
Expected Life in year 10 years
Scrap value – ₹ 50,000
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 34

Question 3.
A machine was purchased For ₹ 2,40,000, on 1.1.2010. This is expected to last for five year. Estimated scrap at the end of given year in ₹ 40,000. Find out the rate of depreciation under straight line method.
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 35

Question 4.
A company has purchased a machinery for ₹ 1,70,000 and spent ₹ 20,000 for its installation. The estimated life of the machinery is 5 years with a residual value of ₹ 15,000. Find out the rate of depreciation under straight line method.
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 36

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

Question 5.
Monisha Garments purchased a machinery on 1.4.2015 for ₹ 2,40,000. After three years the plane was sold for ₹ 1,80,000 The firm charges dpreciation at the rate of 10% per annum on stright line method. Accounts are closed on 31st march every year. Prepare machinery account and depreciation A/C.
Notes:
(i) Amount of Depreciation = ₹ 2,40,000
(ii) Book value after three year = 2,40,000 – (24000 x 3) = 2,40,000 – 72,000 = ₹ 1,68,000
(iii) Selling price = ₹ 1,80,000
Profit on sale of machinery = ₹ 72,000
Solution:
Machinary Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 39
Depreciation Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 40

Question 6.
Pugazh & CO, purchased a machinery for ₹ 4,70,000. On 1,4.2001 they spent₹ 30,000 on the repairs and installed the machinery. Depreciation is written after at 10% p.a on the straight Sine method on 31.3.2004, the machinery was found the unsuitable and sold for ₹ 3,50,000. Prepare machinery A/C assuming that the account are closed on 31st march every year.
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 41
Solution:
Machinery Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 42

Question 7.
A Company purchased a machinery on 1,4,2001 for ₹ 2,40,000 on 1 October 2002. It purchased another machinery for ₹ 60,000. On 1st October 2003, it sold oft the first machine purchased on 1.4.20C1 for ₹ 1,68,000 on the same date, it purchased another machinery for ₹ 1,50,000 Account are clsoed every year on 31st march depredation is written of at 10% p.a on original cost. Prepare machinery account and depreciation account for three years.
Solution:
I. Machinery purchased on 1.4.2001 for ₹ 2,40,000
1.4.2001 – 31.3.2002 = 24,000 – Ist year
1.4.2002- 31.3.2003 = 24,000 – IInd year
1.4.2003- 1.10.2003 = 12,000 – IIIrd year
Book value = 60,000
(-) Book value = 24,000 – 60,000 = ₹ 1, 80, 000
(-) Sale of machinery = ₹ 1, 68, 000
Loss on sale of machinery ₹ 12, 000

II. Machinery purchased on 1.10.2002 for Rs.60,000
1.10.2002 – 31.3.2003 = 3,000 – IInd year
1.4.2003 – 31.3.2004 = 6,000 – IIInd year

III. Machinery purchaed on 1.10.2003 for Rs.1,50,000
1.10.2003 – 31.3.2004 = 7,500 – IIIrd year

Machinary Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 43
Depreciation Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 44

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

Question 8.
A plant is purchased for ₹ 90,000, It is depreciation as 10% p.a on reducing balance for the three years. When it becomes obsolute due to new method of production and is scrapped. The scrap produces ₹ 66,000 at the end of the thrid year.
Prepare plant account for three year.
Solution:
Calculation of profit or loss on sales of plant.
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 45
Plant Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 46

Question 9.
A firm purchased a machine for ₹ 1,00,000 on 1-7-2015 depreciation is written oft at 10% on reducing balance method. The firm close its book on 31st December each year. Show the machinery account up to 31.12.2017
Solution:
Calculation of profit or loss on sales of machinery.
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 47
Machinary Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 48
Depreciation Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 49

Question 10.
Dhanuja shree started business on 1st April 2001 and she purchased a machinery for ₹ 1,40,000. She purchased another machinery on 1st November 2002 costing ₹ 30,000. She ( adopted a policy of charging 15% p.a depreciation under Diminishing balance method.
The account are closed every year on 31st march. Prepare machinery account and depreciation account for the first three years.
Solution:
Calculation of depreciation @ 15 % p.a.
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 50
Machinery Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 51
Depreciation Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 52

Question 11.
On 1st January 2014, Hyagreeva Ltd., purchased a machine costing ₹ 12,000. It is estimated that its working life is four years and it will fetch no scrap value. The company decided to write off depreciation according to the fixed instalment method. Prepare the machinery account.
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 53
Machinary Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 54

Question 12.
Bharathi Ltd., purchased certain machinery at a cost of ₹ 40,000 on 1st January 2014. They decided to write off depreciation @ 20% p.a, according to straight line method. Prepare Machinery Account and Depreciation Account for the year 2014 to 2017.
Solution:
Machinary Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 55
Depreciation Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 56

Question 13.
Shreyan & Co., purchased a computer for ₹ 47,000 on 1st October 2012 and installed it by spending ₹ 3,000. Every year depreciations is to be charged at 10% on its cost. The computer is sold on IstJuly 2015 at a price of ₹ 35,000. Assuming that the accounts are dosed every year on December 31, prepare the computer account.
Solution:
Computer Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 57

Question 14.
A car was purchased on January 1, 2015 for Rs.80,000 depreciated at 10% on diminishing balance method. It was sold on 31st December 2017 for Rs.50,000. Prepare Car account.
Solution:
Car Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 58

Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting

Question 15.
In a business there was a machine for ₹ 90,000 on 1st January 2014. On 30.06.2014, another machinery was purchased for ₹ 10,000. On 31.12.2014 part of the machine was sold for 3,300, which had a cost price of ₹ 4,000 on 01.01.2014. Prepare machinery account after providing depreciation at 10% p.a on fixed installment basis.
Solution:
Machinary Account
Samacheer Kalvi 11th Accountancy Guide Chapter 10 Depreciation Accounting 59

Samacheer Kalvi 11th Computer Applications Guide Book Answers Solutions

Subject Matter Experts at SamacheerKalvi.Guide have created Tamil Nadu State Board Samacheer Kalvi 11th Computer Applications Book Answers Solutions Guide Pdf Free Download of Volume 1 and Volume 2 in English Medium and Tamil Medium are part of Samacheer Kalvi 11th Books Solutions.

Let us look at these TN State Board New Syllabus Samacheer Kalvi 11th Std Computer Applications Guide Pdf of Text Book Back Questions and Answers, Notes, Chapter Wise Important Questions, Model Question Papers with Answers, Study Material, Question Bank and revise our understanding of the subject.

Students can also read Tamil Nadu 11th Computer Applications Model Question Papers 2020-2021 English & Tamil Medium.

Samacheer Kalvi 11th Computer Applications Book Solutions Answers Guide

Tamilnadu State Board Samacheer Kalvi 11th Computer Applications Book Back Answers Solutions Guide Volume 1 and Volume 2.

Samacheer Kalvi 11th Computer Applications Book Back Answers

Unit 2 Office Automation Tools (Word Processor, Spreadsheet and Presentation)

Unit 3 Web Page Development Using HTML and CSS

Unit 4 Javascript

Unit 5 Computer Ethics and Cyber Security

Unit 6 Tamil Computing

We hope these Tamilnadu State Board Samacheer Kalvi Class 11th Computer Applications Book Solutions Answers Guide Volume 1 and Volume 2 Pdf Free Download in English Medium and Tamil Medium will help you get through your subjective questions in the exam.

Let us know if you have any concerns regarding TN State Board New Syllabus Samacheer Kalvi 11th Standard Computer Applications Guide Pdf of Text Book Back Questions and Answers, Notes, Chapter Wise Important Questions, Model Question Papers with Answers, Study Material, Question Bank, drop a comment below and we will get back to you as soon as possible.

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Accountancy Guide Pdf Chapter 7 Subsidiary Books – II Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Accountancy Solutions Chapter 7 Subsidiary Books – II

11th Accountancy Guide Subsidiary Books – II Text Book Back Questions and Answers

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

I. Multiple Choice Questions

Choose the correct answer.

Question 1.
Cash book is a ________.
a) Subsidiary book
b) Principal book
c) Journal proper
d) Both subsidiary book and principal book
Answer:
d) Both subsidiary book and principal book

Question 2.
The cash book records ________.
a) All cash receipts
b) All cash payments
c) Both (a) and (b)
d) All credit transactions
Answer:
c) Both (a) and (b)

Question 4.
A cash book with discount, cash and bank column is called ________.
a) Simple cash book
b) Double column cash book
c) Three column cash book
d) Petty cash book
Answer:
c) Three column cash book

Question 5.
In Triple column cash book, the balance of bank overdraft brought forward will appear in ________.
a) Cash column debit side
b) Cash column credit side
c) Bank column debit side
d) Bank column credit side
Answer:
d) Bank column credit side

Question 6.
Which of the following is recorded as contra entry?
a) Withdrew cash from bank for personal use
b) Withdrew cash from bank for office use
c) Direct payment by the customer in the bank account of the business
d) When bank charges interest
Answer:
b) Withdrew cash from bank for office use

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Question 7.
If the debit and credit aspects of a transaction are recorded in the cash book, it is ________.
a) Contra entry
b) Compound entry
c) Single entry
d) Simple entry
Answer:
a) Contra entry

Question 8.
The balance in the petty cash book is ________.
a) An expense
b) A profit
c) An asset
d) A liability
Answer:
c) An asset

Question 9.
Petty cash may be used to pay ________.
a) The expenses relating to postage and conveyance
b) Salary to the Manager
c) Purchase of furniture and fixtures
d) Purchase of raw materials
Answer:
a) The expenses relating to postage and conveyance

Question 10.
Small payments are recorded in a book called ________.
a) Cash Book
b) Purchase Book
c) Bills Payable Book
d) Petty Cash Book
Answer:
d) Petty Cash Book

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

II. Very Short Answer Type Questions

Question 1.
What is cash book?
Answer:
The book in which only cash transactions are recorded in the chronological order is known as cash book. Cash receipts are recorded on the debit side and Cash payments are recorded on the credit side. It is like a subsidiary book and a principal book.

Question 2.
What are the different types of cash book?
Answer:
The main cash book may be of various types and following are the three most common types.

  1. Simple or single column cash book (only cash column)
  2. Cash book with cash and discount column (double column cash book)
  3. Cash book with cash, discount and bank columns (three column cash book).
  4. Apart from the main cash book, petty cash book may also be prepared to enter the petty expenses, i.e., expenses involving small amount.

Question 3.
What is simple cash book?
Answer:

  1. Single column cash book or simple cash book, like a ledger account has only one amount column, i.e., cash column on each side.
  2. Only cash transactions are recorded in this book.
  3. All cash receipts and payments are recorded systematically in this book.

Question 4.
Give the format of ‘Single column cash book’.
Answer:
Simple Cash Book
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 1

Question 5.
What is double column cash book?
Answer:

  1. It is a cash book with cash and discount columns.
  2. As there are two columns, i.e., discount and cash columns, both on debit and credit sides, this cash book is known as ‘double column cash book’.
  3. Discount column represents discount allowed on the debit side and discount received on the credit side.

Question 6.
Give the format of ‘Double column cash book’.
Answer:
Double Column Cash Book
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 2

Question 7.
What is three column cash book?
Answer:

  1. A three column cash book includes three amount columns on both sides, i.e., cash, bank and discount.
  2. This cash book is prepared in the same way as simple and double column cash books are prepared.
  3. The transactions which increase the cash and bank balance are recorded on the debit side of the cash and bank columns respectively.
  4. Opening balance of cash and favorable bank balance appear as the first item on the debit side of the three column cash book in case of existing business.

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Question 8.
What is cash discount?
Answer:

  1. Cash discount is allowed to the parties making prompt payment within the stipulated period of time or early payment.
  2. It is discount allowed (loss) for the creditor and discount received (gain) for the debtor who makes payment.
  3. The discount is allowed when payment is received or made and hence, the entry for discount is also passed with the entry of payment.
  4. Cash discount motivates the debtor to make the payment at an earlier date to avail discount facility.

Question 9.
What is trade discount?
Answer:

  1. Trade discount is a deduction given by the supplier to the buyer on the list price or catalogue price of the goods.
  2. It is given as a trade practice or when goods are purchased in large quantities.
  3. It is shown as a deduction in the invoice.
  4. Trade discount is not recorded in the books of accounts.
  5. Only the net amount is recorded.

Example:
Suppose the sale of goods for ₹ 10,000 was made and 10% was allowed as trade discount, the entry regarding sales will be made for ₹ 9,000 (10,000 – 10 per cent of 10,000). In the same way, purchaser of goods will also record purchases as 19,000).

Question 10.
What is a petty cash book?
Answer:

  1. Business entities have to pay various small expenses like taxi fare, bus fare, postage, carriage, stationery, refreshment and other sundry items.
  2. These are small payments and repetitive in nature.
  3. If all these small payments are recorded in the main cash book, it will be loaded with lot of entries.
  4. Hence, all petty payments of the business may be recorded in a separate book, which is called as petty cash book and the person who maintains the petty cash book is called the petty cashier.

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

III. Short Answer Questions

Question 1.
Explain the meaning of imprest system of petty cash book.
Answer:

  1. Under this system, a fixed amount necessary or sufficient to meet petty payments determined on the basis of past experience is paid to the petty cashier on the first day of the period. (It may be a week or fortnight or month).
  2. The amount given to the petty cashier in advance is known as “Imprest Money”.
  3. The word imprest means payment in advance.
  4. The petty cashier makes payments from this amount and records them in petty cash book.
  5. At the end of a particular period, the petty cashier submits the petty cash book to the head cashier.
  6. The head cashier scrutinies the petty payments and gives amount equal to the amount spent by petty cashier so that the total amount with the petty cashier is now equal to the amount he had received in the beginning as advance.
  7. Under the system, the total cash with the petty cashier never exceeds the imprest at any time during the period.
  8. This method thus provides an effective control over petty payments.

Question 2.
Bring out the differences between cash discount and trade discount.
Answer:
Following are the difference between cash discount and trade discount:
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 3

Question 3.
Write the advantages of maintaining petty cash book.
Answer:
Following are the advantages of maintaining petty cash book:

  1. There can be better control over petty payments.
  2. There is saving of time of the main cashier.
  3. Cash book is not loaded with many petty payments.
  4. Posting of entries from main cash book and petty cash book is comparatively easy.

Question 4.
Write a brief note on accounting treatment of discount in cash book.
Answer:

  1. Discount column represents discount allowed on the debit side and discount received on the credit side.
  2. In the discount columns, cash discount, i.e., cash discount allowed and cash discount received are recorded.
  3. The net amount received is entered in the amount column on the debit side and the net amount paid is entered in the amount column on the credit side.
  4. For the seller who allows cash discount, it is a loss and hence it is debited and shown on the debit side of the cash book.
  5. For the person making payment, discount received is a gain because less payment is made and it is credited and shown on the credit side of the cash book.
  6. The cash columns are balanced. Discount columns are not balanced, since debit represents discount allowed and credit represents discount received. They are totalled, separately.

The periodical totals of discount columns are posted as under:

  1. Debit Discount allowed account as ‘To Sundry Accounts as per Cash book’, with the periodical total of the discount allowed column.
  2. Credit Discount received account as ‘By Sundry Accounts as per Cash Book’ with the periodical total of the discount received column.

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Question 5.
Briefly explain about contra entry with examples.
Answer:
1. When the two accounts involved in a transaction are cash account and bank account, then both the aspects are entered in cash book itself. As both the debit and credit aspects of a transaction are recorded in the cash book, such entries are called contra entries.

Example:

  • When cash is paid into bank, it is recorded in the bank column on the debit side and in the cash column on the credit side of the cash book.
  • When cash is drawn from bank for office use, it is entered in cash column on the debit side and in the bank column on the credit side of the cash book.

2. To denote that there are contra entries, the alphabet ‘C is written in L.F. column on both sides.

3. Contra means that particular entry is posted on the other side (contra) of the same book, because Cash account and Bank account are there in the cash book only and there are no separate ledger accounts needed for this purpose,

4. The alphabet ‘C’ indicates that no further posting is required and the relevant account is posted on the opposite side.

IV. Exercises

Question 1.
Enter the following transactions in a single column cash book of Seshadri for May, 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 4
Solution:
In the book of Seshadri
Cash book (single column)
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 5

Question 2.
Enter the following transactions in a single column cash book of Pandeeswari for the month of June, 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 6
Solution:
In the book of Pandeeswari
Cash book (single column)
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 7

Question 3.
Enter the following transactions in a single column cash book of Ramalingam for month of July, 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 8
Solution:
Single column cash book of Mr. Ramalingam
 Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 9

Question 4.
Enter the following transaction in Chandran’s cash book with cash and discount columns.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 9a
Solution:
In the book of Mr. chandran
Cash book (with cash and discount columns)
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 10

Question 5.
Enter the following transaction in Chandran’s cash book with cash and discount column.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 11
Solution:
In the book of Mr. chandran
Cash book (with cash and discount columns)
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 12

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Question 6.
Enter the following transactions in cash book with discount and cash column of Anand.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 13
Solution:
In the book of Anand
Cash book (with cash and Discount columns)
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 14

Question 7.
Write out a cash book with discount, cash and bank columns in the books of Mahendran. 2017 Oct?
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 15
Solution:
IIn the books of Mr. Mahendran
Three columns cash book
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 16

Question 8.
Enter the following transactions in the three column cash book of Kalyana Sundaram.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 17
Solution:
IIn the books of Mr. Mahendran
Three columns cash book
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 18

Question 9.
Enter the following transactions of Fathima in the cash book with a sh, bank and discount columns for the month of May, 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 19
Solution:
In the books of Fathima
Dr. Three columns cash book
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 20

Question 10.
Enter the fallowing transactions in the three column cash book of Chozhan.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 21
Solution:
In the books of Sri Chozhan
Three Columns Cash Book
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 22

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Question 11.
Enter the following transactions, in a cash book with cash, bank and discount columns of Sundari.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 23
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 24

Question 12.
Record the following transaction in the three column cash book of Rajeswari for the month of June, 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 25
Solution:
In the book of Miss. Rajeswari
Three columns cash book
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 26

Question 13.
Record the following transactions in three column cash book of Ramachandran.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 27
Solution:
In the book of Mr. Ramachandran
Three columns cash book
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 28

Question 14.
Record the. following transactions in the three column cash book of John Pandian.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 29
Solution:
In the book of Mr. John Pandian
Three columns cash book
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 30

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Question 15.
Prepare a triple column cash book of Rahim from the following transactions:
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 31
Solution:
In the book of Mr. Rahim
Three Columns cash book
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 32

Question 16.
Prepare analytical petty cash book from the following particulars under imprest system:
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 32a
Solution:
Analytical petty cash book – Analysis of payments (in ₹)
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 33

Question 17.
From the following information prepare an analytical petty cash book under imprest system:
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 34
Solution:
Analytical petty cash book – Analysis of payments
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 35

Question 18.
Record the following transactions in an analytical petty cash hook and balance the same. On 1st November, 2017, the petty cashier started with imprest cash ₹ 2,000.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 36
Solution:
Analytical petty cash book – Analysis of payments
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 37

Question 19.
Enter the following transactions in Iyyappan’s petty cash hook with analytical columns under imprest system.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 38
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 39

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

11th Accountancy Guide Subsidiary Books – II Additional Important Questions and Answers

I. Choose the correct answer.

Question 1.
Cash Book is a type of ________ but treated as a ________ of accounts.
a) Subsidiary book, Principal book
b) Principal book, subsidiary book
c) Subsidiary book, subsidiary book
d) Principal book, principal book
Answer:
a) Subsidiary book, Principal book

Question 2.
The imprest system pertains to ________.
a) Purchases book
b) Sales book
c) Cash book
d) Petty cash book
Answer:
d) Petty cash book

Question 3.
While balancing three column cash book, the discount columns are:
a) Totalled but not adjusted
b) Totalled and also adjusted
c) Totalled but not balanced
d) Balanced but not totalled
Answer:
c) Totalled but not balanced

Question 4.
In three column cash book, when does contra entry occur?
a) Withdrawal of cash from bank
b) Payment to creditors
c) Withdrawal of cash from bank for personal use
d) All of the above
Answer:
a) Withdrawal of cash from bank

Question 5.
Double entry in cash book is completed when:
a) Salaries are paid by cheque
b) Withdrawal of money from bank for personal use
c) Deposited cash into bank
d) None of these
Answer:
c) Deposited cash into bank

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Question 6.
A book where small items of expenditure like postage, carriage, coolies, stationery etc., are entered is called ________.
a) Purchases book
b) Sales book
c) Cash book
d) Petty cash book
Answer:
d) Petty cash book

Question 7.
Cash sales are entered in the ________.
a) Purchases book
b) Sales book
c) Cash book
d) Petty cash book
Answer:
c) Cash book

Question 8.
Cash discount is recorded in the ________.
a) Purchases book
b) Sales book
c) Cash book
d) Journal proper
Answer:
c) Cash book

Question 9.
Subsidiary books are maintained in ________.
a) Big business concerns
b) Small business concerns
c) Banks
d) None of the above
Answer:
a) Big business concerns

Question 10.
Which of the following books should be used to record purchase of furniture on credit?
a) Purchases book
b) Goods account
c) Cash book
d) Journal proper
Answer:
d) Journal proper

Question 11.
The credit balance in the Bank account is ________.
a) An asset
b) A liability
c) An expense
d) None of the above
Answer:
b) A liability

Question 12.
Double entry means ________.
a) Entry in two sets of books
b) Entry in two pages
c) Entry for two aspects of a transaction
d) None
Answer:
c) Entry for two aspects of a transaction

Question 13.
Which of the following is not true?
a) Double Column cash book contains cash and bank columns
b) Discount columns are not balanced
c) The dosing balance of bank columns is called cash at bank
d) None of the above
Answer:
a) Double Column cash book contains cash and bank columns

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Question 14.
Dishonour of a discounted bill, not recorded in the cash book will be added in the BRS, if the balance given is ________.
a) Unfavourable balance as per cash book
b) Favourable balance as per Pass book
c) Both (a) & (b)
d) None of the above
Answer:
c) Both (a) & (b)

Question 15.
The total of the purchases day book is posted periodically to the debit of ________.
a) Purchases account
b) Journal proper
c) Cash book
d) None of these
Answer:
a) Purchases account

Question 16.
Goods given as charity should be credited to ________.
a) Purchases account
b) Journal proper
c) Cash book
d) Charity Account
Answer:
a) Purchases account

Question 17.
“Bills payable discounted in cash by creditor”. This transaction will be recorded in ________.
a) Journal
b) Ledger
c) Bank book
d) No entry required to be made
Answer:
d) No entry required to be made

Question 18.
Contra entries are passed only when ________.
a) Double column cash book is prepared
b) Three-column cash books is prepared
c) Simple Cash book is prepared
d) None of these
Answer:
b) Three-column cash books is prepared

Question 19.
Which of the following is a type of cash receipt journal + cash payment journal?
a) Bank Statement
b) Cash flow statement
c) Cash book
d) None of these
Answer:
c) Cash book

Question 20.
Credit balance of the bank column in cash book shows:
a) Overdraft
b) Cash deposited in the bank
c) Cash withdrawn from the bank
d) None of these
Answer:
a) Overdraft

Question 21.
A cash book with discount and cash column is called ________.
a) Simple cash book
b) Double column cash book
c) Three column cash book
d) Petty cash book
Answer:
b) Double column cash book

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Question 22.
When goods are purchased for cash, the entry will be recorded in the ________.
a) Cash book
b) purchases book
c) Sales book
d) journal
Answer:
a) Cash book

Question 23.
The balance of cash book indicates ________.
a) Net income
b) cash in hand
c) Debtors
d) creditors
Answer:
b) cash in hand

Question 24.
In triple column cash book, cash withdrawn from bank for office use Will appear in ________.
a) Debit side of the cash book only
b) both sides of the cash book,
c) Credit side of the cash book only.
d) Journal proper
Answer:
b) both sides of the cash book,

Question 25.
If a cheque sent for collection is dishonoured, the debit is given to ________.
a) suppliers A/c
b) bank A/c
c) customers A/c
d) A and B
Answer:
c) customers A/c

Question 26.
If a cheque issued by us is dishonoured the credit is given to ________.
a) supplier’s A/c
b) customer’s A/c
c) bank A/c
d) A and B
Answer:
a) supplier’s A/c

Question 27.
Cash book always shows.
a) debit balance
b) credit balance
c) nill balance
d) credit balance and debit balance
Answer:
a) debit balance

Question 28.
Bank book always shows ________.
a) debit balance
b) credit balance
c) nil balance
d) credit balance and debit balance
Answer:
d) credit balance and debit balance

Question 29.
On Jan 1st 2017, Rs.1,000 given to petty cashier. He has spent Rs.960during the month of January. On Feb 1st to make the imprest he will receive cheque for Rs. ________.
a) Rs. 1,000
b) Rs. 960
c) Rs. 1,960
d) Rs. 40
Answer:
b) Rs. 960

Question 30.
The dosing balance of petty cash book is considered as ________.
a) Liability
b) Asset
c) Expenses
d) Income
Answer:
b) Asset

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Question 31.
Payment of rent expenses is recorded on which side of cash book ?
a) Receipts
b) Payments
c) Income
d) Expense
Answer:
b) Payments

Question 32.
The most common imprest system is the ________ systems.
a) pretty cash
b) cash book
c) cash receipt
d) discount
Answer:
a) pretty cash

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

II. Short Answer Questions

Question 1.
Enter the following transactions in the simple column cash book.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 40
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 40a

III. Additional Questions & Answers

Question 1.
What is the importance’s of cash book?
Answer:
Serves as both journal and ledger – When cash book is maintained, it is not necessary to open a separate cash account in the ledger. Thus, cash book serves the purpose of a journal and a ledger.

Saves time and labour – When cash transactions are recorded through journal entries, a lot of time and labour will be involved. To avoid this, all cash transactions are straightaway recorded in the cash book, which saves time and labour.

Shows the cash and bank balance – It helps to know the cash and bank balance at any point of time by comparing the total cash receipts and cash payments.

Benefit of division of labour – As cash book is a separate subsidiary book, an independent person can maintain it. Hence, business can get the benefit of division of labour.

Effective cash management – Cash book provides all information regarding total receipts and payments of the business concern during a particular period. It helps in formulating effective policy for cash management.

Prevents errors and frauds – Balance as per cash book and the balance in the cash box can be compared daily. If there is any deficit or surplus, it can be found easily. It helps in preventing any fraud or error in cash dealings.

Question 2.
What are the various types of petty cash book?
Answer:
There are two types of petty cash books. They are:

  1. Simple petty cash book
  2. Analytical petty cash book

Simple petty cash book –
A simple petty cash book resembles the single column cash book. But the columns are different. On the debit side, only the advance received from the head cashier is recorded. On the credit side, all payments are recorded in only one column. This is known as simple petty cash book.

Analytical petty cash book –
In analytical petty cash book, a separate column is provided for different heads of payments and one column for total payments. When the petty expenses are recorded in the total payment column, same amount is also recorded in the appropriate expense column. This is known as analytical petty cash book.

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Question 3.
What is Simple petty cash hook?
Answer:
A simple petty cash book resembles the single column cash book. But the columns are different. On the debit side, only the advance received from the head cashier is recorded. On the credit side, all payments are recorded in only one column. This is known as simple petty cash book.

Question 4.
What is Analytical petty cash book?
Answer:
In analytical petty cash book, a separate column is provided for different heads of payments and one column for total payments. When the petty expenses are recorded in the total payment column, same amount is also recorded in the appropriate expense column. This is known as analytical petty cash book.

Question 5.
Give any two Examples for a Contra Entry.
Answer:

  1. Cash paid into bank.
  2. Money withdrawn from bank for office use.

Additional Sums:

Question 1.
Enter the following in the simple column cash book.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 41
Solution:
Single Column Cash Book
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 42

Question 2.
Enter the Following transactions in a petty cash book of Mr, Kishore Kumar with analytical columns the petty cashier beigns with an imprest amount of Rs.1,000.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 43
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 45

Question 3.
Prepare petty cash book on imperst system from the Following Particulars given below.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 46
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 47

Question 4.
Prepare the analytical petty cash book of Mr. Keerthivasan from the Following.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 48
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 49

Question 5.
Thiru.Suganthan started business with the capital of Rs.15,00,000 on 01.01.2018. He paid into Bank Rs.10,00,000. He tarried out the following transactions during the month is given below; prepare the cash of Suganthan.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 50
Solution:
Single Column Cash Book of Mr. Suganthan
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 51

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Question 6.
Enter the lowing transactions of Royce in Double Column Cash Book.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 52
Solution:
Double Column Cash Book of Royce
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 54

Question 7.
Record the following transactions in the Double CoSusium cash book of Mr. X
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 56
Solution:
Double Column Cash Book of Mr. X
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 57

Question 8.
Enter the following transactions of a trader in a triple column cash book.
2015,
Nov.
1 – Nizam started business with ₹ 1,00,000
2 – Deposited into bank of Baroda ₹ 95,000
5 – Purchased a building for ₹ 70,000 and paid by cheque
10 – Purchased merchandise ₹ 20,000 and paid by cheque
25 – Paid freight ₹ 50
29 – Withdrew from bank for personal use ₹ 500
30 – Cleared electricity bills ₹ 90
Solution:
Cash Book of a Trader
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 58

Question 9.
Enter the following transactions in the three columnar cash book of Mr.Z
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 59
Solution:
Three Column Cash Book of Mr.Z
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 60

Question 10.
Enter the following transactions in Gopi’s Three Column Cash Book:
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 61
Solution:
Three Column Cash Book of Mr.Z
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 62

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Question 11.
Enter the following transactions in cash book of Mr. K with cash, bank and discount columns
2018
Feb.
1 – Cash in hand Rs. 1,60,000
3 – Opened bank account with Rs. 70,000
5 – Cash purchases Rs. 1,00,000
6 – Cash Sales Rs. 1,30,000
14 – Withdrew cash for office use Rs. 20,000
20 – Sold goods to Sundar Rs. 90,000
25 – Cash received from Sundar Rs. 88,000 in full settlement
28 – Paid Salaries Rs. 30,000
29 – With drew Rs. 10,000 from bank for domestic purpose
30 – Paid Rent Rs. 10,000
31 – Paid to Prabhu Rs. 37,000 in full settlement against his claim of Rs. 40,000 during 2017
Solution:
Triple Column Cash Book of Mr. K
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 63

Question 12.
Enter the following transactions in Ganesan’s cash book with columns for cash, bank and discount:
2017
Nov
1 – Balance in cash on hand Rs. 400 and at Bank Rs. 3,600
3 – Received Rs. 1,600 from Gopalan in cash; Allowed him discount of Rs. 20
3 – Paid Rs. 1,000 into bank
4 – Cash sales Rs. 1,200
5 – Paid salaries by cheque Rs. 1,600
6 – Repairs of typewriter Rs. 600
8 – Paid Rs. 1,200 to Modern Co., half in cash and half in cheque
Solution:
Triple Column Cash Book of Mr.Ganeshan
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 64

Question 13.
From the following particulars prepare analytical column of petty cash book of Mr. Z:
2017
Dec
1 – Received from head cashier Rs. 300
2 – Paid for stationary Rs. 20; Postage and telegram paid Rs. 10; Paid office expenses Rs. 15
4 – Bought paper and ink Rs. 10
5 – Paid for Tiffen to office peon Rs. 8; Bought postage stamps Rs. 15
6 – Paid Selvan on account Rs. 15
7 – Paid for miscellaneous office expenses Rs. 10
8 – Paid Cartage Rs. 10; Paid travelling expenses Rs. 15
Solution:
Analytical Petty Cash Book of Mr. Z
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 65

Question 14.
Lakshman, maintains a columnar petty cash book on the imprest system. The imprest amount is Rs.400. From the following information write up the petty cash book for the 1st Week of January 2018.
Jan
2018
1 – Bought stamps Rs. 50 (Voucher No.l)
2 – Paid bus fares Rs. 4 (Voucher No.2)
2 – Paid postages Rs. 10 (Voucher No.3)
2 – Paid envelopes Rs. 30 (Voucher No.4)
2 – Paid for refreshment Rs. 14 (Voucher No.5)
3 – Paid Arun a creditor Rs. 62 (Voucher No.6)
4 – Paid for postage Rs. 20 (Voucher No.7)
5 – Paid Guru a creditor Rs. 105 (Voucher No.8)
6 – Paid train fares Rs. 45 (Voucher No.9)
7 – Restored imprest
Solution:
Analytical Petty Cash Book of Mr. Lakshman
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 66

Question 15.
From the following transactions for the month of June 2017, drew up a Petty Cash Book in analytical form:
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 67
Solution:
Analytical Petty Cash Book
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 68

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Question 16.
Prepare Mr. Keerthivasan single column cash book.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 69
Solution:
Single column book of Mr. Kishore Kumar
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 70

Question 17.
Record the transactions given below in the double column cash book of cash book (with discount and cash columns) of Mr. Kirubakaran.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 71
Solution:
Double column cash book or Mr. Kirunakaran (Cash book with discount and cash column)
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 72

Question 18.
Enter the following transaction in the cash book with discount and cash columns of Mr. Guru.
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 73
Solution:
Double column cash book or Mr. Guru
(Cash book with discount and cash column)
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 74

Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II

Question 19.
Enter the following transaction in the three column cash book of Mr. kumaran.
2002
May
1 – Cash in hand Rs. 30,000; Cash at bank Rs. 2,000
3 – Received cheque for goods sold to Arun and bank Rs. 1,000
5 – Paid into bank Rs. 4,000
9 – Paid cash to david from whom goods worth Rs.6,000 were purchased for credit on 1st May on term 2% cash discount within two weeks
10 – Paid to Robert by cheque Rs.2,400 in full settlement of his account of Rs.2,500
12 – Received cash from Nathan Rs.4,750 Discount allowed Rs.250
19 – Interest allowed by bank Rs.200
20 – Robert to whom we have usued a cheque has reported that our cheque is dishounred
22 – Roshan got exchange for a Five hundred rupee note
31 – Paid into bank all cash in excess of Rs.5000
Solution:
Trible column cash book or Mr. Guru
(Cash book with discount and cash column)
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 75

Question 20.
Enter the following transactions in the triple column cash hook of Mr.Yogesh
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 76
Solution:
Trible column cash book or Mr. Kumaran
(Cash book with discount and cash column)
Samacheer Kalvi 11th Accountancy Guide Chapter 7 Subsidiary Books – II 77

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Accountancy Guide Pdf Chapter 6 Subsidiary Books – I Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Accountancy Solutions Chapter 6 Subsidiary Books – I

11th Accountancy Guide Subsidiary Books – I Text Book Back Questions and Answers

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

I. Multiple Choice Questions

Choose the correct answer.

Question 1.
Purchases book is used to record ________.
a) all purchases of goods
b) all credit purchases of assets
c) all credit purchases of goods
d) all purchases of assets
Answer:
c) all credit purchases of goods

Question 2.
A periodic total of the purchases book is posted to the ________.
a) debit side of the purchases account
b) debit side of the sales account
c) credit side of the purchases account
d) credit side of the sales account
Answer:
a) debit side of the purchases account

Question 3.
Sales book is used to record ________.
a) all sales of goods
b) all credit sales of assets
c) all credit sales of goods
d) all sales of assets and goods
Answer:
c) all credit sales of goods

Question 4.
The total of the sales book is posted periodically to the credit of ________.
a) Sales account
b) Cash account
c) Purchases account
d) Journal proper
Answer:
a) Sales account

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

Question 5.
Purchase returns book is used to record ________.
a) returns of goods to the supplier for which cash is not received immediately
b) returns of assets to the supplier for which cash is not received immediately
c) returns of assets to the supplier for which cash is received immediately
d) None of the above
Answer:
a) returns of goods to the supplier for which cash is not received immediately

Question 6.
Sales return book is used to record ________.
a) Returns of goods by the customer for which cash is paid immediately
b) Returns of goods by the customer for which cash is not paid immediately
c) Returns of assets by the customer for which cash is not paid immediately
d) Returns of assets by the customer for which cash is paid immediately
Answer:
b) Returns of goods by the customer for which cash is not paid immediately

Question 7.
Purchases of fixed assets on credit basis is recorded in ________.
a) Purchases book
b) Sales book
c) Purchases returns book
d) Journal proper
Answer:
d) Journal proper

Question 8.
The source document or voucher used for recording entries in sales book is ________.
a) Debit note
b) Credit note
c) Invoice
d) Cash receipt
Answer:
c) Invoice

Question 9.
Which of the following statements is not true?
a) Cash discount is recorded in the books of accounts
b) Assets purchased on credit are recorded in journal proper
c) Trade discount is recorded in the books of accounts
d) 3 grace days are added while determining the due date of the bill
Answer:
c) Trade discount is recorded in the books of accounts

Question 10.
Closing entries are recorded in ________.
a) Cash Book
b) Journal Proper
c) Ledger
d) Purchases book
Answer:
c) Ledger

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

II. Very Short Answer Type Questions

Question 1.
Mention four types of subsidiary books.
Answer:
The following are the four types of subsidiary books.

  1. Cash book
  2. Purchases book
  3. Sales book
  4. Bills receivable book

Question 2.
What is purchases book?
Answer:

  1. Purchases book is a subsidiary book in which only credit purchases of goods are recorded.
  2. While recording transactions in the purchases book, it must be ascertained whether the credit purchase is related to the item in which the firm is dealing.
  3. Purchases of assets and purchase of goods for cash are not entered in purchases book.

Question 3.
What is purchases returns book?
Answer:

  1. Purchases returns book is a subsidiary book in which transactions relating to return of previously purchased goods to the suppliers, for which cash is not immediately received are recorded.
  2. Since goods are going out to the suppliers, they are also known as returns outward and the book is called as ‘returns outward book or returns outward journal’.

Question 4.
What is sales book?
Answer:

  1. Sales book is a subsidiary book maintained to record credit sale of goods. Goods mean the items in which the business is dealing.
  2. These are meant for regular sale.
  3. Cash sale of goods and sale of property and assets whether for cash or on credit are not recorded in the sales book.
  4. This book is also named as sales day book, sold day book, sales journal or sale register.

Question 5.
What is sales returns book?
Answer:

  1. Sales returns book is a subsidiary book, in which, details of return of goods are sold for which cash is not immediately paid are recorded.
  2. This book is not concerned with the return of assets or return of goods for which cash is paid. <$> This book is prepared just like the other day books.

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

Question 6.
What is debit note?
Answer:

  1. A ‘debit note’ is a document, bill or statement sent to the person to whom goods are returned.
    This statement informs that the supplier’s account is debited to the extent of the value of goods returned.
  2. It contains the description and details of goods returned, name of the party to whom goods are returned and net value of the goods so returned with reason for return.

Question 7.
What is credit note?
Answer:

  1. A credit note is prepared by the seller and sent to the buyer when goods are returned indicating that the buyer’s account is credited in respect of goods returned.
  2. Credit note is a statement prepared by a trader who receives back from his customer the goods sold.
    It contains details such as the description of goods returned by the buyer, quantity returned and also their value.

Question 8.
What is journal proper?
Answer:

  1. Journal proper is a residuary book which contains record of transactions, which do not find a place in the subsidiary books such as cash book, purchases book, and sales book, purchases returns book, sales returns book, bills receivable book and bills payable book.
  2. Journal proper or general journal is a book in which the residual transactions which cannot be entered in any of the sub divisions of journal are entered.

Question 9.
Define bill of exchange.
Answer:
According to the Negotiable Instruments Act, 1881, “Bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument”.

Question 10.
What is an opening entry?
Answer:

  1. At the end of the accounting year, all nominal accounts are closed but the business has to be carried on with previous year’s assets and liabilities.
  2. These accounts are to be brought into the accounts of the current year.
  3. Journal entry made in the beginning of the current year with the balances of assets and liabilities of the previous year is opening journal entry.
  4. In this entry, asset accounts are debited, liabilities and capital accounts are credited.

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

Question 11.
What Is an invoice?
Answer:

  1. Invoice is a business document or bill or statement, prepared and sent by the seller to the buyer giving the details of goods sold, such as quantity, quality, price, total value, etc.
  2. The invoice is a source document of prime entry both for the buyer and the seller.

III. Short Answer Questions

Question 1.
Give the format of purchases book.
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 1

Question 2.
Mention the subsidiary books in which the following transactions are recorded.
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 2

Question 3.
What are the advantages of subsidiary books?
Answer:
The advantages of maintaining subsidiary books can be summarised as under : Proper and systematic record of business transactions –

  • All the business transactions are classified and grouped conveniently as cash and non cash ‘ transactions, which are further classified as credit purchases, credit sales, returns, etc.
  • As separate books are used for each type of transactions, individual transactions are properly and systematically recorded in the subsidiary books.

Convenient posting:

  • All the transactions of a particular nature are recorded at one place, i.e., in one of the subsidiary books.
  • For example, all credit purchases of goods are recorded in the purchases book and ail credit sales of goods are recorded in the sales book.
  • It facilitates posting to purchases account, sales account and concerned personal accounts.

Division of work:
As journal is sub-divided, the work will be sub-divided and different persons can work on different books at the same time and the work can be speedily completed.

Efficiency:

  • The sub-division of work gives the advantage of specialisation. When the same work is done by a person repeatedly the person becomes efficient in handling it.
  • Thus, specialisation leads to efficiency in accounting work.

Helpful in decision making:

  • Subsidiary books provide complete details about every type of transactions separately.
  • Hence, the management can use the information as the basis for deciding its future actions.
  • For example, information regarding sales returns from the sales returns book will enable the management to analyse the causes for sales returns and to adopt effective measures to remove deficiencies.

Prevents errors and frauds:

  • Internal check becomes more effective as the work can be divided in such a manner that the work of one person is automatically checked by another person.
  • With the use of internal check, the possibility of occurrence of errors or fraud may be avoided or minimised.

Availability of requisite information at a glance:

  • When all transactions are entered in one journal, it is difficult to locate information about a particular item.
  • When subsidiary books are maintained, details about a particular type of transaction can be obtained from subsidiary books.
  • The maintenance of subsidiary books helps in obtaining the necessary information at a glance.

Detailed Information available : As all transactions relating to a particular item are entered in a subsidiary book, it gives detailed information. It is easy to arrive at monthly or quarterly totals.

Saving in time : As there are many subsidiary books, work of entering can be done simultaneously by many persons. Thus, it saves time and accounting work can be completed quickly.

Labour of posting is reduced : Labour of posting is reduced as posting is made in periodical totals to the impersonal account, for example, Purchases account.

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

Question 4.
Write short notes on:
Answer:
a) Endorsement of a bill:

  • Endorsement means signing on the face or back of a bill for the purpose of transferring the title of the bill to another person.
  • The person who endorses is called the “Endorser”.
  • The person to whom a bill is endorsed is called the “Endorsee”.
  • The endorsee is entitled to collect the money.

b) Discounting of a bill:

  • When the holder of a bill is in need of money before the due date of a bill, cash can be received by discounting the bill with the banker.
  • This process is referred to as the discounting of bill.
  • The banker deducts a small amount of the bill which is called discount and pays the balance in cash immediately to the holder of the bill.

IV. Exercises

Question 1.
Enter the following transactions in the Purchases book of M/s. Subhashree Electric Co., which deals in electric goods?
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 3
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 4

Question 2.
Enter the following credit transactions in the purchases book of Manoharan, a Provisions Merchant.
2017
May 2 – Bought from Vasu 100 bags of rice @ ₹ 800 per bag
May 8 – Bought from Cheyyar Sugar Mills Ltd., 20 bags of sugar @ ₹ 2,600 per bag
May 10 – Bought from Ram Flour Mill, Coimbatore, 10 bags of wheat flour @ ₹ 750 per bag
May 15 – Bought from Nilgiri Tea Co., Nilgiris, 15 cases of tea @ ₹ 900 per case
May 25 – Bought from Sairam Coffee Works Ltd., 100 kgs of Coffee @ ₹ 190 per kg.
May 29 – Bought from X & Co. furniture worth ₹ 2,000
Solution:
In the books of Manoharan Provisional Merchant Purchases as book.
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 5

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

Question 3.
From the following transactions write up the Sales day book of M/s. Ram & Co., a stationery. merchant.
2017
Jan. 1 – Sold to Anbu & Co., on credit 20 reams of white paper @ ₹ 150 per ream
Jan. 2 – Sold to Jagadish & Sons on credit 6 dozen pens @ ₹ 360 per dozen
Jan. 10 – Sold old newspapers for cash @ ₹ 620
Jan. 15 – Sold on credit M/s. Elango & Co., 10 drawing boards @ ₹ 170 per piece
Jan. 20 Sold to Kani & Co., 4 writing tables at ₹ 1,520 per table for cash
Solution:
In the books of M/s. Ram & Co. a Stationary Merchant
Sales Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 6

Question 4.
Enter the following transactions in the Sales book of Kamala Stores, a furniture shop.
2017
May 2 – Sold to Naveen Stores, Trichy on credit 5 computer tables @ ₹ 1,750 per table
May 9 – Sold to Deepa & Co., Madurai on credit 6 dining tables @ ₹ 1,900 per dining table
May 15 – Sold to Rajesh 10 dressing tables @ ₹ 2,750 each on credit
May 24 – Sold to Anil 5 wooden tables @ ₹ 1,250 per table on credit
May 27 – Sold to Gopi 3 old computers @ ₹ 3,500 each
May 29 – Sold 50 chairs to Anil @ ₹ 275 each for cash
Solution:
In the books of Kamala Stores a Furniture’s Shop
Sales book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 7

Question 5.
Enter the following transactions in the purchases and sales books of Kannan, an automobile dealer, for the month of December, 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 8
Solution:
In the books of Kannan
Purchase book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 9
In the books of Kannan
Sales book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 10

Question 6.
Prepare Purchases book and Sales book in the books of Santhosh Textiles Ltd., from the following transactions given for April, 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 11
Solution:
In the books of Santhosh Textile Ltd,
Purchase Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 12
In the books of Santhosh Textile Ltd,
Sales Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 13

Question 7.
From the following information, prepare purchase day book and purchases returns book for the month of June, 2017 and post them into ledger accounts in the books of Robert Furniture Mart.
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 14
Solution:
In the books of Robert Furniture Mart.
Purchases Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 15
In the books of Robert Furniture Mart.
Purchase return A/C
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 16
Ledger Account
Purchases Account
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 17
Balu Traders
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 18
Subash & Co.
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 19
Sunrise Furniture
 Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 20
Mouli Traders
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 21
Purchase Return Account
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 22

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

Question 8.
Enter the following transactions in the proper subsidiary books of Suman who is dealing in electronic goods for the month of January, 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 23
Solution:
In the books of Suman
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 24
In the books of Suman
Purchase Returns Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 25

Question 9.
Enter the following transactions in the sales book and saies returns book of M/s. Guhan & Sons, who is a textile dealer.
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 26
Solution:
In the books of Guhan & Sons
Sales Books
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 27
In the books of Guhan & Sons
Sales Return Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 28

Question 10.
Record the following transactions in the sales book and sales returns book of M/s. Ponni & Co., and post them to ledger.
2017
Aug 1 – Sold goods to Senthii as per Invoice No. 68 for ₹ 20,500 on credit
Aug 4 – Sold goods to Madhavan as per Invoice No. 74 for ₹ 12,800 on credit
Aug 7 – Sold goods to Kanagasabai as per Invoice No. 78 for 17,500 on credit
Aug 15 – Returns inward by Senthii as per Credit Note no. 7 for ₹ 1,500 for which cash is not paid
Aug 20 – Sold goods to Selvarn for ₹ 13,300 for cash
Aug 25 – Sales returns of 11,800 by Madhavan as per Credit Note No. 11 for which cash is not paid
Solution:
In the books of Ponni & Co
Sales Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 29
In the books of Ponni & Co.
Sales Return Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 30
Ledger A/C
Sales Account
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 31
Senthil Account
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 32
Madhavan Account
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 33Kanagasabai Account
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 34
Sales Return Account
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 35

Question 11.
Prepare necessary subsidiary books in the books of Niranjan and aiso Sachin account and Mukil account from the following transactions for the month of February, 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 36
Solution:
In the books of Sachin account and Mukil account.
Purchase Book (Mukil Account)
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 37
Sales Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 38
Purchase Return Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 39
Sales return Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 40
Ledger
Sachin Account
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 41
Mukil Account
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 42

Question 12.
From the following information, prepare the necessary subsidiary books for Nalanda Book Stores.
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 43
Solution:
In the books of Naianda Book Stores
Purchase Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 44
In the books of Naianda Book Stores
Sales Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 45
Purchase return books
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 46

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

11th Accountancy Guide Subsidiary Books – I Additional Important Questions and Answers

I. Choose the correct answer

Question 1.
If goods are sold but not delivered to the customer, they will be included in _______.
a) Closing Inventory
b) Goods in transit
c) Sales
d) Sales in returns
Answer:
b) Goods in transit

Question 2.
Goods Of Rs.800 (sales price) sent on sale on approval basis were included In the sales book. The profit included in the sales was 25% on cost. Inventory with the party will increase our closing inventory by _______.
a) Rs. 600
b) Rs. 640
c) Rs. 680
d) Rs. 700
Answer:
b) Rs. 640

Question 3.
List price of the goods purchased is Rs. 60,000 cash paid is Rs. 45,000 (After receiving a cash discount of Rs. 9,000) the trade discount will be?
a) 10 %
b) 7.5 %
c) 15 %
d) 25 %
Answer:
a) 10 %

Question 4.
A trader purchased goods for Rs. 4,000 at a discount of 5%. As he paid the amount immediately, a cash discount of Rs.100 was also allowed. In this case, Purchases A/c is debited by:
a) Rs. 4,000
b) Rs. 3,800
c) Rs. 3,700
d) Rs. 3,900
Answer:
b) Rs. 3,800

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

Question 5.
The periodical total of the Sales Return Book is posted to the _______.
a) Debit side of Sales Account
b) Debit side of Sales Return Account
c) Credit side of Sales Return Account
d) Debit side of Debtors Return Account
Answer:
b) Debit side of Sales Return Account

Question 6.
Debit notes issued are used to prepare _______.
a) Sales returns book
b) Puchases returns book
c) Journal proper
d) Puchases book
Answer:
b) Puchases returns book

Question 7.
Trade discount allowed at the time of sale of goods is _______.
a) Recorded in Sales Book
b) Recorded in Cash Book
c) Recorded in Journal
d) Not recorded in Books of Accounts
Answer:
d) Not recorded in Books of Accounts

Question 8.
Subsidiary books are maintained in _______.
a) Big business concerns
b) Small business concerns
c) Banks
d) None of the above
Answer:
a) Big business concerns

Question 9.
Journal Proper is used to record _______.
a) Ail cash and credit transaction
b) cash and credit sales
c) Cash and credit purchases
d) adjusting and closing entries
Answer:
d) adjusting and closing entries

Question 10.
Cash discount is recorded in the _______.
a) Cash book
b) Sales Book
c) Purchases book
d) Journal
Answer:
a) Cash book

Question 11.
The cash discount allowed to a debtor should b e credited to _______.
a) Discount Account
b) Customer’s Account
c) Sales account
d) None of the above
Answer:
b) Customer’s Account

Question 12.
Which of the following books should be used to record purchase of furniture on credit?
a) Petty Cash Book
b) Journal Proper
c) Cash Book
d) None of the above
Answer:
b) Journal Proper

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

Question 13.
The return of goods to a supplier should be credited to _______.
a) Supplier Account
b) Goods Account
c) Purchase Return Account
d) None of the above
Answer:
c) Purchase Return Account

Question 14.
The other name of Sales Returns book is _______.
a) Returns Inwards Book
b) Sales Returns Journal
c) both (a) & (b)
d) None of the above
Answer:
c) both (a) & (b)

Question 15.
The statement sent to the suppliers on account of return of goods is known as _______.
a) Debit Note
b) Credit Note
c) Journal Proper
d) None of the above
Answer:
a) Debit Note

Question 16.
On 1st January 2918, pugazh draws a bill on Sundar for 3 months, Its due date is _______.
a) 31st March 2018
b) 1st April 2018
c) 4th April 2018
d) 4th April 2018
Answer:
c) 4th April 2018

Question 17.
Goods returned by customers are recorded in _______.
a) Sales book
b) sales return book
c) Purchases book
d) purchases return book
Answer:
b) sales return book

Question 18.
Goods returned by suppliers are recorded in _______.
a) Sales book
b) sales return book
c) Purchases book
d) purchases return book
Answer:
d) purchases return book

Question 19.
Days of grace are _______ in number.
a) one
b) two
c) three
d) four
Answer:
c) three

Question 20.
The person who prepares a bill is called the _______.
a) Drawer
b) Drawee
c) Payee
d) All of these
Answer:
a) Drawer

Question 21.
The person who has to make the payment or who accepts to make the payment is called _______.
a) Drawer
b) Drawee
c) Payee
d) All of these
Answer:
b) Drawee

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

Question 22.
The person who receives the payment is payee _______.
a) Drawer
b) Drawee
c) Payee
d) All of these
Answer:
d) All of these

Question 23.
_______ means signing on the face or back of a bill for the purpose of transferring the title of the bill to another person.
a) Endorsement
b) Discounting
c) Retiring of bill
d) Renewal
Answer:
a) Endorsement

Question 24.
_______ is the statement prepared by the seller of goods.
a) Voucher
b) Receipt
c) Invoice
d) Ledger
Answer:
c) Invoice

Question 25.
Puchases book does not keep record of purchases of _______.
a) Purchases book
b) sales book
c) Purchases returns book
d) sales returns book
Answer:
a) Purchases book

II. Very Short Answer Type Questions

Question 1.
Prepare Sales Book of M/S A :
i. 2016, Feb, 1 – Sold goods to prince Rs. 2,500
i. 2016, Feb 10 – Sold to Kannan 100 shirts @ Rs. 55 per shirt, Trade discount 10%
ii. 2016, Feb 26 – Sold old furniture to Rasi & sons Rs. 2,400 on credit.
Solution:
Sales Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 47

Question 2.
Record the following transactions in the returns inwards book of Mr. A.
1. Dharani returned goods worth Rs. 700
2. Malaini returned goods worth Rs. 800
Answer:
Sales Returns Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 48

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

III. Short Answer Questions

Question 1.
What is trade discount?
Answer:
Trade discount is a deduction given by the supplier to the buyer on the list price or catalogue price of the goods. It is given as a trade practice or when goods are purchased in large quantities. It is shown as a deduction in the invoice. Trade discount is not recorded in the books of accounts. Only the net amount is recorded.

Example : Suppose the sale of goods for ₹ 10,000 was made and 10% was allowed as trade discount, the entry regarding sales will be made for Rs 9,000 (10,000 – 10 per cent of 10,000). In the same way, purchaser of goods will also record purchases as Rs 9,000).

Question 2.
Write notes on parties involved in a bill of exchange.
Answer:
There are three parties to a bill of exchange as under:

  1. Drawer : The person who prepares the bill is called the drawer, i.e., a creditor.
  2. Drawee : The person who has to make the payment or who accepts to make the payment is called the drawee, i.e., a debtor.
  3. Payee : The person who receives the payment is payee. He may be a third party or the drawer of the bill.

Question 3.
What are the features of bills of exchange?
Answer:

  1. It is a written document.
  2. It is an unconditional order.
  3. It is an order to pay a certain sum of money.
  4. It is signed by the drawer.
  5. It bears stamp or it is drafted on a stamp paper.
  6. It is to be accepted by the acceptor.

Question 4.
What is Due date?
Answer:
When a bill is drawn payable after a specified period, the date on which the payment should be made is called ‘Due date’.

Question 5.
What is Days of grace?
Answer:
In the calculation of the due date, three extra days are added to the specified period of the bills called ‘Days of grace’. If the date of maturity falls on a holiday, the bill will be due for payment on the preceding day.

Question 6.
Write notes on retiring of a bill.
Answer:
An acceptor may make the payment of a bill before its due date and may discharge the liability on the bill. It is called as retirement of a bill. Usually, the holder of the bill allows a concession called rebate to the drawee for the unexpired period of the bill.

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

Question 7.
Write notes on renewal of a bill of exchange.
Answer:
When the acceptor of a bill knows in advance that he/she will not be able to meet the bill on its due date, he/she may request the drawer for extension of time for payment. The drawer of the bill may agree to cancel the original bill and draw a new bill for the amount due with interest thereon. This is referred to as renewal.

Question 8.
Write notes on closing entries.
Answer:
At the end of the accounting period, all the ledger accounts relating to purchases, sales, purchases returns, sales returns, stock and other accounts concerning expenses, losses, incomes and gains are closed by transfer to trading and profit and loss account so that financial statements can be prepared. It should be noted that closing entries are made for nominal accounts only.

Question 9.
Write notes on rectifying entries.
Answer:
Rectifying entries are passed for rectifying errors which are committed in the books of accounts.

Example : Purchase of furniture by a stationery dealer for Rs 10,000 was debited to purchases account. Pass rectifying entry on December 31, 2017.
Rectifying Entry
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 49

Question 10.
What is Endorsement?
Answer:
Endorsement means signing on the face or back of a bill for the purpose of transferring the title of the bill to another person. The person who endorses is called the “Endorser”. The person to whom a bill is endorsed is called the “Endorsee”. The endorsee is entitled to collect the money.

Question 11.
What is discounting?
Answer:
When the holder of a bill is in need of money before the due date of a bill, cash can be received by discounting the bill with the banker. This process is referred to as the discounting of bill. The banker deducts a small amount of the bill which is called discount and pays the balance in cash immediately to the holder of the bill.

Question 12.
State the reasons for returning of the goods?
Answer:

  1. not according to the order placed.
  2. not upto the samples which were already shown.
  3. due to damage condition.
  4. due to price difference.
  5. undue delay in the delivery of the goods.

Question 13.
What are the kinds of returns books?
Answer:

  1. Purchases Return or Returns outward book.
  2. Sales Return or Returns inward book.

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

Question 14.
What is Bills payable book?
Answer:
Details recorded in the bills payable book are the names of the parties whose bills are accepted, date of the bills payable, due date, amount, etc. The individual accounts of the parties whose bills are accepted will be debited with the corresponding amount in the bills payable book.

Question 15.
What is Bills receivable book?
Answer:
Bills receivable refers to bills drawn, the payment for which has to be received. In case of credit sales of goods, the entity may draw a bill on the buyer (debtor), for a certain period. This is called bills receivable for the business entity and bills payable for the debtor who has accepted the bill.

IV. Exercises

Question 1.
From the following transactions of Ram Home appliances for July, 2017 prepare pui books and ledger accounts connected with his book.
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 50
Solution:
In the books of ram home appliances
Purchase book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 51

Question 2.
Enter the following transactions in the purchases returns book of Hair who lealing in auto mobiles and post them into the 2017
2017
Jan 5 – Returned to Anand 10 dutch plates @ ₹ 200 each not in accordance with order.
Jan 14 – Returned to Chardran 5 brake shoes @ ₹ 200 each and 20 rear view Mirrors @ ₹ 350, each due to inferior quality
Solution:
In the books of Hari
Purchases Return book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 52

Question 3.
From the transactions given below, Prepare the sales book of Kumar Stationery of July 2017,
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 53
Solution:
Sales account
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 54
Ledger Accounts
Sales Account
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 55
Yogesh Traders A/c
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 56
Kumaran & Co, A/c
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 57

Question 4.
Enter the following transaction in returns inward book of Magesh a textile dealer.
2017
April 6 – Returned by Naren 40 shirts each costing ₹ 150 due top inferior Quality.
April 8 – Amar Tailors returned 10 T-shirts, each costing ₹ 100 on accounts Of being not in accordance with their order.
April 21 – Prema stars returned 20 salwar sets each costing ₹ 200, being not in Accordance with order.
Solution:
In the books of Magesh
Sales Return book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 57a

Question 5.
Enter the following transactions in proper subsidiary books.
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 58
Solution:
Purchase Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 59
Sales book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 60

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

Question 6.
Record the following transaction in the proper subsidiary books of M/S Ram & Co.
April
1 – Goods sold to Ramesh Rs. 1000
3 – Sold goods to Kumar Rs. 2,200.
8 – Sold goods to Shankar Rs. 300
10 – Goods returned by Kumar Rs. 600.
15 – Credit note sent to Shankar For Rs. 200
Solution:
In the books of Ram & Co.
Sales book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 61
Sales Return Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 62

Question 7.
Write the following transaction in proper subsidiary books of Mr. Pugazh.
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 63
In the books of Mr. Pugazh
Purchased book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 64
In the books of Mr. Pugazh
Purchased return book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 65

Question 8.
Enter the following transaction in the proper subsidiary books of Mr. Somu.
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 66
Solution:
In the books of Mr. Somu
Purchase book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 67
In the books of Mr. Somu
Purchased return book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 68
In the books of Mr. Somu
Sales book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 69
In the books of Mr. Somu
Sales return book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 70

Question 9.
Enter the following transactions in the appropriate special M/s Padmini & Co.
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 71
Solution:
In the books of M/S Padmini
Purchase book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 72
In the books of M/S Padmini
Sales book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 73
In the books of M/S Padmini
Purchase return book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 74
In the books of M/S Padmini
Sale return book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 75

Question 10.
Enter the following transactions in the subsidiary books:
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 76
Solution:
Purchases Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 77

Question 11.
Enter the following transactions in the purchase book of M/S Arun and post them in the ledger:
2016,
Jan.
9 – Purchased from Joseph stores, 15 boxes of pencil @ Rs.6 per box 15 Purchased for cash 10 Exercise book @ Rs.5 per book
18 – Bought Furniture from Fancy Furniture Mart for Rs.2,000, Trade discount @ 10%
21 – Purchased 25 bags of tea dust from Subam Traders @ Rs.20 per bag, Trade discount 5%
Solution:
Purchases Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 78

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

Question 12.
From the particulars given below, write up the Purchases Day Book of M/s Hilton Electric Co, which deals in electrical goods:
2017,
Dec.
5 – Purchased on Credit from H Electric Co. – 10 Electric Iron @ Rs. 7,000 each; 5 – Electric Stoves @ Rs. 6,000 each;
16 – Purchased on credit from Khaitan Electric Co – 30 Electric Heater @ Rs. 12,000 each; 20 Electric Kettles @ Rs. 6,000 each;
21 – Purchased from Solar Electric Co. on credit – 10 Toasters @ Rs. 4,000 each; 5 – Electric Heater @ Rs. 12,000 each;
30 – Purchased from Bombay Electric Stores on Credit – 20 Electric Stoves @ Rs. 4,000 each; Electric Fans @ Rs. 3,000 each;
Solution:
Purchases Day Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 79

Question 13.
Enter the following transactions in the sales book of Arun and post them into ledger.
2016,
Jan.
1 – Sold goods to Prince Rs. 2500
10 – Sold to Kannan 100 Shirts @ Rs. 45 per shirt, Trade discount 10%
21 – Sold old furniture to Kumar & Sons Rs. 1,200 on credit
Solution:
Sales Day Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 80

Question 14.
From the following transactions write up the sales day book of M/s Rajesh & Co.
Jan.
1 – Sold to S 100 bags of sugar @ Rs. 7,000 per bag, less trade discount @ 5%
10 – Sold to D 20 bags of milk powder @ Rs. 6,000 per bag, less trade disc. @ 10%
20 – Sold to F 10 boxes of Tea @ Rs. 2,500 per box, less trade discount @ 10%
29 – Sold old office furniture on credit to Rainbow furniture mart for Rs. 64,000
Solution:
Sales Day Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 81

Question 15.
Enter the following information in the proper subsidiary books:
Mar.
1 – Returned to Onida Co. Ltd 4 colour TVs @ Rs. 24,000 each
2 – Returned by Metro Electronics Ltd 4 pieces of Fridge costing Rs. 20,000 each
15 – Returned to Venus Electricals 2 pieces of electric heater @ Rs. 6,500 each
24 – Returned by Swasthica & Co , 4 pieces of Speakers costing Rs. 9,000 each
29 – Returned to LG ltd 3 pieces of Computer @ Rs. 40,000 each which was purchased for cash.
Solution:
Purchase Returns Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 82
Sales Return Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 83

Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I

Question 16.
Record the following transactions in the bills receivable and the bills payable books of a trader:
2017
January
1 – Received from Narayan an acceptance of 3 months for Rs. 15,000
5 – Our acceptance to Rani at 4 months for Rs. 16,000
15 – Received from D & Co an acceptance for 2 months for Rs. 12,000
18 – Discount Narayan acceptance for Rs. 9,800
19 – Received from Giri an acceptance for 3 months for Rs. 16,000
20 – Our acceptance to Raja at 4 months for Rs. 15,000
21 – Kumar Renewed our acceptance to Rani by paying him cash Rs. 12,000 and accepted a fresh bill of Rs. 12,200 at 4 months, Rs. 200 has being interest charged
22 – D & Co acceptance endorsed in favour of G in full settlement of a debt of Rs. 2,250
Solution:
Bills Receivable Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 84
Bills Payable Book
Samacheer Kalvi 11th Accountancy Guide Chapter 6 Subsidiary Books – I 85

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Accountancy Guide Pdf Chapter 5 Trial Balance Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Accountancy Solutions Chapter 5 Trial Balance

11th Accountancy Guide Trial Balance Text Book Back Questions and Answers

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

I. Multiple Choice Questions

Choose the correct answer.

Question 1.
Trial balance is a _______.
a) Statement
b) Account
c) Ledger
d) Journal
Answer:
a) Statement

Question 2.
After the preparation of ledger, the next step is the preparation of _______.
a) Trading account
b) Trial balance
c) Journal
d) Profit and loss account
Answer:
b) Trial balance

Question 3.
The trial balance contains the balances of _______.
a) Only personal accounts
b) Only real accounts
c) Only nominal accounts
d) All accounts
Answer:
d) All accounts

Question 4.
Which of the following is/are the objective(s) of preparing trial balance?
a) Serving as the summary of all the ledger accounts
b) Helping in the preparation of final accounts
c) Examining arithmetical accuracy of accounts
d) a, b and c
Answer:
d) a, b and c

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

Question 5.
While preparing the trial balance, the accountant finds that the total of the1 credit column is short by Rs. 200. This difference will be _______.
a) Debited to suspense account
b) Credited to suspense account
c) Adjusted to any of the debit balance
d) Adjusted to any of the credit balance
Answer:
b) Credited to suspense account

Question 6.
A list which contains balances of accounts to know whether the debit and credit balances are matched is _______.
a) Journal
b) Day book
c) Trial balance
d) Balance sheet
Answer:
c) Trial balance

Question 7.
Which of the following method(s) can be used for preparing trial balance?
a) Balance method
b) Total method
c) Total and Balance method
d) a, b and c
Answer:
d) a, b and c

Question 8.
The account which has a debit balance and is shown in the debit column of the trial balance is _______.
a) Sundry creditors account
b) Bills payable account
c) Drawings account
d) Capital account
Answer:
c) Drawings account

Question 9.
The difference of totals of both debit and credit side of trial balance is transferred to:
a) Trading account
b) Difference account
c) Suspense account
d) Miscellaneous account
Answer:
c) Suspense account

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

Question 10.
Trial balance is prepared:
a) At the end of the year
b) On a particular date
c) For a year
d) None of the above
Answer:
b) On a particular date

II. Very Short Answer Type Questions

Question 1.
What is trial balance?
Answer:
“A trial balance is a statement, prepared with the debit and credit balances of the ledger accounts to test the arithmetical accuracy of the books”.

Question 2.
Give the format of trial balance.
Answer:
Trial balance is prepared in the following format under the balance method:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 1

Question 3.
What are the methods of preparation of trial balance?
Answer:
Trial Balance is prepared in the following methods:
Balance method : In this method, the balance of every ledger account either debit or credit, as the case may be, is recorded in the trial balance against the respective accounts. The balance method is widely used, as it helps in the preparation of financial statements.

Total method : Under this method, the total amounts on the debit side of the ledger accounts and the total amounts on the credit side of the ledger accounts are ascertained and recorded in the trial balance. This method is not commonly used as it cannot help in the preparation of financial statements.

Total and Balance method : This method is a combination of both total method and balance method. Under this method, four columns are provided, namely,

  • Totals of debit side of the ledger accounts,
  • Totals of the credit side of the ledger accounts
  • Debit balances of ledger accounts and
  • Credit balances of the ledger accounts. This method is not in practice.

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

Question 4.
State whether the balance of the following accounts should be placed in the debit or the credit column of the trial balance:
(i) Carriage outwards
(ii) Carriage inwards
(iii) Sales
(iv) Purchases
(v) Bad debts
(vi) Interest paid
(vii) Interest received
(viii) Discount received
(ix) Capital
(x) Drawings
(xi) Sales returns
(xii) Purchase returns
Answer:
 Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 2

III. Short Answer Questions

Question 1.
What are the objectives of preparing trial balance?
Answer:
1. Test of arithmetical accuracy:
(i) Trial balance is the means by which the arithmetical accuracy of the book-keeping work is checked.

(ii) When the totals of debit column and credit column in the trial balance are equal, it is assumed that posting from subsidiary books, balancing of ledger accounts, etc. are arithmetically correct.

(iii) There may be some errors which are not disclosed by trial balance.

2. Basis for preparing final accounts : Financial statements, namely, trading and profit and loss account and balance sheet are prepared on the basis of summary of ledger balances obtained from the trial balance.

Location of errors:
(i) When the trial balance does not tally, it is an indication that certain errors have occurred.

(ii) The errors may have occurred at one or more of the stages of accounting process, namely, journalising or recording in subsidiary books, totalling subsidiary books, posting in ledger accounts, balancing the ledger accounts, carrying ledger account balances to the trial balance, totalling the trial balance columns, etc.

(ii) Hence, the errors should be located and rectified before preparing the financial statements.

3. Summarised information of ledger accounts : The summary of ledger accounts is shown in the trial balance. Ledger accounts have to be seen only when details are required in respect of an account.

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

Question 2.
What are the limitations of trial balance?
Answer:
The following are the limitations of trial balance:

  1. It is possible to prepare trial balance of an organisation, only if the double entry system is followed.
  2. Even if some transactions are omitted, the trial balance will tally.
  3. Trial balance may tally even though errors are committed in the books of account.
  4. If trial balance is not prepared in a systematic way, the final accounts prepared on the basis of trial balance may not depict the actual state of affairs of the concern.
  5. Agreement of trial balance is not a conclusive proof of arithmetical accuracy of entries made

Question 3.
‘A trial balance is only a prima facie evidence of the arithmetical accuracy of records’. Do you agree with this statement? Give reasons.
Answer:
1. Yes. Trial Balance helps to check the arithmetical accuracy of the entries made in the accounting records.
In the computerized accounting system, once the transactions are recorded in the journals, all the other records are made simultaneously, i.e. ledger postings, trial balance and final accounts.

2. Hence, arithmetic errors and errors in posting the entries from journal to ledger and further will not occur in computerised accounting.

3. When double entry system is followed, the totals of the debit and the credit columns of the trial balance must be equal. Thus, trial balance helps to check the arithmetical accuracy of entries made in the books of accounts.

IV. Exercises 

Question 1.
Prepare a trial balance with the following information:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 3
Solution:
Trial Balance:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 4

Question 2.
Prepare the trial balance from the following information:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 5
Solution:
Trial Balance:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 6

Question 3.
Prepare the trial balance from the following balances of Chandramohan as on 31st March, 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 7
Solution:
In the books of Chandramohan Trial balance as on 31st March 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 8

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

Question 4.
Prepare the trial balance from the following balances of Babu as on 31st March, 2016.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 9
Solution:
In The Books of Arjun Trial Balance As On 31st March 2018
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 10

Question 5.
From the following balances of Arjun, prepare the trial balance as on 31st March, 2018.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 11
Solution:
In The Books of Arjun Trial Balance As On 31st March 2018
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 12

Question 6.
Prepare the trial balance from the following balances of Rajesh as on 31st March, 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 13
Solution:
In The Books of Rajesh Trial Balance as on 31st March 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 14

Question 7.
Prepare the trial balance from the following balances of Karthik as on 31st March, 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 15
Solution:
In the books of Karthik Trial Balance as on 31st March 2018
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 16

Question 8.
From the following balances of Rohini, prepare the trial balance as on 31st March, 2016.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 17
Solution:
In the books of Rohini Trial Balance as on 31st March 2018
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 18

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

Question 9.
Balan who has a car driving school gives you the following ledger balances. Prepare trial balance as on 31st December, 2016.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 19
Solution:
In the books of Balan Trial Balance as on 31st December 2016.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 20

Question 10.
The following balances are extracted from the books of Ravichandran on 31st December, 2016.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 21
Solution:
In the books of Ravichandran Trial Balance as on 31st December 2016
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 22

Question 11.
From the following balances, prepare trial balance of Baskar as on 31st March, 2017. Transfer the difference, if any, to suspense account.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 23
Solution:
In the books of Baskar Trial Balance as on 31st March 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 24

Question 12.
From the following balances extracted from the books of Rajeshwari as on 31st March, 2017, prepare the trial balance.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 25
Solution:
In the books of Baskar Trial Balance as on 31st March 2017
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 26

Question 13.
Correct the following trial balance.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 27
Solution:
Trial Balance:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 28

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

11th Accountancy Guide Trial Balance Additional Important Questions and Answers

I. Choose the correct answer.

Question 1.
Trial Balance shows arithmetical accuracy of ledger accounts, but it is not a _______ of accuracy.
a) Conclusive
b) Exclusive
c) Submissive
d) Inclusive
Answer:
a) Conclusive

Question 2.
The statement showing balance of all the ledger accounts is known as _______.
a) Trial balance
b) Balance sheet
c) Bank reconciliation statement
d) Profit and loss account
Answer:
a) Trial balance

Question 3.
Which of the following in Trial Balance is contradictory to each other?
a) Inventory and Drawings
b) Sales and Purchases returns
c) Carriage inwards and outward
d) Trade receivable and Liability
Answer:
d) Trade receivable and Liability

Question 4.
Closing stock in the Trial Balance implies that _______.
a) It is already adjusted in the opening stock
b) It is adjusted in sales account
c) It is adjusted in the purchases account
d) None of these
Answer:
c) It is adjusted in the purchases account

Question 5.
The preparation of trial balance is for _______.
a) Locating errors of commission
b) Locating errors of principle
c) Locating clerical errors
d) All of the above
Answer:
d) All of the above

Question 6.
_______ Us Hie most popular method of preparing trial balance.
a) Balance Method
b) Net Asset Method
c) Average Trial Balance method
d) None of the above
Answer:
a) Balance Method

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

Question 7.
When adjusted purchase is shown on the debit column of the trial balance then
a) Both opening and closing stock do not appear in the trial balance
b) Closing stock is shown in the trial balance and not the opening stock
c) Opening stock is shown in the trial balance and not the closing stock
d) Both opening and closing stock appear in the trial balance
Answer:
b) Closing stock is shown in the trial balance and not the opening stock

Question 8.
A suspense account facilitates the preparation of financial statements even when the has not tallied.
a) Cash Book
b) Ledger
c) Trial Balance
d) Journal
Answer:
c) Trial Balance

Question 9.
Trial Balance is a statement which shows _______ of all accounts.
a) Debit or Credit Balances
b) Balances and Totals
c) Positive and Negative Balances
d) Opening and Closing balances
Answer:
a) Debit or Credit Balances

Question 10.
All the following statements are correct except _______.
a) Trial balance is a statement and not an account
b) Trial balance is prepared at the end of the year
c) Trial balance is not a concluding proof of arithmetical accuracy
d) Trial balance is tallied if a transaction posted twice in the ledger
Answer:
c) Trial balance is not a concluding proof of arithmetical accuracy

Question 11.
Trial balance of a trader shows the following balances: Opening Inventory Rs.9600;Purchases less returns Rs.11850; Salaries Rs.3200;Wages Rs.750; Commission on purchases Rs.200; Carriage outwards Rs.300; Sales Rs.24900; Closing Inventory Rs.3500; Carriage on purchases Rs.1000; Gross profit will be .
a) Rs. 5,000
b) Rs. 6,500
c) Rs. 3,250
d) Rs. 3,200
Answer:
a) Rs. 5,000

Question 12.
Trial Balance is a _______.
a) Real account
b) Nominal account
c) Personal account
d) Statement
Answer:
d) Statement

Question 13.
Bank account will show _______ balance.
a) Debit
b) Credit
c) Debit (or) Credit
d) None
Answer:
a) Debit

Question 14.
Which of the following will affect the agreement of a trial balance?
a) Complete omission of a transaction
b) Partial omission of a transaction
c) Error of principle
d) Compensating errors
Answer:
b) Partial omission of a transaction

Question 15.
Trial balance is prepared to find out the _______.
a) Profit
b) loss
c) financial position
d) Arithmetical accuracy of the accounts
Answer:
d) Arithmetical accuracy of the accounts

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

Question 16.
Suspense account in the trial balance is entered in the
a) Trading A/c
b) Profit and loss A/c
c) Balance sheet.
d) None of the above
Answer:
c) Balance sheet.

Question 17.
Suspense account having credit balance will be shown on the _______.
a) Credit side of the profit and loss A/c
b) Liabilities side of the balance sheet
c) Assets side of the balance sheet
d) Debit side of the profit and loss A/c
Answer:
b) Liabilities side of the balance sheet

Question 18.
Suspense account having debit balance will be shown on the _______.
a) Credit side of the profit and loss A/c
b) Liabilities side of the balance sheet
c) Assets side of the balance sheet
d) Debit side of the profit and loss A/c
Answer:
c) Assets side of the balance sheet

Question 19.
While preparing the trial balance, the accountant finds that the total of the debit column is short by Rs. 1,000. This difference will be _______.
a) Debited to suspense account
b) Credited to suspense account
c) Adjusted to any of the debit balance
d) Adjusted to any of the credit balance
Answer:
a) Debited to suspense account

Question 20.
The preparation of trial balance is the step in the accounting process.
a) first
b) second
c) third
d) fourth
Answer:
c) third

Question 21.
When double entry system is followed, the totals of the debit and the Credit columns of the trial balance must be _______.
a) Equal
b) unequal
c) Excess
d) Short
Answer:
a) Equal

Question 22.
The account which has a credit balance and is shown in the debit column of the trial balance is
a) Sundry debtors account
b) Bills receivable account
c) Purchases account
d) Capital account
Answer:
d) Capital account

Question 23.
Which one the following represents correct sequence of accounting cycle _______.
a) Journal > Trial balance > Ledger > Transaction
b) Transaction > Journal > Ledger > Trial balance
c) Purchases > Journal > Ledger > Trial balance
d) None of the above
Answer:
b) Transaction > Journal > Ledger > Trial balance

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

Question 24.
Which one of the following is the most popular method of preparing a trial balance.
a) Total method
b) Balance method
c) Trial and error method
d) Line method
Answer:
b) Balance method

II. Very Short Answer Type Questions

Question 1.
What are the features of Trial Balance?
Answer:

  1. Trial balance contains the balances of all ledger accounts.
  2. It is prepared on a specific date. That is why, the word, “as on…” is used at the top.
  3. When double entry system is followed, the totals of the debit and the credit columns of the trial balance must be equal.
  4. If there is a difference between the totals of debit column and credit column of the trial balance, it is an indication of errors being committed somewhere.
  5. If both the debit column and the credit column of the trial balance have the same total, it does not mean that there is no mistake in accounting, since some errors are not disclosed by the trial balance.

Question 2.
What are the limitations of trial balance?
Answer:
The following are the limitations of trial balance:

  1. It is possible to prepare trial balance of an organisation, only if the double entry system is followed.
    Even if some transactions are omitted, the trial balance will tally.
  2. Trial balance may tally even though errors are committed in the books of account.
  3. If trial balance is not prepared in a systematic way, the final accounts prepared on the basis of trial balance may not depict the actual state of affairs of the concern.
  4. Agreement of trial balance is not a conclusive proof of arithmetical accuracy of entries made in the accounting records.
  5. This is because there are certain errors which are not disclosed by trial balance such as complete omission of a transaction, compensating errors and error of principle.

Question 3.
State whether the balance of the following accounts should be placed in the debit or the credit column of the trial balance:
(i) Opening Stock
(ii) Bank Loan
(iii) Provision for Bad debts
(iv) Good will
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 29

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

III. Short Answer Questions

Question 1.
What is a Suspense Account?
Answer:
It is used as a place to hold unclassified or disputed funds and expenses. It is used to carry

Question 2.
What are the steps to be followed to prepare trial balance under Balance method?
Answer:
Step 1 : Calculate the balances of all ledger accounts including the cash book.

Step 2 : Record the names of the accounts in the particulars column and the amounts of debit balances in the debit column and credit balances in the credit column.

Step 3 : Enter the page number of ledger from which the balance is taken in the Ledger Folio column.

Step 4 : Total the debit and credit columns. It must be equal. If not equal, locate the errors and make the trial balance agree.

Question 3.
State whether the balance of each of the following accounts should be placed in
The debit or the credit column of the trial balance:
(1) Sundry debtors
(2) Sundry creditors
(3) Cash in hand
(4) Bank overdraft
(5) Salary
(6) Discount allowed
(7) Plant and machinery
(8) Furniture
(9) Commission earned
(10) Reserve Fund
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 30

Question 4.
What are the advantages of a Trial Balance?
Answer:

  1. It helps to ascertain the arithmetical accuracy of the book-keeping work done during the period.
  2. It supplies in one place ready reference of all the balances of the ledger accounts.
  3. If any error is found out by preparing a trial balance, the same can be rectified before preparing final accounts.
  4. It is the basis on which final accounts are prepared.

Specimen of Trial Balance
Trial balance of Mr. X as on –
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 31

Question 5.
Prepare Trial Balance with the following information’s:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 32
Solution:
Trial Balance
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 33

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

IV. Exercises

Question 1.
From the following list of balances, prepare a trial balance as on 31.3.2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 34
Solution:
Trial Balance as on 31.3.2017
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 35

Question 2.
Prepare tare trial balance from the following:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 36
Solution:
Trial Balance
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 37

Question 3.
From the following details prepare Trial Balance:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 38
Solution:
Trial Balance
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 39

Question 4.
The following are the balances extracted from the books of Mr.M as on 31st December, 2017. Prepare Trial Balance. ,
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 40
Solution:
Trial Balance of Mr.M as on 31.12.2017
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 41

Question 5.
The following balances were extracted from the ledger of Shri Prasad on 31st March 2017. You are required to prepare a trial balance as on that date in proper form.
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 42
Trial Balance of Shri Prasad as on 31.3.2017
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 43

Question 6.
Prepare Trail Balance.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 44
Solution:
Trail Balance
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 45

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

Question 7.
Redraw correctly the trial balance given below:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 46
Solution:
Corrected Trial Balance
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 47

Question 8.
From the following list of balances, prepare Trial Balance:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 48
Solution:
Trial Balance
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 49

Question 9.
State whether the balances of the following accounts should be placed in debit column or credit column of the trial balance.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 50
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 51

Question 10.
From the under mentioned balances extracted from the books of a sole trader on 31st December. Prepare a Trial Balance as on 31st December, 2017.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 52
Solution:
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 53

Question 11.
Prepare trial balance as on 31.12.2000 From the followings balances of Mr. Kishore Kumar
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 54
Solution:
In the book of Mr. Kishore Kumar Trial balance as on 31st December 2000
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 55

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

Question 12.
The following balances are extracted from the books of Mr. Anbu. Prepare trial balance as on 30.6.2004.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 56Solution:
In the book of Mr. Anbu trial balance as on 30.06.2004
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 57

Question 13.
Prepare Trial Balance as on 31.3.2004 From the books of Mr. Praveen
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 58
Solution:
Prepare Trail Balance as 31.03.2004 from the books Mr. Praveen
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 59

Question 14.
Prepare trial balance as on 31.12.2002. From the followings balance of Mr. Ram Prasanth.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 60
Solution:
In the books of Mr. Ram Prasanth trial balance as on 31.12.2002
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 61

Question 15.
From the extracats of Mr.Keerthivasan books of accounts prepare Trail balance as on 31.03.94.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 62
In the books of Mr. Keerthivasan trial balance as on 31.03.1994
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 63

Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance

Question 16.
The Following details have been extracted from Mr. Kirubakaran books of accounts as on 31.12.98.
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 64
Solution:
In the books of Mr. Kirubakaran trial balance as on 31.12.1998
Samacheer Kalvi 11th Accountancy Guide Chapter 5 Trial Balance 65

Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Accountancy Guide Pdf Chapter 4 Ledger Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Accountancy Solutions Chapter 4 Ledger

11th Accountancy Guide Ledger Text Book Back Questions and Answers

I. Choose the correct answer.

Question 1.
Main objective of preparing ledger account is to ………………..
(a) Ascertain the financial position
(b) Ascertain the profit or loss
(c) Ascertain the profit or loss and the financial position
(d) Know the balance of each ledger account
Answer:
(d) Know the balance of each ledger account

Question 2.
The process of transferring the debit and credit items from journal to ledger accounts is called ………….
(a) Casting
(b) Posting
(c) Journalising
(d) Balancing
Answer:
(b) Posting

Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger

Question 3.
J.F means
(a) Ledger page number
(b) Journal page number
(c) Voucher number
(d) Order number
Answer:
(b) Journal page number

Question 4.
The process of finding the net amount from the totals of debit and credit columns in a ledger is known as ……………
(a) Casting
(b) Posting
(c) Journalising
(d) Balancing
Answer:
(d) Balancing

Question 5.
If the total of the debit side of an account exceeds the total of its credit side, it means
(a) Credit balance
(b) Debit balance
(c) Nil balance
(d) Debit and credit balance
Answer:
(b) Debit balance

Question 6.
The amount brought into the business by the proprietor should be credited to
(a) Cash account
(b) Drawings account
(c) Capital account
(d) Suspense account
Answer:
(c) Capital account

II. Very Short Answer Type Questions

Question 1.
What is a ledger?
Answer:
Ledger account is a summary statement of all the transactions relating to a person, asset, liability, expense or income which has taken place during a given period of time and it shows their net effect From the transactions recorded in the journal, the ledger account is prepared. Ledger is known as principal book of accounts. It is a book which contains all sets of accounts, namely, personal, real and nominal accounts. Account wise balance can be determined from the ledger. The ledger accounts are prepared based on journal entries passed.

Question 2.
What is meant by posting?
Answer:
The process of transferring the debit and credit items from the journal to the ledger accounts is called posting.

Question 3.
What is debit balance?
Answer:
If the total on the debit side of an account is higher, the balancing figure is debit balance.

Question 4.
What is credit balance?
Answer:
If the credit side of an account has higher total, the balancing figure is credit balance.

Question 5.
What is balancing of an account?
Answer:
Balancing means that the debit side and credit side amounts are totalled and the difference between the total of the two sides is placed in the amount column as ‘Balance c/d’ on the side having lesser total, so that the total of both debit and credit columns are equal.

When the total of the debit side is more than the total of credit side the difference is debit balance and is placed on the credit side as ‘By Balance c/d’. If the credit side total is more than the total of debit side, the difference is credit balance and is placed on the debit side as ‘To Balance c/d’.

III. Short Answer Questions

Question 1.
Distinguish between journal and ledger.
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 1a

Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger

Question 2.
What is ledger? Explain its utilities.
Answer:
1. Ledger account is a summary statement of all the transactions relating to a person, asset, liability, expense or income which has taken place during a given period of time and it shows their net effect.
2. It is a book which contains all sets of accounts, namely, personal, real and nominal accounts.
3. Account wise balance can be determined from the ledger.
4. The ledger accounts are prepared based on journal entries passed.

Quick information about a particular account:
Ledger account helps to get all information about a particular account like sales, purchases, machinery, etc., at a glance.

For example, where there are several transactions with a debtor, the net amount due from a debtor can be known from the ledger account.

Control over business transactions:
From the ledger balances extracted, a thorough analysis of account balances can be made which helps to have control over the business transactions.

Trial balance can be prepared:
With the balances of ledger accounts, trial balance can be prepared to check the arithmetical accuracy of entries made in the journal and ledger.

Helps to prepare financial statements:
From the ledger balances extracted, financial statements can be prepared for ascertaining net profit or loss and the financial position.

Question 3.
How is posting made from, the journal to the ledger?
Answer:
The process of transferring the debit and credit items from the journal to the ledger accounts is called posting. The procedure of posting from journal to ledger is as follows:
1. Locate the ledger account that is debited in the journal entry. Open the respective account in the ledger, if already not opened. Write the name of the account in the top middle. If already opened, locate the account from the ledger index. Now entries are to be made on the debit side of the account.

2. Record the date of the transaction in the date column on the debit side of that account.

3. Record the name of the account credited in the journal with the prefix ‘To’ in particulars column.

4. Record the amount of the debit in the ‘amount column’.

5. Locate the ledger account that is credited in the journal entry. Open the respective account in the ledger, if already not opened. Write the name of the account in the top middle. If already opened, locate the account from the ledger index. Now entries are to be made on the credit side of the account. Record the date of the transaction in the date column. Record the name of the account debited in the journal entry in the particulars column with the prefix ‘By’ and write the amount in the amount column.

Question 4.
Explain the procedure for balancing a ledger account.
Answer:
1. The debit and credit columns of an account are to be totalled separately.

2. The difference between the two totals is to be ascertained.

3. The difference is to be placed in the amount column of the side having lesser total. ‘Balance c/d’ is to be entered in the particulars column against the difference and in the date column the last day of the accounting period is entered.

4. Now both the debit and credit columns are to be totalled and the totals will be equal. The totals of both sides are to be recorded in the same line horizontally. The total is to be distinguished from other figures by drawing lines above and below the amount.

5. The difference has to be brought down to the opposite side below the total. ‘Balance b/d’ is to be entered in the particulars column against the difference brought down and in the date column, the first day of the next accounting period is entered.

6. If the total on the debit side of an account is higher, the balancing figure is debit balance and if the credit side of an account has higher total, the balancing figure is credit balance. If the two sides are equal, that account will show nil balance.

IV. Exercises

Question 1.
Journalise the following transactions and post them to ledger.
2016 Jan.1 Started business with cash – 10,000
5 Paid into bank – 5,000
7 Purchased goods from Ram for cash – 1,000
Answer:
Journal of Mr. X
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 1
Ledger Account
Cash Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 2
Bank Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 3

Question 2.
Give journal entries for the following transactions and post them to ledger.
2015, March 1 Goods sold to Somu on credit – 5,000
7 Furniture purchased for cash – 300
15 Interest received – 1,800
Answer:
Journal of Mr.Y
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 4
Ledger Account
Samu Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 5
Furniture Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 6

Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger

Question 3.
Pass journal entries for the following transactions and post them to ledger.
2017 Aug 1 Dharma started business with cash – 70,000
6 Cash received from Ganesan – 10,000
10 Rent paid – 3000
20 Received commission from Anand – 5000
Answer:
Journal of Mr. Dharma
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 7
Dharma Capital Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 8
Rent Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 9

Question 4.
Record the following transactions in the journal of Banu and post them to the ledger.
2018, Sep 1 Commenced business with cash – 90,000
5 Rent received – 4,000
12 Purchased 6 tables from Gobu & Co. for cash – 6,000
Answer:
Journal of Mr. Banu
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 10
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 11

Question 5.
The following balances appeared in the books of Vinoth on Jan 1, 2018.
Assets: Cash Rs 40,000; Stock Rs 50,000; Amount due from Ram Rs 20,000
Machinery Rs 40,000 Liabilities: Amount due to Vijay Rs 10,000
Pass the opening journal entry and post them to Vinoth’s Capital account,
Answer:
Opening Entry
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 12

Question 6.
Prepare Furniture A/c from the following transactions
2016, Jan 1 Furniture in hand – 2,000
1 Purchased furniture for cash – 4,000
30 Sold furniture – 400
Answer:
Furniture Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 13

Question 7.
The following balances appeared in the books of Kumaran on April 1, 2017.
Assets: Cash Rs 1,00,000; Stock Rs 40,000; Amount due from Rohit Rs 10,000;
Furniture Rs 10,000;
Liabilities: Amount due to Anusha Rs 40,000;
Kumaran’s capital Rs 1,20,000
Find the capital and show the ledger posting for the above opening balances.
Answer:
Opening Entry
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 14
Stock Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 15
Furniture Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 16
Kumaran Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 17

Question 8.
Give journal entries and post them to cash account.
2016, June 1 Commenced business with cash – 1,10,000
10 Introduced additional capital – 50,000
28 Withdrawn for personal use – 20,000
Answer:
Journal Entry
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 18

Question 9.
Give journal entries from the following transactions of Mohit, dealing in Textiles and post them to ledger.
2014 Aug 1 Commenced business with cash – 1,10,000
7 Opened bank account with SBI – 50,000
3 Purchased furniture for cash – 20,000
Answer:
Journal of Mohit
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 19
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 20
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 21

Question 10.
Give journal entries for the following transactions and post them to ledger.
2016, sep 1 Commenced business with cash – 80,000
7 Bought goods for cash from Roopan – 10,000
10 Purchased goods from Hema on credit – 42,000
22 Goods returned to Hema – 2,000
23 Cash paid to Hema – 10,000
Answer:
Journal of Entry Mr. Y
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 22
Ledger Account
Cash Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 23
Purchases Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 24

Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger

Question 11.
Give Journal entries for the following transactions and post them to Cash A/c and
Sales A/c.
2017, Aug 10 Sold goods and cheque received but not deposited – 30,000
14 Sold goods on credit to Gopi – 12,000
20 Received cash from Gopi – 12,000
Answer:
Journal of Entry Mr. Y
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 25
Cash Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 26

Question 12.
Journalise the transactions given below and post them to ledger.
2017 Oct. 18 Paid trade expenses – 1,000
25 Bought postage stamps – 100
30 Commission received – 6,000
30 Rent paid – 4,000
Answer:
Journal of Entries
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 27
Cash Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 28
Commission Received Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 29

Question 13.
Journalise the following transactions and prepare ledger accounts.
2015, Feb 1 Sold goods for cash – 5,000
2 Purchased goods from Kumar on credit – 4,000
5 Sold goods to Prabu on credit – 8,000
12 Received cash from Prabu – 1,200
20 Paid to Kumar – 2,000
25 Paid salary – 3,000
Answer:
Journal Entry
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 30
Sales Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 31
Prabhu Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 32
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 33

Question 14.
Enter the following transactions in the books of Ganesan and post them into ledger.
2017, Oct 1 Started business with cash – 25,000
5 Deposited into bank – 12,500
10 Purchased furniture and payment by cheque – 2,000
15 Goods purchased for cash – 5,000
19 Sold goods to Vasu on credit – 4,000
22 Goods worth Rs 500 taken for personal use
Answer:
Journal of Ganesan
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 34
Ledger Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 35
Bank Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 36
Vasu Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 37

Question 15.
Journalise the following transactions in the books of Arun and post them to ledger accounts
accounts.
2017, Dec 1 Arun started his business with cash – 10,000
3 Bought goods for cash – 1,500
8 Sold goods to Krishna on credit – 4,000
14 Purchased goods from Govind on credit – 2,000
25 Received cash from Krishna – 3,000
28 Cash paid to Govind – 1,000
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 38
Ledger Account
Cash Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 39
Purchases Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 40
Sales Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 41

Question 16.
Journalise the following transactions and post them to ledger in the books of Raja.
2018, Mar 1 Sold goods to Senthil for cash – 9,000
5 Sold goods to Murali on credit – ,500
9 Cash sales – 6,000
18 Bought goods from Mani on credit – 3,200
23 Received Rs 4,000 from Murali in full settlement of his account
Answer:
Journal of Raja
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 42
Sales Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 43
Purchases Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 44

Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger

Question 17.
Journalise the following transactions and post them to the ledger.
2017, July 1 Cash in hand – 50,000
5 Goods purchased by cash – 30,000
7 Insurance paid – 2,500
10 Machinery purchased for cash – 9,000
15 Interest received – 2,000
18 Goods sold for cash – 7,000
Answer:
Journal of Entry of Mr. Y
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 45
Purchases Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 46
Machinary Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 47

Question 18.
Journalise the following transactions in the books of Vasu and post them to ledger accounts.
2017, Nov 1 Cash in hand Rs 1,00,000; Cash at bank: Rs 30,000
2 Vasu sold goods to Jothi for Rs 25,000 against a cheque and deposited the same in the bank
4 Received as commission Rs 5,000
8 Bank paid Rs 15,000 directly for insurance premium of Vasu.
15 Cash deposited into bank Rs 30,000
20 Cash withdrawn from bank for personal use Rs 45,000.
Answer:
Journal of Mr. Vasu
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 48
Ledger Account
Cash Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 49
Bank Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 50
Commission Received Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 51

Question 19.
Prepare Anand’s account from the following details.
2017, July 1 Credit balance of Anand’s A/c – 4,000
15 Amount paid to Anand – 2,000
18 Goods purchased from Anand on credit – 8,000
20 Paid to Anand – 3,960
Discount allowed by him – 40
25 Goods purchased from Anand – 5,000
Answer:
Ledger Account
Dr. Anand’s Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 52

Question 20.
Prepare a Sales account from the following transactions.
2018, Jan 1 Sold goods to Sam – 4,000
4 Sold goods to Suresh – 2,500
11 Sold goods to Joy – 8,000
17 Sold goods to Rajan – 3,000
Answer:
Ledger Account
Sales Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 53

Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger

Question 21.
Show the direct ledger postings for the following transactions:
2017, June 1 Raja commenced business with cash Rs 50,000,
6 Sold goods for cash Rs 8,000
8 Sold goods to Devi on credit Rs 9,000
15 Goods purchased for cash Rs 4,000
20 Goods purchased from Shanthi on credit Rs 5,000
Answer:
Ledger Account
Cash Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 54
Sales Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 55
Purchases Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 56

Question 22.
Show the direct ledger postings for the following transactions:
2017, July 1 Shankar commenced business with a cash of Rs 1,00,000
5 Sold goods for cash Rs 10,000
9 Wages paid Rs 6,000
19 Salaries paid Rs 8,000
20 Advertisement expenses paid Rs 4,000
Answer:
Ledger Account
Cash Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 57
Shankar Capital Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 58
wages Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 59

11th Accountancy Guide Ledger Additional Important Questions and Answers

I. Choose the correct answer.

Question 1.
Ledger is a book of:
(a) original entry
(b) final entry
(c) ail cash transactions
(d) contra entry
Answer:
(b) final entry

Question 2.
Personal and real accounts are:
(a) closed
(b) Balanced
(c) closed and transferred
(d) opening
Answer:
(b) Balanced

Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger

Question 3.
The column of ledger which links the entry with journal is
(a) L.F column
(b) J.F column
(c) Date column
(d) Particulars column
Answer:
(b) J.F column

Question 4.
Posting on the credit side of an account is written as
(a) To
(b) By
(c) Being
(d) Both (a) and (b)
Answer:
(b) By

Question 5.
Posting on the Debit side of an account is written as
(a) To
(b) By
(c) Being
(d) Both (a) and (b)
Answer:
(a) To

Question 6.
Nominal account having credit balance represents
(a) income / gain
(b) expenses / losses
(c) assets
(d) liabilities
Answer:
(a) income / gain

Question 7.
Nominal account having debit balance represents
(a) income / gain
(b) expenses / losses
(c) liability
(d) assets
Answer:
(b) expenses / losses

Question 8.
Real accounts always show
(a) debit balances
(b) credit balances
(c) nill balance
(d) Both (a) and (b)
Answer:
(a) debit balances

Question 9.
Account having credit balance is closed by writing
(a) To Balance b/d
(b) By Balance c/d
(c) To Balance c/d
(d) By Balance b/d
Answer:
(c) To Balance c/d

Question 10.
When the total of debits and credits are equal, it represents
(a) debit balance
(b) credit balance
(c) nil balance
(d) opening balance
Answer:
(c) nil balance

Question 11.
The balances of personal and real accounts are shown in the
(a) profit and loss account
(b) balance sheet
(c) trading account
(d) both (a) and (b)
Answer:
(b) balance sheet

Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger

Question 12.
If the total of the credit side of an account exceeds the total of its debit side, it means
(a) Credit balance
(b) Debit balance
(c) Nil balance
(d) Debit and credit balance
Answer:
(a) Credit balance

Question 13.
The closing balance is the next year’s
(a) debit balance
(b) credit balance
(c) nil balance
(d) opening balance
Answer:
(d) opening balance

Question 14.
The ledger account is prepared in format.
(a) T
(b) D
(c) C
(d) U
Answer:
(a) T

Question 15.
The process of recording business transactions in a chronological order is called ……………
(a) Recording
(b) Posting
(c) Journalizing
(d) Classifying
Answer:
(c) Journalizing

Question 16.
Which one of the following is known as the king of all books of accounts?
(a) Recording
(b) Posting
(c) Journalizing
(d) Classifying
Answer:
(c) Journalizing

Question 17.
A decrease in the provision for doubtful debts would result in
(a) Increase in liability
(b) Decrease in liability
(c) Decrease in the net profit
(d) Increase in the net profit
Answer:
(d) Increase in the net profit

Question 18.
The discount which is calculated on the list price of the goods is called .
(a) Cash discount
(b) Rebate
(c) Trade discount
(d) Discount
Answer:
(c) Trade discount

Question 19.
Merchandise stolen by someone should be debited to …………..
(a) Sales account
(b) Purchases account
(c) Loss by theft account
(d) None of the above
Answer:
(c) Loss by theft account

Question 20.
The owner of the business takes Rs.100 cash and goods costing Rs.200 for his family. The proper journal entry for this transaction is called ……………..
(a) drawing > debit; Cash > Credit; Purchases > Credit
(b) Drawing > debit; Cash > Credit; merchandise > credit
(c) Drawing > debit; Cash > credit; Sales > credit
(d) cash > debit; Purchases > debit; drawings > credit
Answer:
(a) drawing > debit; Cash > Credit; Purchases > Credit

II. Very Short Answer Type Questions

Question 1.
What is Nil balance?
Answer:
If the two sides are equal, that account will show nil balance.

Question 2.
What are the steps involved in posting the opening entry?
Answer:
Step 1:
The items debited in the opening entry are entered on the debit side of respective accounts. The words ‘To Balance b/d’ are written in the particulars column with respective amounts in the amount column, date being the first day of the accounting period.

Step 2:
The items credited in the opening entry are entered on the credit side of respective accounts. The words ‘By Balance b/d’ are written in the particulars column with respective amounts in the amount column, date being the first day of the accounting period.

Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger

Question 3.
Indicate the nature of normal balance in the following accounts.
Answer:
a. Cash – Debit balance
b. Creditors – Credit balance
c. Sales – Credit balance
d. Furniture – Debit balance
e. Commission received – Credit balance
f. Debtors – Debit balance
g. Purchases – Debit balance
h. Capital – Credit balance
i. Discount earned – Credit balance
j. Computer – Debit balance

Question 4.
Define ledger.
Answer:
According to L.C. Cropper, ‘the book which contains a classified and permanent record of all the transactions of a business is called the Ledger’.

Question 5.
What is compound journal entry?
Answer:
When a journal entry has more than one debit or more than one credit or both, it is called a compound entry.

III. Additional Sums

Question 1.
Prepare cash account A/c from the following transactions.
2018 Jan. 1 Commenced business with cash Rs 62,000
2 Good purchased for cash Rs 12,000
10 Cash sales Rs 10,000
12 Wages paid Rs 4,000
25 Furniture purchased for cash Rs 6,000
Answer:
Ledger Account
Cash Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 60

Question 2.
Prepare a sales A/c from the following transaction.
2018 Feb. 1 Cash sales – 5,000
4 Sold goods to Suresh – 4,000
8 Sold goods to Mohan – 8,000
12 Sold goods for cash – 3,000
Answer:
Ledger Account
Sales Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 61

Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger

Question 3.
Prepare Rangasamy A/c for the following transaction.
2017 Aug. 17 Goods purchased from Rangasamy Rs. 20,000
19 Goods returned to Rangasamy Rs. 5,000
31 Settles Rangasamy’s account
Answer:
Ledger Account
Rangasamy Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 62

Question 4.
Prepare Chitra account from the following transaction.
2018 March. 18 Sold goods to Chitra Rs. 1,26,000
24 Chitra returned goods Rs. 6,000
28 Chitra settled her account
Answer:
Chitra Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 63

Question 5.
Journalise the following transaction and post them to ledger in the book of Mr. Raja.
2018, Jan. 1 Started business with cash Rs 3,00,00
2 Opening bank account by deposition Rs 2,00,000
5 Purchased goods for cash Rs 10,000
15 Cash sales Rs 5,000
22 Purchased goods from X and Co. for Rs 15,000 and the payment is made through net banking
25 Sold goods for Y and Co. for Rs 30,000 and the payment is received thought NEET
Answer:
Journal of Mr. Raja
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 64
Ledger Account
Cash Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 65
Raja Capital Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 66
Purchases Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 67

Question 6.
Post the following Journal into Ledger of Thiru. Gowri Shankar.
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 68
Answer:
Ledger Account
Cash Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 69
Sayeed Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 70
David Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 71

Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger

Question 7.
Show the sivect ledger positions for the following transaction.
2018, May. 1 Commenced business with cash Rs 1,50,000
2 Sold goods for cash Rs 50,000
5 Purchases goods for cash Rs 25,000
25 Salaries paid Rs 15,000
30 Wages paid Rs 10,000
Answer:
Ledger Account
Cash Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 72
Capital Account
Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger 73

Samacheer Kalvi 11th Accountancy Guide Chapter 4 Ledger

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Accountancy Guide Pdf Chapter 3 Books of Prime Entry Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Accountancy Solutions Chapter 3 Books of Prime Entry

11th Accountancy Guide Books of Prime Entry Text Book Back Questions and Answers

I. Choose the correct answer.

Question 1.
Accounting equation signifies …………….
(a) Capital of a business is equal to assets
(b) Liabilities of a business are equal to assets
(c) Capital of a business is equal to liabilities
(d) Assets of a business are equal to the total of capital and liabilities
Answer:
(d) Assets of a business are equal to the total of capital and liabilities

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 2.
‘Cash withdrawn by the proprietor from the business for his personal use’ causes …………….
(a) Decrease in assets and decrease in owner’s capital
(b) Increase in one asset and decrease in another asset
(c) Increase in one asset and increase in liabilities
(d) Increase in asset and decrease in capital
Answer:
(a) Decrease in assets and decrease in owner’s capital

Question 3.
A firm has assets of Rs. 1,00,000 and the external liabilities of Rs. 60,000. Its capital would be ……………….
(a) Rs. 1,60,000
(b) Rs. 60,000
(c) Rs. 1,00,000
(d) Rs. 40,000
Answer:
(d) Rs. 40,000

Question 4.
The incorrect accounting equation is ………………….
(a) Assets = Liabilities + Capital
(b) Assets = Capital + Liabilities
(c) Liabilities = Assets + Capital
(d) Capital = Assets – Liabilities
Answer:
(c) Liabilities = Assets + Capital

Question 5.
Accounting equation is formed based on the accounting principle of ………………
(a) Dual aspect
(b) Consistency
(c) Going concern
(d) Accrual
Answer:
(a) Dual aspect

Question 6.
Real account deals with ……………..
(a) Individual persons
(b) Expenses and losses
(c) Assets
(d) Incomes and gains
Answer:
(c) Assets

Question 7.
Which one of the following is representative personal account?
(a) Building A/c
(b) Outstanding salary A/c
(c) Mahesh A/c
(d) Balan & Co
Answer:
(b) Outstanding salary A/c

Question 8.
Prepaid rent is a ……………….
(a) Nominal A/c
(b) Personal A/c
(c) Real A/c
(d) Representative personal A/c
Answer:
(d) Representative personal A/c

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 9.
Withdrawal of cash from business by the proprietor should be credited to
(a) Drawings A/c
(b) Cash A/c
(c) Capital A/c
(d) Purchases A/c
Answer:
(b) Cash A/c

Question 10.
In double entry system of book keeping, every business transaction affects
(a) Minimum of two accounts
(b) Same account on two different dates
(c) Two sides of the same account
(d) Minimum three accounts
Answer:
(a) Minimum of two accounts

II. Very Short Answer Type Questions

Question 1.
What are source documents?
Answer:
Source documents are the authentic evidences of financial transactions.
These documents show the nature of transaction, the date, the amount and the parties involved.
Source documents include cash receipt, invoice, debit note, credit note, pay-in-slip, salary bills, wage bills, cheque record slips, etc.
They also serve as legal evidence in case of any legal dispute.

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 2.
What Is accounting equation?
Answer:
The relationship of assets with that of liabilities to outsiders and to owners in the equation form is known as accounting equation.
Accounting equation is a mathematical expression which shows that the total of assets is equal to the total of liabilities and capital.
This is based on the dual aspect concept of accounting.
This means that total claims of outsiders and the proprietor against a business enterprise will always be equal to the total assets of the business enterprise.
Capital + Liabilities = Assets

Question 3.
Write any one transaction which
(a) Decreases the assets and decreases the liabilities:
Answer:
E.g : Outstanding Rent paid by the company Rs. 30,000.
Here Outstanding Rent (Liability) is decreasing, Cash (Asset) is decreasing.

(b) Increases one asset and decreases another asset:
Answer:
E.g: Building purchased for Cash Rs. 50,000.
Here Building (Asset) is increasing and Cash (Asset) is decreasing.

Question 4.
What is meant by journalising?
Answer:
The process of analysing the business transactions under the heads of debit and credit and recording them in the journal is called journalising.

Question 5.
What is real account?
Answer:
A real account is an account that retains and rolls forward its ending balance from period to period. The areas in the balance, sheet in which real accounts are found are assets, liabilities, and equity. Examples of real accounts are: Cash, Accounts receivable, Fixed Assets Accounts payable, Retained earnings.

Question 6.
How are personal accounts classified?
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 1

Question 7.
State the accounting rule for nominal account.
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 2

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 8.
Give the golden rules of double entry accounting system.
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 3

III. Short Answer Questions

Question 1.
Write a brief note on accounting equation approach of recording transactions.
Answer:
The relationship of assets with that of liabilities to outsiders and to owners in the equation form is known as accounting equation.
Accounting equation is a mathematical expression which shows that the total of assets is equal to the total of liabilities and capital.
This is based on the dual aspect concept of accounting.

This means that total claims of outsiders and the proprietor against a business enterprise will always be equal to the total assets of the business enterprise. The equation is given under:
Capital + Liabilities = Assets
Capital can also be called as owner’s equity and liabilities as outsider’s equity.

As the revenues and expenses will affect capital, the expanded equation may be given as under:
Assets = Liabilities + Capital + Revenues – Expenses
Accounts are classified into five categories: (i) Asset account, (ii) Liability account, (iii) Capital account, (iv) Revenue account and (v) Expense account as follows:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 4

Question 2.
What is an Account? Classify the accounts with suitable examples.
Answer:
Every transaction has two aspects and each aspect affects minimum one account.
An account is the basic unit of identification in accounting.
A ledger account is a summary of relevant transactions at one place relating to a particular head.
Account is the systematic presentation of all material information regarding a particular person or item at one place, under one head.

Classification of Accounts:
Persona! Account;
Accounting relating to persons is called personal account. The personal account may be natural, artificial or representative personal account.
E.g: Malini account, BHEL account, Prepaid Rent account.

Impersonal Account:
All accounts which do not affect persons are called impersonal accounts. These are further classified into Real and Nominal Accounts.
E.g ; Building account, Goodwill, Salaries account.

Question 3.
What are the three different types of persona! accounts?
Answer:
Natural person’s account: Natural person means human beings. Example: Vinoth account, Malini account.

Artificial person’s account: Artificial person refers to the persons other than human beings recognised by law as persons. They include business concerns, charitable institutions, etc. Example: BHEL account, Bank account.

Representative personal accounts: These are the accounts which represent persons natural or artificial or a group of persons. Example: Outstanding salaries account, Prepaid rent account. When expenses are outstanding, it is payable to a person. Hence, it represents a person.

Question 4.
What is the accounting treatment for insurance premium paid on the of the proprietor?
Answer:
The proprietor has to pay an agreed premium on a monthly or annual basis. The amount should be treated as prepayment which is considered as current asset.
The following entry should be made:
Insurance A/c Dr –
To Cash/Bank A/c –
(Being insurance premium paid.)

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 5.
State the principles of double entry system of book keeping.
Answer:
Meaning:
Double entry system of book keeping is a scientific and complete system of recording the financial transactions of an organisation. The two aspects involved is denoted by Debit (Dr.) and Credit(Cr.). The following are the principles of double entry system of book keeping:
In every business transaction, there are two aspects.
The two aspects involved are the benefit or value receiving aspect and benefit or value giving aspect.
These two aspects involve minimum two accounts; at least one debit and at least one credit.
For every debit, there is a corresponding and equivalent credit. If one account is debited the other account must be credited.

Question 6.
Briefly explain about steps in journalising.
Answer:
The process of analysing the business transactions under the heads of debit and credit and recording them in the journal is called journalising. An entry made in the journal is called a journal entry. The following steps are followed in journalising:

Analyse the transactions and identify the accounts (based on aspects) which are involved in the transaction.

Classify the above accounts under Personal account, Real account or Nominal account <•> Apply the rules of debit and credit for the above two accounts.

Find which account is to be debited and which account is to be credited by the application of rules of double entry system. Record the date of transaction in the date column.

Enter the name of the account to be debited in the particulars column very close to the left hand side of the particulars column followed by the abbreviation ‘Dr/ at the end in the same line. Against this, the amount to be debited is entered in the debit amount column in the same line.

Write the name of the account to be credited in the second line starting with the word ‘To’ prefixed a few spaces away from the margin in the particulars column. Against this, the amount to be credited is entered in the credit amount column in the same line.

Write the narration within brackets in the next line in the particulars column.

Question 7.
What is double entry system? State its advantages.
Answer:
“Every business transaction has a two-fold effect and that it affects two accounts in opposite directions and if a complete record is to be made of each such transaction it is necessary to debit one account and credit another account. It is this recording of two fold effect of every transaction that has given rise to the term Double Entry” J.R. Batliboi.

Advantages of double entry system:
Following are the advantages of double entry system:
Accuracy
In this system, the two aspects of each transaction are recorded in the books of accounts. This helps in checking the accuracy in accounting.

Ascertainment of business results
Details regarding expenses, losses, incomes, gains, assets, liabilities, debtors, creditors, etc., are readily available. This helps to ascertain the net profit earned or loss incurred during an accounting period and also to know the financial position as on a particular date.

Comparative study
The business results of the current year can be compared with those of the previous years and also 4 with other business firms. It facilitates business planning for future.

Common acceptance
The business records maintained under this system are accepted by financial institutions, government and others, because it is a systematic and scientific system.

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

IV. Exercises

Question 1.
Complete the accounting equation.
(a) Assets = Capital + Liabilities
1,00,000 = 80,000 + ?
Answer:
(a) Liabilities = Assets – Capital
Liabilities = 1,00,000 – 80,000
Liabilities = 20,000

(b) Assets = Capital + Liabilities
2,00,000 = ? + 40,000
Answer:
Capital = Assets – Liabilities
Capital = 2,00,000 – 40,000
Capital = 1,60,000

(c) Assets = Capital + Liabilities
? = 1,60,000 + 80,000
Answer:
Assets = Capital + Liabilities
Assets = 1,60,000 + 80,000
Assets = 2,40,000

Question 2.
For the following transactions, show the effect on accounting equation.
(a) Raj Started business with cash – 40,000
(b) Opened bank account with a deposit of – 30,000
(c) Bought goods from Hari on credit for – 12,000
(d) Raj withdrew cash for personal use – 1,000
(e) Bought furniture by using debit card for – 10,000
(f) Sold goods to Murugan and cash received – 6,000
(g) Money withdrawn from bank for office use – 1,000
Answer:
(a) Raj started business with cash Rs 40,000
Increasing in capital and increasing in Asset Effects:
Cash comes in → Increase in asset
Capital provided by the owner → Increase in capital of owner
Capital = Asset
Capital = Cash
(+)Rs. 40,000 = (+)Rs. 40,000

(b) Opened bank account with a deposit of Rs 30,000
Decrease in one asset and increase in another asset Effects:
Bank is the receiver → Increases in Assets
Cash goes out → Decrease in Asset
Capital = Asset
Capital = Bank + cash
Capital = (+) Rs. 30,000 + (-) Rs. 30,000

(c) Bought goods from Hari on credit for Rs. 12,000
Increasing Asset and Increase in Liabilities Effects:
Stock comes in → Increase in Asset
Creditors arises → Increase in Liabilities
Asset = Liabilities
Stock = Creditors
(+) Rs. 12,000 = (+) Rs. 12,000

(d) Raj withdrew cash for personal use Rs 1,000
Decrease in Asset and decrease in capital Effects:
Cash goes out → Decrease in cash
Drawings proprietor is the receiver → Decrease in capital
Asset = Capital
Cash = Capital
(-) Rs. 1,000 = (-) Rs. 1,000

(e) Bought furniture by using debit card for Rs 10,000
Decrease in one asset and Increase in another asset Effects:
Furniture comes in → Increase in Furniture
Bank is giver → Decrease in a Bank
Asset = Liabilities
Furniture + Bank = Liabilities
(+) Rs. 10,000 + (-) Rs. 10,000 = Liabilities

(f) Sold goods to Murugan and cash received Rs 6,000
Decrease in one asset and increase in another asset Effects:
Cash comes in → Increase in cash
<$> Stock goes out → Decrease in stock
Asset = Liabilities
Cash + Stock = Liabilities
(+) Rs. 6,000 + (-) Rs. 6,000 = Liabilities

(g) Money withdrawn from bank for office use Rs 1,000
Decrease in one asset and increase in another asset Effects:
Cash comes in → Increase in Cash
Bank is a giver → Decrease in Bank
Asset = Liabilities
Cash + Bank = Liabilities
(+) Rs. 1,000 + (-) Rs. 1,000 = Liabilities

Accounting Equation:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 5

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 3.
Prepare accounting equation for the following transactions,
(a) Murugan commenced business with cash Rs 80,000
(b) Purchased goods for cash Rs 30,000
(c) Paid salaries by cash Rs 5,000
(d) Bought goods from Kumar for Rs 5,000 and deposited the money in CDM.
(e) Introduced additional capital of Rs 10,000
Answer:
Accounting Equation:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 6

Question 4.
What will be the effect of the following on the accounting equation?
(a) Sunil started business with Rs 1,40,000 cash and goods worth Rs 60,000
(b) Purchased furniture worth Rs 20,000 by cash
(c) Depredation on furniture Rs 800
(d) Deposited into bank Rs 40,000
(e) Paid electricity charges through net banking Rs 500
(f) Sold goods to Ravi costing Rs 10,000 for Rs 15,000
(g) Goods returned by Ravi Rs 5,000
Answer:
(a) Sunil started business with Rs 1,40,000 cash and goods worth Rs 60,000
Transactions affecting more than two accounts Effects:
Cash comes in → Increase in asset
Stock comes in → Increase in asset
Capital provide by the owner → Increase in capital
Capital = Asset
Capital = Cash + Stock
(+) 2,00,000 = (+) 1,40,000 + (+) 60,000

(b) Purchased furniture worth Rs 20,000 by cash
Decrease in one asset and Increase in Another asset Effects:
Furniture comes in → Increase in asset
Cash goes out → Decrease in asset
Liabilities = Assets
Liabilities = Cash + Furniture
Liabilities = (-) 20,000 + (-) 20,000

(c) Depreciation on furniture Rs 800
Decrease in asset and decrease in capital effects:
Furniture goes out → Decrease in Asset
Capital → Decrease in Capital
Capital = Asset
Capital = Furniture
(-) 800 = (-) 800

(d) Deposited into bank Rs 40,000
Increase in one Asset and decrease in another asset Effects:
Cash goes out → Decrease in asset
Bank is a receiver → Increase in asset
Liability = Asset
Liability = Cash + bank
= (-) 40,000 + (+) 40,000

(e) Paid electricity charges through net banking Rs 500
decrease in Asset and Decrease in capital Effects:
Bank is a given → Decrease in Asset
Capital (Expenses) → Decrease in capital
Capital = Asset
Capital = Bank
(-) 500 = (-) 500

(f) Sold goods to Ravi costing Rs 10,000 for Rs 15,000
Increase in asset and decreases in another asset and Increase in Capital Effects:
Creditors → Increases in Liabilities
Stock goes out → Decreases in asset
Capital (Incom(e) → Increase in capital
Liabilities + Capital = Asset
Creditors + Capital = Stock
(+) 15,000 + (+) 5,000 = (-) 5,000

(g) Goods returned by Ravi Rs 5,000
Increase in asset and decrease in Liabilities Effects:
Stock comes in → Increase in asset
Reducing in creditors → Decreases in Liabilities
Liability = Asset
Creditors = Stock
(-) 5,000 = (+) 5,000
Accounting Equation:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 7

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 5.
Create an accounting equation on the basis of the following transactions.
(i) Rakesh started business with a capital of Rs 1,50,000
(ii) Deposited money with the bank Rs 80,000
(iii) Purchased goods from Mahesh and paid through credit card Rs 25,000
(iv) Sold goods (costing Rs 10,000) to Mohan for Rs 14,000 who pays through debit card
(v) Commission received by cheque and deposited the same in the bank Rs 2,000
(vi) Paid office rent through ECS Rs 6,000
(vii) Sold goods to Raman for Rs 15,000 of which Rs 5,000 was received at once
Answer:
Accounting Equation:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 8

Question 6.
Create an accounting equation on the basis of the following transactions.
(i) Started business with cash 80,000 and goods Rs 75,000
(ii) Sold goods to Shanmugam on credit for Rs 50,000
(iii) Received cash from Shanmugam in full settlement Rs 49,000
(iv) Salary outstanding Rs 3,000
(v) Goods costing Rs 1,000 given as charity
(vi) Insurance premium paid Rs 3,000
(vii) Out of insurance premium paid, prepaid is Rs 500
Answer:
Accounting Equation:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 9

Question 7.
Create accounting equation on the basis of the following transactions:
(i) Opening balance on 1st January, 2018 cash Rs 20,000; stock Rs 50,000 and bank Rs 80,000
(ii) Bought goods from Suresh Rs 10,000 on credit
(iii) Bank charges Rs 500
(iv) Paid Suresh Rs 9,700 through credit card in full settlement.
(v) Goods purchased on credit from Philip for Rs 15,000
(vi) Goods returned to Philip amounting to Rs 4,000
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 10

Question 8.
Enter the following transactions in the journal of Manohar who is dealing in textiles. 2018 March
Manohar started business with cash – 60,000
Purchased furniture for cash – 10,000
Bought goods for cash – 25,000
Bought goods from Kamaiesh on credit – 15,000
Sold goods for cash – 28,000
Sold goods to Hari on credit – 10,000
Paid Kamaiesh – 12,000
Paid rent – 500
Received from Hari – 8,000
Withdrew cash for personal use – 4,000
Answer:
journal of Mr. Manohar
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 11

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 9.
Pass journal entries in the books of Sasi Kumar who is dealing in automobiles. 2017 Oct.
1. Commenced business with goods – 40,000
3. Cash introduced in the business – 60,000
4. Purchased goods from Arul on credit – 70,000
6. Returned goods to Arul – 10,000
10. Paid cash to Arul on account – 60,000
15. Sold goods to Chandar on credit – 30,000
18. Chandar returned goods worth – 6,000
20. Received cash from Chandar in full settlement – 23,000
25. Paid salaries through ECS – 2,000
30. Sahil took for personal use goods worth – 10,000
Answer:
journal of Mr. Sasi Kumar:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 12

Question 10.
Pass Journal entries in the books of Hart who is a deafer in sports items. 2017 Jan.
1. Commenced business with cash 50,000
2. Purchased goods from Subash on credit 20,000
4. Sold goods to Ramu on credit 15,000
8. Ramu paid the amount through cheque
10. Cheque received from Ramu is deposited with the bank
15. Sports items purchased from Gopal on credit 10,000
18. Paid rent for the proprietor’s residence 1,500
20. Paid Gopai in full settlement after deducting 5% discount
25. Paid Subash Rs 4,750 and discount received 250
28. Paid by cash: wages Rs 500; electricity charges Rs 3,000 and trade expenses 1,000
Answer:
journal of Hari:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 13

Question 11.
Karthick opened a provisions store on 1st April, 2017, Journalise the following transactions in this books:
2017 April?
1. Paid into bank for opening a current account – 2,00,000
3. Goods purchased by cheque – 40,000
5. Investments made in securities – 40,000
6. Goods sold to Radha for Rs 20,000 and cheque received and deposited into bank
7. Amount withdrawn from bank for office use – 15,000
10. Purchased goods from Kamala and cash deposited in CDM – 10,000
12. Sold goods to Vanitha who paid through debit card – 10,000
15. Interest on securities directly received by the bank – 1,000
20. Insurance paid by the bank as per standing instructions – 2,000
25. Sales made to Kunal who made payment through CDM – 6,000
Answer:
journal of karthik:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 14

Question 12.
Journalise the following transactions in the books of Ramesh who is dealing in computers:
2018, may 1. Ramesh started business with cash Rs 3,00,000, Goods Rs 80,000 and Furniture Rs 27,000.
2. Money deposited into bank Rs 2,00,000
3. Bought furniture from M/s Jayalakshmi Furniture for Rs 28,000 on credit.
4. Purchased goods from Asohan for Rs 5,000 by paying through debit card.
5. Purchased goods from Guna and paid through net banking for cash Rs 10,000
6. Purchased goods from Kannan and paid through credit card Rs 20,000
7. Purchased goods from Shyam on credit for Rs 50,000
8. Bill drawn by Shyam was accepted for Rs 50,000
9. Paid half the amount owed to M/s Jayalakshmi Furniture by cheque
10. Shyam’s bill was paid
Answer:
journal of Mr. Ramesh
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 15

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 13.
Journalise the following transactions in the books of Sundar who is a book seller.
dec 2017. 1. Commenced business with cash – 2,00,000
2. Bought goods from X and Co. on credit – 80,000
4. Opened a bank account with – 50,000
5. Sold goods to Naresh who paid the amount through net banking – 5,000
6. Sold goods to Devi who paid through credit card – 7,000
7. Sold goods to Ashish on credit – 700
8. Money withdrawn from bank through ATM for office use – 1,000
9. Purchased a furniture and paid through debit card – 2,000
10. Salaries paid by cash – 6,000
11. Furniture purchased from Y for Rs 25,000 and advance given – 5,000
Answer:
journal of Mr. Sundar
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 16

Question 14.
Raja has a hotel. The following transactions took place in his business. Journalise them.
Jan. 1. Started business with cash – 3,00,000
2. Purchased goods from Rajiv on credit – 1,00,000
3. Cash deposited with the bank – 2,00,000
20. Borrowed loan from bank – 1,00,000
22. Withdrew from bank for personal us – 800
23. Amount paid to Rajiv in full settlement through NEFT – 99,000
25. Paid club bill of the proprietor by cheque – 200
26. Paid electricity bill of the propHetor’s house through debit card – 2,000
31. Lunch provided at free of cost to a charity – 1,000
31. Bank levied charges for lofcker rent – 1,000
Answer:
journal of Mr. Raja
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 17

Question 15.
From the following transactions of Shyam, a stationery dealer, pass journal entries for the month of August 2017,
Aug 1. Commenced business with cash Rs 4,00,000, Goods Rs 5,00,000
2. Sold goods to A and money received through RTGS 12,50,000
3. Goods sold to Z on credit for Rs 20,000
5. Bill drawn on Z and accepted by him Rs 20,000
8. Bill received from Z is discounted with the bank for 119,000
10. Goods sold to M on credit Rs 12,000
12. Goods distributed as free samples for Rs 2,000
16. Goods taken for office use Rs 5,000
17. M became insolvent and only 0.80 per rupee is received in final settlement
20. Bill of Z discounted with the bank is dishonoured
Answer:
Journal of Mr. Shyam
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 18

Question 16.
Mary is a cement dealer having business for more than 5 years. Pass journal entries in her books for the period of March, 2018,
March 1. Cement bags bought on credit form Sibi – 20,000
2. Electricity charges paid through net banking – 500
3. Returned goods bought form Sibi – 5,000
4. Cement bags taken for personal use – 1,000
5. Advertisement expenses paid – 2,000
6. Goods sold to Mano – 20,000
7. Goods returned by Mano – 5,000
8. Payment received from Mano through NEFT
Answer:
Journal of Mr. Mary
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 19

11th Accountancy Guide Conceptual Framework of Accounting Additional Important Questions and Answers

I. Choose the correct answer.

Question 1.
Journal is a book of ………
(a) Prime Entry
(b) Compound Entry
(c) Closing Entry
(d) Adjustment Entry
Answer:
(a) Prime Entry

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 2.
Journal is a book of ……….
(a) Original Entry
(b) Final Entry
(c) Assets
(d) None of the above
Answer:
(a) Original Entry

Question 3.
Drawings account is …………..
(a) Personal A/c
(b) Real A/c
(c) Nominal A/c
(d) None of the above
Answer:
(c) Nominal A/c

Question 4.
Accounts of persons with whom the business deals is known as ………….
(a) Personal A/c
(b) Real A/c
(c) Nominal A/c
(d) Profit & Loss A/c
Answer:
(a) Personal A/c

Question 5.
Nominal Account relates to …………
(a) Drawings A/c
(b) Impersonal A/c
(c) Capital A/c
(d) Bank A/c
Answer:
(d) Bank A/c

Question 6.
Which one of the following equation is correct?
(a) Owner’s Equity = Liability + Asset
(b) Owner’s Equity = Asset – Liability
(c) Liability = Owner’s Equity + Asset
(d) Asset = Owner’s Equity – Liability
Answer:
(b) Owner’s Equity = Asset – Liability

Question 7.
Decrease in the amount of creditors results in ……………
(a) Increase in cash
(b) Decrease in cash
(c) Increase in assets
(d) No change in assets
Answer:
(b) Decrease in cash

Question 8.
Atul purchased a car for Rs. 5,00,000, by making down payment of Rs. 1,00,000 and signing a Rs. 4,00,000 bill payable due in 60 days. As a result of this transaction
(a) Total assets increase by Rs. 5,00,000
(b) Total liabilities increase by Rs.4,00,000
(c) Total assets increase by Rs. 4,00,000
(d) Total assets increase by Rs. 4,00,000 with a corresponding increase in liabilities by Rs. 4,00,000
Answer:
(d) Total assets increase by Rs. 4,00,000 with a corresponding increase in liabilities by Rs. 4,00,000

Question 9.
Identify the personal accounts from the following
(a) Salary Payable Account
(b) Taxes Paid Account
(c) Investment Account
(d) Trademark Account
Answer:
(a) Salary Payable Account

Question 10.
Amount paid to a supplier is ……….
(a) An event
(b) A Transaction
(c) Both (a) and (b)
(d) Neither (a) Nor (b)
Answer:
(c) Both (a) and (b)

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 11.
Goods worth Rs. 2,000 were distributed as free samples in the market. The journal entry will be
(a) Drawings A/c Dr. 2,000
To Purchases A/c 2,000
(b) Saies A/c Dr. 2,000
To Cash A/c 2,000
(c) Advertisement A/c Dr. 2,000
To Purchases A/c 2,000
(d) No entry
Answer:.
(c) Advertisement A/c Dr. 2,000
To Purchases A/c 2,000

Question 12.
If two or more transactions of the same nature are journalised together, it is known as;
(a) Compound journal entry
(b) Separate journal entry
(c) Posting
(d) None of the above
Answer:
(a) Compound journal entry

Question 13.
An amount of Rs.200 received from A credited to B would affect ………….
(a) Accounts of A and B
(b) A’s Account
(c) Cash Account
(d) B’s Account
Answer:
(a) Accounts of A and B

Question 14.
Contra entries are passed only when …………..
(a) Double Column cash book is prepared
(b) Three-Column Cash book is prepared
(c) Single Cash book is prepared
(d) None of the above
Answer:
(b) Three-Column Cash book is prepared

Question 15.
Which of the following statements is correct?
(a) Accounting profit is the difference between cash receipts and cash paid in a period.
(b) Accounting profit is the total of cash sales in the year iess the expenses for the period.
(c) Accounting profit is the difference between revenue income and expenses for the period.
(d) Accounting profit is the difference between revenue income and cash payment for the period.
Answer:
(c) Accounting profit is the difference between revenue income and expenses for the period.

Question 16.
Direct Expenses are those which can be identified with the particular products. Which of the following items is a direct cost?
(a) The rent of the factory in which products are made
(b) The wages of the production supervisor
(c) A royalty paid to the holder of a patent after each item is produced
(d) The cost of the glue used to attach labels to the products.
Answer:
(c) A royalty paid to the holder of a patent after each item is produced

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 17.
Rent payable to the landlord Rs. 5,00,000 is credited to
(a) Cash Account
(b) Landlord Account
(c) Outstanding Rent Account
(d) None of the above
Answer:
(c) Outstanding Rent Account

Question 18.
Bad debts entry is.passed in …………
(a) Sales Book
(b) Cash Book
(c) journal Book
(d) None of the above
Answer:
(c) journal Book

Question 19.
Return of cash sales is recorded in …………..
(a) Sales Return book
(b) cash book
(c) Journal proper
(d) None of the above
Answer:
(b) cash book

Question 20.
Jhony purchased goods ‘ Rs, 5900 for cash at 20% trade discount and 5% cash discount. Purchase account Is to fee debited by Rs ………….
(a) Rs, 3,800
(b) Rs. 5,000
(c) Rs. 3,750
(d) Rs. 4,000
Answer:
(d) Rs. 4,000

Question 21.
Out of the following Identify the wrong statement.
(a) Real & Personal accounts are transferred to Balance Sheet
(b) Nominal accounts are transfer to profit and loss account
(c) Cash account is not opened separately in the ledger
(d) Rent account is a personal account and outstand rent account is a Nominal Account
Answer:
(a) Real & Personal accounts are transferred to Balance Sheet

Question 22.
Financial position of a business concern is ascertained on the basis of ………….
(a) Records Prepared under book – keeping process
(b) Trial Balance
(c) Accounting reports
(d) None of the above
Answer:
(c) Accounting reports

Question 23.
Salary “payable to an employee Rs.50,000. Which account is to be credited?
(a) Cash Account
(b) Salaries Account
(c) Outstanding Salaries
(d) None
Answer:
(b) Salaries Account

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 24.
Loss on sale of machinery Is credited to …………..
(a) Machinery Account
(b) Purchase Account
(c) Profit and Loss Account
(d) None of the above
Answer:
(a) Machinery Account

Question 25.
The Capital of a sole trader Is affected by ……………..
(a) Purchase of raw material
(b) Commission received
(c) Cash received from trade receivables
(d) Purchase of an asset for cash
Answer:
(b) Commission received

II. Very Short Answer Type Questions

Question 1.
From the following information below journalise its
i. Salary paid Rs. 5,000
ii. Rent paid to house owner Rs. 1,000
iii. Cash sales Rs. 10,000
Answer:
Journal Entries
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 20

Question 2.
Journalise the following transactions:
2017, Jan 11 Purchased goods for Rs. 1,500
13. Bought furniture for cash Rs. 2,000
19. Drew for private use Rs. 500
Answer:
Journal Entries
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 21

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

III. Short Answer Questions

Question 1.
Journalise the following transitions in the books of G.
i. Started business with cash Rs. 9,000
ii. Deposited into Canara Bank Rs, 3,000
iii. Paid Salary Rs, 5,000
iv. Received commission Rs. 200
v. Cash received from Rajan Rs. 400
Answer:
Journal Entries
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 22

IV. Additional Sums

Question 1.
Prepare accounting equation on the basis the following.
1) Ramya started business with cash Rs. 1,20,000
2) She Paid Rent Rs. 4,000
3) She Purchases Furniture Rs. 20,000
4) She Purchased goods on credit from Mr. Parthiban Rs. 60,000
5) She Sold goods (Cost Price Rs. 40,000) for Cash Rs. 50,000
Answer:
Accounting Equation
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 23

Question 2.
Show the Accounting equation the basis of the following transaction.
1. Pailavan Started business with cash Rs. 50,000
2. Purchased goods from Monisha Rs. 40,000
3. Sold goods to Aruna (Costing Rs. 36,000) for Rs. 50,000
4. wan withdraw from business Rs. 10,000
Answer:
Accounting Equation
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 24

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 3.
Journalise the following transaction of Mrs. Padmini
2018 May 1. Received Cash from Siva – 75,000
8. Paid Cash to Sayed – 45,000
11. Bought Goods for cash – 27,000
12. Bought Furniture – 48,000
15. Sold Goods for cash – 70,000
18. Sold Furniture – 50,000
Answer:
Journal of Mrs. Padmini
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 25

Question 4.
Journalise the following transactions of Mr. Dharani. 2018
Jan 1. Mr. Dharani Started Business with Cash – 1,00,000
4. Sold Goods to Mohan – 70,000
10. Purchased goods from Bashyam – 50,000
20. Sold goods for cash from Natarajan – 70,000
25. Paid to Bashyam – 50,000
28. Received from Mohan – 70,000
Answer:
Journal of Mr. Dharani
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 26

Question 5.
Journilise the following transaction of Tmt. Rani
2018 Feb 1. Tmt Rani Started Business With cash – 300000
5. Opening a current account with Indian Overseas Bank – 50000
10. Bought goods from Sumathi – 90000
18. Paid to Sumathi – 90000
20. Sold Goods to Chitra – 126000
28. Chitra Settled her account
Answer:
Journal of Tmt. Rani
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 27

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 6.
Joumalise the following transactions of Mr.Jeevan.
2018 Mar 5. Sold goods to Arun on Credit – 17,500
10. Bought Goods for cash from Ravi – 22,500
12. Met Travelling Expenses – 2,500
18. Received Rs.80000 from Sivakumar as loan
21. Paid wages to workers – 3,000
Answer:
Journal of Mr. Jeevan
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 28

Question 7.
Give Transaction with imaginary figure involving the following
(i) Increase in assets and capital
(ii) Increase and decrease in assets
(iii) Increase in an assets and a liabilities
(iv) Decrease of an asset and owners capital
Answer:
(i) Mr. Raja Commenced Business with Rs. 2,00,000
(ii) Purchased Computer Rs. 15,000
(iii) Purchased goods from Suresh Rs. 80,000
(iv) Drawings Rs. 15,000

Question 8.
Journalise the following transaction of Mrs. Rama
2018 April 1. Mrs. Rama Commenced Business with cash – 30,000
2. Paid into Bank – 21,000
3. Purchases goods and paid through Debit Card – 15,000
7. Drew Cash from Bank for Personal Use – 3,000
15. Purchased goods from Siva – 15,000
20. Cash Sales – 30,000
23. Money Withdrawn from Bank thought ATM for office use – 1,000
25. Paid to Siva – 14,750
Discount Received – 250
31 Paid Rent – 500
Paid Salaries – 2,000
Answer:
Journal of Mrs. Rama
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 29

Question 9.
Record the transactions in the books of Shri. Ganesh & Co.
2012
Jan 1. Ganesh started a business with cash – 90,000
1. Paid into bank – 20,000
2. Purchased goods for cash – 50,000
4. Purchased furniture by issuing cheque – 24,000
5. Sold goods to Siva – 17,000
6. Purchased goods from Anand – 30,000
9. Returned goods to Anand – 3,000
10. Cash received from Siva – 16,000
11. Withdraw cash for personal use – 1,500
18. Purchase of stationary – 500
Answer:
Journal Entries in the Books of Shri. Ganesh & Co.
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 30

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 10.
Record the transactions in the books of XYZ & Co:
2017
may 1. Furniture purchased for Rs. 10,000
2. Old Computer worth Rs. 13,700 sold to Sankar on credit
3. Rent paid Rs. 5,000
6. Depreciation on Machinery Rs. 6,400 paid by cheque
10. Paid Rs. 250 for the installation charges of Machinery
13. Cash taken for personal use Rs. 7,000
Answer:
Journal Entries in the books XYZ & Co.
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 31

Question 11.
Record the transaction in the books of Y.
2017, April 1. Started Business with cash Rs, 9,000
2. Purchased goods for cash Rs. 21,000
3. Sold goods for cash Rs. 8,000
4. Deposited into Canara Bank Rs. 3,000
5. Cash received from Rajan Rs. 4,000
7. Paid salary Rs. 3,000
8. Paid Rent Rs. 4,000
9. Received Commission Rs. 500
10. Withdrew from Canara Bank Rs. 2,700
Answer:
Journal Entries in the books of Y
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 32

Question 12.
Journalize the following transactions:
2016, Dec 1. Purchased goods for cash Rs. 14,000
8. Purchased goods from Anand Stores Rs. 600
12. Sold goods for Rs. 12,500
16. Sold goods to Sridhar Rs. 6,450
18. Bought Machinery for Cash Rs. 1,20,000
20. Goods returned to Anand Stores Rs. 300
22. Sridhar returned goods worth Rs. 450
25. Drew for personal use Rs. 500
25. Electric charges amounted Rs. 1,000
30. Got a loan from Joice Rs. 750
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 33

Question 13.
Journalise the following transactions in the books of Z.
2016, july 1. Sold goods for Cash Rs. 2,800
2. Purchased goods for cash Rs, 5,900
5. Purchased goods from K Rs. 3,500
8. Sold goods to P Rs. 6,500
5. Received cash from P Rs. 6,200
9. Paid to K Rs. 3,200
9. Paid Telephone Charges Rs: 1,200
10. Paid Salary Rs. 2,600
10. Received Commission Rs. 3,000
10. Computer purchased from S for Rs. 20,000 and an advance of Rs. 8,000 is given as cash
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 34

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry

Question 14.
Varna, is a women entrepreneur, dealing in textiles. From the following transactions, pass journal entries for the month of March 2017.
2017,
March, 1. Commenced business with cash Rs. 50,000 & with goods Rs. 45,000
2. Purchased 20 sarees from V & Co on credit Rs. 60,000
3. Cash deposited into bank Rs. 48,000
4. Paid to V & Co through net banking
5. Sold 10 sarees @ Rs. 3,000 each on credit to X & Co.
6. Paid Travelling expenses Rs. 450
8. Bank Charges levied Rs. 150
9. X become insolvent and only Rs. 2,000 per saree received by cash in final settlement.
10. Electricity charges amount to Rs. 1,500
10. Received Commission Rs. 2,000
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 35

Question 15.
Journalise the following transactions:
2018, march 1. Salary paid Rs. 8,000
2. Rent paid to the house owner Rs. 7,000
3. Credit purchases from Mr. A Rs. 5,800
8. Cash sales Rs. 10,000
9. Deposited cash into bank Rs. 2,500
10. Purchased furniture Rs. 2,400
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 36

Question 16.
Complete the accounting equation.
(a) Assets = Capital + Liabilities
Rs.2,00,000 = Rs. 1,60,000 + ?
Answer:
Rs. 40,000

(b) Assets = Capital + Liabilities
Rs. 1,00,000 = ? + Rs. 20,000
Answer:
Rs. 80,000

(c) Assets = Capital + Liabilities
? = Rs. 1,60,000 + Rs. 80,000
Answer:
Rs. 2,40,000

Question 17.
Journalise the following transactions in the books of S.
2017, march 1. M commenced business with Rs. 20,000
2. Remitted in to bank account Rs. 18,000
3. Paid to K by cheque Rs. 5,000 and discount allowed Rs. 100
10. Cash sales Rs. 4,500
15. Issued a cheque to L for furniture Rs. 2,000
18. Withdrew from bank Rs. 500
25. Cash purchase Rs. 800
31. Paid salaries by cheque Rs. 6,000
Answer:
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 37

Question 18.
Write down the transactions for the following.
Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry 38
Answer:
1. Sale of building for Rs. 2,50,000
2. Paid Telephone Charges by Cheque Rs. 2,000
3. Withdrew Cash from Bank Rs. 5,000
4. Withdrew cash for personal use Rs. 3,000
5. Purchased good for Rs. 6,400 and paid by cheque.

Samacheer Kalvi 11th Accountancy Guide Chapter 3 Books of Prime Entry