Chapter recording-of-transactions-ii: Recording of Transactions - II Case Study Questions | accountancy Class 11 CBSE

Chapter recording-of-transactions-ii: Recording of Transactions - II Case Study Questions | accountancy Class 11 CBSE | ByteNotes.in

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Roopa Traders is a small retail business. At the start of November, they had ₹50,000 cash in hand. During the month, they received cash from Gurmeet against a previous credit sale, paid annual insurance premium, purchased furniture and stationery for cash, paid rent, and sold goods to Kamal for cash. All these transactions were recorded in a single column cash book. At the end of the month, the cashier balanced the book by totalling both debit and credit sides and carrying forward the closing balance as the opening balance for December. The total of debit and credit sides came to ₹88,200 with a closing balance of ₹23,400 carried forward to December.

Question 1: What is the purpose of a single column cash book?

It records all cash receipts and cash payments chronologically in a single amount column on each side.
It serves the dual purpose of a journal as well as a ledger cash account, eliminating the need for a separate cash account in the ledger.

Question 2: How are the accounts appearing on the debit side of the cash book posted to the ledger?

Accounts appearing on the debit side of the cash book are credited in the respective ledger accounts because cash has been received in respect of them.
For example, 'Cash received from Gurmeet' on the debit side means Gurmeet's account will be credited in the ledger with 'Cash' written in the particulars column.

Question 3: Explain the balancing of the single column cash book and why it always shows a debit balance.

The cash book is balanced like a ledger account by totalling both the debit (receipts) and credit (payments) sides.
The difference between the two sides represents cash in hand, which is written on the credit side as 'Balance c/d'.
The cash book always shows a debit balance because cash payments can never exceed the sum of cash receipts and opening cash balance—it is impossible to pay more cash than what is available.

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Case Set 2

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Tools India maintains a double column cash book because the company handles both cash and bank transactions extensively. In September, the company started with a bank balance of ₹31,000 and a cash balance of ₹10,100. During the month, goods were purchased by cheque, machinery was bought by cheque, goods were sold and a cheque was received and deposited the same day, and cash was withdrawn from the bank for office use. When cash was deposited into the bank, the cashier wrote 'C' (contra) in the L.F. column of both entries, indicating that these entries are not to be posted individually to the ledger.

Question 1: What is a contra entry in the double column cash book?

A contra entry arises when both aspects of a transaction appear within the cash book itself, such as depositing cash into the bank or withdrawing cash from the bank.
The letter 'C' is written in the L.F. column to indicate that these entries should not be posted to the ledger.

Question 2: How is a cheque received from a customer recorded in the double column cash book if it is deposited on a different day from receipt?

On the date of receipt, the cheque is treated as cash and recorded in the cash column on the debit (receipts) side.
On the date of actual deposit to the bank, it is recorded in the bank column on the debit side and in the cash column on the credit side as a contra entry.

Question 3: Explain the treatment of a dishonoured cheque in the double column cash book and its impact on the firm's accounts.

When a cheque previously deposited is dishonoured, the bank debits the firm's account and returns the cheque.
The firm records an entry on the credit side of the cash book, entering the amount in the bank column and the customer's name in the particulars column.
This restores the position to that prevailing before the cheque was received and deposited, effectively reversing the earlier bank entry and re-instating the customer's liability.

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Case Set 3

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M/s Samaira Traders appointed Mohit as their petty cashier. On May 1, 2017, the head cashier gave Mohit ₹2,000 as imprest amount to meet small day-to-day expenses. During the month, Mohit made payments for postal stamps, stationery, taxi fare, refreshments, computer stationery, telephone charges, office sanitation, and unloading charges. By the end of the month, Mohit had spent ₹1,487 and requested reimbursement from the head cashier. At the beginning of June, after reimbursement, Mohit again had ₹2,000 as the opening balance, maintaining the imprest level.

Question 1: What is the imprest system of petty cash?

Under the imprest system, a fixed sum (the imprest amount) is given to the petty cashier at the beginning of a period.
At the end of the period, the petty cashier is reimbursed exactly the amount spent, so the imprest amount is restored to its original level at the start of the next period.

Question 2: What are the advantages of maintaining a petty cash book?

It saves the time and effort of the chief cashier, who can focus on large cash transactions.
It enables effective control over petty disbursements through division of work and reduces the bulkiness of the main cash book.

Question 3: Explain the posting procedure from the petty cash book to the ledger.

A petty cash account is opened in the ledger and debited with the amount given to the petty cashier.
Each individual expense account (such as postage, conveyance, stationery) is debited with the periodic total from the respective column in the petty cash book, with 'Petty Cash A/c' written in the particulars column.
The petty cash account is then credited with the total expenditure incurred during the period (writing 'Sundries as per petty cash book'), and the resulting balance in the petty cash account reflects the actual cash held by the petty cashier.

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Case Set 4

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Kanika Traders is an electronics dealer. During August, they made several credit purchases from Neema Electronics, Pawan Electronics, and Northern Electronics. Each purchase invoice showed a trade discount ranging from 10% to 20%. The bookkeeper recorded only the net amount (after deducting trade discount) in the purchases journal. No cash discount or details of individual items were entered in the purchases journal. At the end of August, the total of the purchases journal amounted to ₹6,12,000, which was posted to the debit of the Purchases Account in the ledger.

Question 1: What types of purchases are recorded in the purchases journal?

Only credit purchases of goods (merchandise) are recorded in the purchases journal.
Cash purchases are recorded in the cash book, and purchases of assets like furniture or equipment on credit are recorded in the journal proper.

Question 2: How is trade discount treated in the purchases journal?

Trade discount is deducted from the list price before recording the entry in the purchases journal.
Only the net amount after deducting trade discount is entered in the purchases journal; the discount itself is not separately recorded.

Question 3: Describe the posting procedure from the purchases journal to the ledger accounts.

Individual supplier accounts are posted daily to the credit side of each supplier's account in the ledger with the net invoice amount.
The monthly total of the purchases journal is posted to the debit side of the Purchases Account in the ledger.
The source documents for the purchases journal are the invoices or bills received from suppliers, and entries are made at net amounts only.

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Case Set 5

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Koina Supplies sold goods on credit to M/s Raman Traders and M/s Nutan Enterprises during April 2017. They issued separate invoices for each sale. The sales invoices showed the date, invoice number, customer name, and net amount. All credit sales were recorded in the sales journal. At the end of April, the total of ₹1,10,850 was posted to the credit of the Sales Account. One purifier from the sale to Raman Traders was returned due to a manufacturing defect. Koina Supplies issued a credit note for the return and recorded it in the sales return journal.

Question 1: What is the source document for recording entries in the sales journal?

The source document for recording entries in the sales journal is the sales invoice or bill issued by the firm to the customer.
It contains details such as date of sale, invoice number, customer name, and amount.

Question 2: How are postings made from the sales journal to the ledger?

Individual customer accounts are debited daily with the respective amounts, with 'Sales' written in the particulars column on the debit side.
The periodic total (generally monthly) of the sales journal is credited to the Sales Account in the ledger.

Question 3: Explain the difference between a debit note and a credit note and how each is used in recording returns.

A debit note is prepared by the buyer (purchaser) when goods are returned to the supplier; it is used as the source document for recording entries in the purchases return journal.
A credit note is prepared by the seller (supplier) when goods are returned by a customer; it is the source document for recording entries in the sales return journal.
Both notes contain the name of the party, details of goods, and the amount, and each is serially numbered and prepared in duplicate.

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Chapter sections

Chapter recording-of-transactions-ii: Recording of Transactions - II | Case Study Questions

Passage

Question 1: What is the purpose of a single column cash book?

Question 2: How are the accounts appearing on the debit side of the cash book posted to the ledger?

Question 3: Explain the balancing of the single column cash book and why it always shows a debit balance.

Passage

Question 1: What is a contra entry in the double column cash book?

Question 2: How is a cheque received from a customer recorded in the double column cash book if it is deposited on a different day from receipt?

Question 3: Explain the treatment of a dishonoured cheque in the double column cash book and its impact on the firm's accounts.

Passage

Question 1: What is the imprest system of petty cash?

Question 2: What are the advantages of maintaining a petty cash book?

Question 3: Explain the posting procedure from the petty cash book to the ledger.

Passage

Question 1: What types of purchases are recorded in the purchases journal?

Question 2: How is trade discount treated in the purchases journal?

Question 3: Describe the posting procedure from the purchases journal to the ledger accounts.

Passage

Question 1: What is the source document for recording entries in the sales journal?

Question 2: How are postings made from the sales journal to the ledger?

Question 3: Explain the difference between a debit note and a credit note and how each is used in recording returns.

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