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

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

Long Answer

Medium difficulty • Structured explanation

Medium

Question 1

Long Form

Compare the single column and double column cash books with reference to their structure, purpose, and posting procedure.

The single column cash book has one amount column on each side and records only cash transactions, while the double column cash book has two amount columns (cash and bank) on each side, recording both cash and bank transactions.
The double column cash book eliminates the need for both a cash account and a bank account in the ledger, whereas the single column only eliminates the cash account.
In the double column cash book, transactions involving both cash and bank (deposits/withdrawals) give rise to contra entries marked 'C' in the L.F. column, which do not exist in the single column cash book.
The bank column in the double column cash book can show a credit balance (overdraft), while the cash column and the single column cash book always show a debit balance.
Posting from both books requires crediting ledger accounts for debit-side entries and debiting them for credit-side entries; contra entries are excluded from ledger posting in the double column cash book.

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Long Answer

Medium difficulty • Structured explanation

Medium

Question 2

Long Form

Explain the Imprest System of petty cash. How does it help in controlling petty expenditure?

Under the Imprest System, the head cashier gives a fixed sum (imprest amount) to the petty cashier at the start of each period to meet small recurring expenses.
The petty cashier records all payments in the petty cash book under specific analysis columns (conveyance, postage, stationery, miscellaneous) and a remarks column.
At the end of the period, the petty cashier is reimbursed exactly the amount spent, so the balance always returns to the full imprest amount — enabling easy verification.
This system provides effective control: the head cashier can verify the petty cash book against vouchers, and the total of all analysis columns must equal the total payments column.
It saves the chief cashier's time, prevents fraud or embezzlement in small payments, and keeps the main cash book uncluttered by removing insignificant entries.

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Long Answer

Medium difficulty • Structured explanation

Medium

Question 3

Long Form

Analyse the process of recording and posting from the purchases book to the ledger, with reference to trade discount and the role of the invoice.

Only credit purchases of goods (merchandise) are recorded in the purchases book; the source document is the invoice received from the supplier.
Trade discount is deducted from the list price and only the net amount is recorded in the purchases book; trade discount is never shown separately in the books.
Individual supplier accounts are credited in the ledger (usually daily) with the respective net invoice amounts, reflecting the amount owed to each supplier.
The monthly total of the purchases book is posted to the debit of the Purchases Account in the ledger, recognising the total credit purchases for the period.
Under GST, the purchases book uses an analytical format with separate CGST, SGST, and IGST columns; the tax amounts are posted to their respective tax input accounts in the ledger.

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Long Answer

Medium difficulty • Structured explanation

Medium

Question 4

Long Form

Distinguish between the purchases return book and the sales return book in terms of source documents, posting, and the parties involved.

The purchases return book records goods returned by the buyer to the supplier; the sales return book records goods returned by the customer to the seller.
The source document for the purchases return book is the debit note prepared by the buyer; the source document for the sales return book is the credit note prepared by the seller.
In the purchases return book, posting involves debiting individual supplier accounts and crediting the Purchases Return Account with the periodic total.
In the sales return book, posting involves crediting individual customer accounts and debiting the Sales Return Account with the periodic total.
The debit note is sent by the buyer to the supplier informing him of the return; the credit note is sent by the seller to the customer acknowledging the return and is conventionally written in red ink.

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Long Answer

Hard difficulty • Structured explanation

Hard

Question 5

Long Form

Explain the various types of cheques and crossings. How do different types of crossing provide varying degrees of safety?

A bearer cheque is payable to whoever presents it and is transferred by mere delivery; an order cheque is payable to the named person and is transferred by endorsement and delivery.
A crossed cheque has two parallel lines across its face; payment cannot be made over the counter and must go through a bank, providing a basic level of safety.
General crossing (with or without words like 'Not Negotiable') allows any bank to process the payment; A/c Payee Only crossing restricts payment to the named person's account, offering maximum safety.
Special crossing names a specific bank between the lines; payment is made only through that bank, providing a higher degree of safety than general crossing.
A cheque marked 'Not Negotiable' means that even if it passes through multiple hands, no one can acquire a better title than the transferor, protecting the original holder in case of theft or loss.

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Long Answer

Medium difficulty • Structured explanation

Medium

Question 6

Long Form

Describe the format and posting procedure of the petty cash book with reference to its analysis columns.

The petty cash book has a single receipt (debit) column and multiple analysis columns on the payment (credit) side, such as postage, conveyance, stationery, telephone, and miscellaneous.
Each small payment is recorded in the total payment column and simultaneously in the relevant analysis column; if no specific column exists, it is recorded in the miscellaneous column with a remark.
At period end, all columns are totalled; the total payment column must equal the sum of all individual analysis column totals.
Posting to the ledger: a Petty Cash Account is opened in the ledger and is debited with the amount given to the petty cashier; each expense account is debited with the periodic total of its respective analysis column.
The Petty Cash Account is credited with the total expenditure, and its balance represents the actual cash remaining with the petty cashier, which should tally with the physical cash in hand.

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Long Answer

Hard difficulty • Structured explanation

Hard

Question 7

Long Form

How are cheque transactions — receipt, deposit, and dishonour — recorded in the double column cash book? Explain with the help of rules.

When a cheque is received and deposited on the same day, it is directly recorded in the bank column on the debit side of the cash book.
When a cheque is received but deposited on a later date, on receipt it is entered in the cash column on the debit side; on the date of deposit, it is recorded as a contra entry (bank column debit, cash column credit).
When the bank debits the firm's account for a dishonoured cheque, the firm records the amount on the credit side in the bank column with the customer's name, effectively reversing the earlier deposit entry.
Dishonour restores the balance to the position before the cheque was received — the customer's account, which was previously credited on receipt of the cheque, is now treated as still outstanding.
Bank charges, interest on overdraft, and similar bank debits are also entered on the credit side in the bank column and posted to respective expense accounts in the ledger.

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Long Answer

Hard difficulty • Structured explanation

Hard

Question 8

Long Form

Explain why the cash book can never have a credit balance in its cash column but can have a credit balance in its bank column.

The cash column records physical cash receipts and payments; it is logically impossible to pay out more cash than what is available (opening balance plus receipts during the period).
Therefore, the cash column always shows a debit balance, representing cash in hand; a credit balance would imply negative physical cash, which is impossible.
The bank column, however, can show a credit balance because the bank may allow the firm to withdraw more than it has deposited — this facility is called an overdraft.
Overdraft is a credit facility provided by the bank, and the credit balance in the bank column represents the amount the firm owes to the bank.
No such credit facility exists for physical cash; hence the strict rule that the cash column always shows a debit balance, while the bank column can show either a debit (favourable) or credit (overdraft) balance.

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Long Answer

Hard difficulty • Structured explanation

Hard

Question 9

Long Form

Analyse how special purpose books facilitate division of labour and internal control in a large business organisation.

In a large organisation, thousands of transactions occur daily; maintaining a single journal would be impractical, slow, and prone to errors.
Each special purpose book is assigned to a different accounting clerk — one for cash, one for purchases, one for sales, etc. — enabling parallel processing and saving time.
Division of labour also provides an internal check: the work of one clerk is automatically verified by another (e.g., the total of the purchases book is cross-verified with individual supplier invoices).
The petty cash book under the imprest system further enhances control by separating the handling of small payments from the main cash book, reducing the risk of fraud.
The use of source documents (invoices for purchases, credit notes for sales returns, debit notes for purchases returns) ensures that every entry in the special books has a verifiable paper trail.

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Long Answer

Hard difficulty • Structured explanation

Hard

Question 10

Long Form

Explain the impact of GST on the format and recording process of the purchases and sales books. How are intra-state and inter-state transactions treated differently?

The introduction of GST has required the purchases and sales books to adopt an analytical format with separate columns for CGST, SGST, and IGST in addition to the purchase/sales amount column.
For intra-state transactions (buyer and seller in the same state), CGST and SGST are levied at equal rates; both are calculated on the net amount after trade discount.
For inter-state transactions (buyer and seller in different states), only IGST is levied on the net amount, and the CGST and SGST columns remain blank.
GST is not included in the cost of purchases for the buyer (it is input tax credit) but is shown separately in the ledger in CGST Input, SGST Input, or IGST Input accounts.
Similarly, on the sales side, GST collected forms part of the firm's tax liability and is separately tracked in CGST Output, SGST Output, or IGST Output accounts, helping to compute net GST payable.

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

Compare the single column and double column cash books with reference to their structure, purpose, and posting procedure.

Explain the Imprest System of petty cash. How does it help in controlling petty expenditure?

Analyse the process of recording and posting from the purchases book to the ledger, with reference to trade discount and the role of the invoice.

Distinguish between the purchases return book and the sales return book in terms of source documents, posting, and the parties involved.

Explain the various types of cheques and crossings. How do different types of crossing provide varying degrees of safety?

Describe the format and posting procedure of the petty cash book with reference to its analysis columns.

How are cheque transactions — receipt, deposit, and dishonour — recorded in the double column cash book? Explain with the help of rules.

Explain why the cash book can never have a credit balance in its cash column but can have a credit balance in its bank column.

Analyse how special purpose books facilitate division of labour and internal control in a large business organisation.

Explain the impact of GST on the format and recording process of the purchases and sales books. How are intra-state and inter-state transactions treated differently?

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