11th Book-Keeping and Accountancy

Book-Keeping and Accountancy Class 11- Chapter - 2 -MEANING AND FUNDAMENTAL OF DOUBLE ENTRY




    Q. 1. Answer in one sentence only.


    1) What is Double Entry System?
    Ans. Double entry system is the most scientific method of recording all business transactions in the books of accounts by giving double or two fold effects of each transaction.

    2) What is an Account?
    Ans. An account is a summarized record of transactions relating to a particular person, asset, liability, particular head of expense or income recorded at one place.

    3) State the meaning of Single Entry System.
    Ans. Single entry system of accounting records only cash book and personal accounts and thus does not provide accurate information about the financial position of business.

    4) What is Personal Account?
    Ans. Personal account represents accounts relating to individual human beings. artificial person or accounts of certain person or group of persons in business dealing. Artificial persons means accounts of organisations, associations etc. which are created by law.

    5) State the rule of nominal account.
    Ans. As per Golden Rules, rule of Nominal account is as follow:
    (1) Debit all expenses and losses (2) Credit all incomes and gains.

    6) Give two examples of intangible assets.
    Ans. Examples of intangible assets are as follow:
    (1) Goodwill (2) Patents (3) Copyright (4) Trademark

    7) State the meaning of Real Account.
    Ans. Accounts represents assets and properties owned by the business having monetary value are known as Real Account.

    8) Give two examples of income and gains.
    Ans. Examples of income and gains are: (1) Discount received, (2) Rent received, (3) Profit on sale of furniture.

    9) State the rule of Personal Account.
    Ans.     As per Golden Rules, rule of Personal account is as follows:
    (1) Debit the receiver, (2) Credit the giver.

    10) How many methods of recording accounting information are there?
    Ans. 
    (1) Indian system (Mahajani Deshinama system)
    (2) English system: (i) Single Entry System.


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

                     Statements

    Ans.
    (1) Method Of accounting Which records both aspects of transaction.Double entry system
    (2) Right hand side of an account.Credit (Cr.) side
    (3) Name Of the account which is debited When Proprietor uses business money for personal use.Drawings A/C
    (4) Accounts of Assets and properties Real A/cReal A/c
    (5) Accounts of expenses and losses and incomes and gainsNominal A/c
    (6) Left hand side of an account.Debit (Dr.) side
    (7) The assets which cannot be seen, touched or theft.Intangible assets
    (8) Person who invented the double entry system.LUCA D BARGO PACIOLI
    (9) Incomplete system of recording business transactions.Single entry system
    (10) Scientific system of recording business transactions.Double entry system


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

    1) International Accounting day is observed on . . . . . . . . . . . . . .
    a) 10th November b) 12th November c) 10th December d) 15th December

    2) Conventional system of accounting is . . . . . . . . . . . . . .
    a) English entry system b) Double entry system c) Indian system d) None of these

    3) Every debit has corresponding . . . . . . . . . . . . . .
    a) Debit b) Credit c) Right hand side d) None of these

    4) Radha`s Account is a type of . . . . . . . . . . . . . account.
    a) Nominal b) Personal c) Real d) Expenses

    5) Machinery Account is . . . . . . . . . . . . . account.
    a) Nominal b) Income c) Personal d) Real

    6) Goodwill is . . . . . . . . . . . . . . asset.
    a) Tangible b) Current c) an intangible d) None of these

    7) Prepaid expenses is . . . . . . . . . . . . account.
    a) Real b) Personal c) Nominal d) Income 40

    8) Debit the receiver, Credit the . . . . . . . . . . . . . .
    a) Goes out b) Giver c) Income and gains d) Comes in

    9) Debit what comes in, Credit what . . . . . . . . . . . . . .
    a) Giver b) Expenses and losses c) Goes out d) Income and gains

    10) Debit all . . . . . . . . . . . . . . and Credit all income and gains.
    a) Giver b) Expenses and losses c) Goes out d) None Of these





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

    1) Outstanding expense is nominal account.
    Ans. This statement is False.
    Amount payable to a person is known as outstanding expense in the business. As person is involved, outstanding expense is nothing but personal account.

    2) Capital account is a real account.
    Ans. This statement is False.
    Amount invested by owner in the form of goods, cash or asset is known as capital. As owner is involved in a transaction, capital account is a personal account.

    3) Every debit effect has equal and corresponding credit effect.
    Ans. This statement is True.
    As per Dual aspect concept, every business transaction have debit effect with equal and corresponding credit effect which is a base for double entry system.

    4) Discount received is a nominal account.
    Ans. This statement is True.
    Discount received is an income for the business therefore discount received is a nominal account.

    5) Drawings account is a nominal account.
    Ans. This statement is False.
    Drawings means amount withdrawn by owner from business and owner’s account is a personal account. Therefore, we can say that drawings account is a personal account.

    6) Outstanding salary is a nominal account.
    Ans. This statement is False.
    Salary payable to an employee means outstanding salary. As employee (person) is involved, outstanding salary is nothing but personal account.

    7) Loan account is a personal account.
    Ans. This statement is True.
    Amount received or p aid for a temporary period from or to a person is known as loan account. Here, person is involved, therefore loan account is a personal account.

    8) Goodwill account is a real account.
    Ans. This statement is True.
    Goodwill is an intangible asset for the business, and every asset account is a real account.

    9) hade discount account is a nominal account.
    Ans. This statement is False.
    When discount is allowed on catalogue price or list price, it is known as Trade discount, which is general discount to be allowed to every customer. From accounting view point, it is not to be recorded in the books. So, we can say that trade discount itself is not an account.

    10) Personal transactions of proprietor are recorded in the books of account of business.
    Ans. This statement is False.
    As per Business entity concept, business is separate and distinct unit from the owner/s. So, personal transactions of proprietor are not to be recorded in the books of account of business.

    11) Motor car account is a real account.
    Ans. This statement is True.
    Motor car is an asset for the business and asset account is real account.

    12) The rule of nominal account is Debit the receiver and credit the giver.
    Ans. This statement is False.
    The rule of nominal account is Debit all expenses and losses and Credit all incomes and gains.

    13) Bank loan account is a nominal account.
    Ans. This statement is False.
    Amount of loan given by bank is known as bank loan. Here, bank is a legal entity, therefore we can say that bank loan account is a. personal account.

    14) Assets = Capital + Liabilities.
    Ans. This statement is True.
    Capital amount of a proprietor is a liability of the business and asset of the proprietor. Therefore, total liabilities of the business is capital plus other liabilities. Accounting equation signifies that assets of a business are always equal to the total of its liabilities and capital. Therefore, equation is expressed as Assets = Liabilities + Capital.

    15) Trademark account is a personal account.
    Ans. This statement is False.
    Trademark is an invisible asset for the business and every asset account is a real account Therefore, Trademark account is a real account.

    Q.5. Fill in the blanks.

    1) Increase in asset is debited and decrease in asset is . . . . . . . . . . .
    2) Assets = Liabilities + . . . . . . . . . . .
    3) Increase in capital is credited and decrease in capital is . . . . . . . . . . .
    4) Scientific and complete system of recording is known as . . . . . . . .
    5) Debit all expenses and losses, Credit all . . . . . . . . . . .
    6) Land and Building account is . . . . . . . . . . . account.
    7) Cash Book and Personal Accounts are only maintained under . . . . . . . system. 41
    8) Debit what comes in and credit what goes out is the rule of . . . . . . . . account.
    9) Travelling expenses account is . . . . . . . . . . .type of Account.
    10) Every transaction has . . . . . . . . . . . effect.
    11) . . . . . . . . . . . accounts are accounts of properties and assets.
    12) Laptop account is a . . . . . . . . . . . account.

    Answers 
    1) Increase in asset is debited and decrease asset is credited.
    2) Assets = Liabilities + Capital.
    3) Increase in capital is credited and decrease in capital is debited.
    4) Scientific and complete system of recording business transactions is known as double entry system.
    5) Debit all expenses and losses, Credit all incomes and gains.
    6) Land and Building account is real account.
    7) Cash book and Personal accounts are only maintained under Single entry system.
    8) Debit what comes in and credit what goes out is the rule of real account.
    9) Travelling expense account is Nominal type of account.
    10) Every transaction has two fold effects.
    11) Real accounts are accounts of properties and assets.
    12) Laptop account is a real account.


    Q.6 Classify the following accounts under the types of Personal, Real and Nominal account.


    1.     Mr. Rohit’s capital A/c 
    2.     Computer A/c 
    3.     Loose Tools A/c
    4.     Legal Expenses A/c
    5.     Drawing A/c 
    6.     Fixed Deposit A/c 
    7.     Cartage A/c
    8.     Income Receivable A/c
    9.     Prepaid Rent A/c 
    10.  Audit Fees A/c 
    11.  Copyright A/c
    12.  Trademark A/c
    13.  Patent A/c 
    14.  Loss by fire A/c 
    15.  Outstanding Income A/c
    16.  Motor Car A/c
    17.  Prepaid Expenses A/c 
    18.  Income tax A/c 
    19.  Commission Received A/c
    20.  GST A/c (Goods and Service Tax)
    21.  Freight A/c 
    22.  Siddhivinayak Trust A/c 
    23.  Plant and Machinery A/c
    24.  Offfice Equipment A/c
    25.  Sundry Income A/c 
    26.  Stock of Stationery A/c 
    27.  Live Stock A/c
    28.  Indian Railways A/c
    29.  Goods distributed as free sample A/c 
    30.  Income Received in Advance A/c 
    31.  Radhika`s A/c
    32.  Dividend on Investment Advance A/c
    33.  Outstanding Wages A/c 
    34.  Discount A/c 
    35.  Loss on Sale of Furniture A/c
    36.  Raj & company A/c
    37.  Bank of Maharashtra A/c
    38.  Repairs A/c 
    39.  Loan A/c
    40.  Royalty A/c

    Answers
    Coming Soon !!!!

    Q.7 Complete the following Accounting equation table.

    Coming Soon !!!!

    Q.8 Give necessary transactions for the following effect of increase and decrease in Assets,

    Capital and Liabilities.
    Coming Soon !!!!



    PRACTICAL PROBLEMS

    Q. 1 Prepare a chart showing Analysis of the following transactions in a Tabular form according
    to Traditional Approach:
    1. Rajasaheb started business with cash ` 85,000.
    2. Goods Purchased for cash ` 5,000.
    3. Sold goods on credit worth ` 6,000.
    4. Cash deposited into Bank of Maharashtra ` 12,000.
    5. Interest received ` 700 from Radhika.
    6. Paid Rent ` 2,000 to landlord.
    7. Bought goods on credit from Birajmohan `7 ,000.
    8. Withdrew cash from bank ` 1,000 for office use.
    9. Purchased computer ` 9,000 for cash.
    10. Paid Mobile bill (office) ` 500.
    11. Sold old Mobile ` 2,000.
    12. Received Rent ` 1,000 from tenant.



    Download (above excel sheet Download)

    Q. 2 Prepare Chart showing Analysis of the following transaction in a Tabular form according to Modern Approach.

    1. Mr. Meghraj started business with cash ` 30,000.
    2. Deposited cash into Bank of India ` 2,000.
    3. Withdrew cash ` 1,000 for personal use.
    4. Purchased goods on credit from Nilesh ` 2,000.
    5. Cash purchases ` 3,000.
    6. Paid Wages ` 400.
    7. Purchase a chair for office use ` 3.200.
    8. Sold goods to Mohan worth ` 1,200.
    9. Withdrew Cash for Office use ` 3,000.
    10. Sold old furniture ` 9,000.
    11. Received Dividend of ` 1,000.

    12. Paid for Printing bill book ` 200.

    Q.3 Give the accounting equation for the following transactions:
    1. Mr. Vaibhav started business with Cash ` 1,00,000.
    2. Purchased goods on credit from Rita Stores ` 9,000.
    3. Purchase Laptop for office use ` 10,000.
    4. Sold goods to Rina on credit ` 12,000.
    5. Received Interest ` 2,500
    6. Paid Telephone bill ` 1,300.

    Q. 4 Give the accounting equation for the following transactions.
    1. Mr. Swaraj commenced business with Bank balance ` 1,10,000.
    2. Purchased Furniture on credit from S.M Furniture Mart ` 25,000.
    3. Bought goods on credit from Yuvraj ` 15,000.
    4. Purchased Machinery ` 10,000.
    5. Paid Electricity bill ` 3,500.
    6. Goods destroyed by fire ` 1,500.

    Q. 5 Show accounting equation for the following transactions:
    1. Rohit started business with cash ` 50,000.
    2. Bought goods on credit from Manoj ` 6,000.
    3. Cash purchases ` 5,000.
    4. Paid wages ` 3,000 to Casual labour.
    5. Sold goods to Santosh ` 7,000 on credit.
    6. Received Commission ` 1,000 from Vaishali.