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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

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

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

II. Very Short Answer Type Questions

Question 1.
What is a cash book?
Answer:
Cashbook is the book in which only cash transactions are recorded in chronological order. The cash book is the book of original entry or prime entry as cash transactions are recorded for the first time in it. Cash transactions here may include bank transactions also. Cash receipts are recorded on the debit side while cash payments are recorded on the credit side.

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

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

Question 3.
What is a simple cash book?
Answer:
Single column cash book or simple cash book, like a ledger account, has only one amount column, i.e., cash column on each side. Only cash transactions are recorded in this book. 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

Question 5.
What is a double column cash book?
Answer:
It is a cash book with cash and discount columns. 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’.

Question 6.
Give the format of ‘Double column cash book’.
Answer:
Double Column Cash Book

Question 7.
What is three column cash book?
Answer:
A three-column cash book includes three amount columns on both sides, i.e., cash, bank, and discount. This cash book is prepared in the same way as simple and double column cash books are prepared. The transactions which increase the cash and bank balance are recorded on the debit side of the cash and bank columns respectively. Opening balance of cash and favourable bank balance appear as the first item on the debit side of the three-column cash book in case of existing business. If the business is a new one, capital contributed in cash and/or bank deposit appear as the first item on the debit side.

Question 8.
What is a cash discount?
Answer:

1. A cash discount is allowed to the parties making a 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 a 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.

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 a lot of entries.
4. Hence, all petty payments of the business may be recorded in a separate book, which is called a petty cash book, and the person who maintains the petty cash book is called the petty cashier.

III. Short Answer Questions

Question 1.
Explain the meaning of the imprest system of petty cash books.
Answer:
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). The amount given to the petty cashier in advance is known as “Imprest Money”.

The word imprest means payment in advance. The petty cashier makes payments from this amount and records them in the petty cash book. At the end of a particular period, the petty cashier submits the petty cash book to the head cashier.

The head cashier scrutinizes the petty payments and gives an amount equal to the amount spent by the 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. Under the system, the total cash with the petty cashier never exceeds the imprest at any time during the period.

Question 2.
Bring out the differences between cash discounts and trade discounts.
Answer:
Following are the difference between cash discount and trade discount:

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

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

Question 4.
Write a brief note on the accounting treatment of discounts in the 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 is 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.

Question 5.
Briefly explain contra entry with examples.
Answer:
To denote that there are contra entries, the alphabet ‘C’ is written in the L.F. column on both sides. Contra means that a particular entry is posted on the other side (contra) of the same book because the Cash account and Bank account are there in the cash book only and there are no separate ledger accounts needed for this purpose. 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.

Solution:
In the book of Seshadri
Cashbook (single column)

Question 2.
Enter the following transactions in a single column cash book of Pandeeswari for the month of June 2017

Solution:
In the book of Pandeeswari
Cashbook (single column)

Question 3.
Enter the following transactions in a single column cash book of Ramalingam for the month of July 2017.

Solution:
Single column cash book of Mr. Ramalingam

Question 4.
Enter the following transaction in Chandran’s cash book with cash and discount columns.

Solution:
In the book of Mr. Chandran
Cashbook (with cash and discount columns)

Question 5.
Enter the following transaction in Chandran’s cash book with the cash and discount column.

Solution:
In the book of Mr. Chandran
Cashbook (with cash and discount columns)

Question 6.
Enter the following transactions in the cash book with the discount and cash column of Anand.

Solution:
In the book of Anand
Cashbook (with cash and Discount columns)

Question 7.
Write out a cash book with discount, cash, and bank columns in the books of Mahendran. 2017 Oct?

Solution:
IIn the books of Mr. Mahendran
Three columns cash book

Question 8.
Enter the following transactions in the three-column cash book of Kalyana Sundaram.

Solution:
IIn the books of Mr. Mahendran
Three columns cash book

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.

Solution:
In the books of Fathima
Dr. Three columns cash book

Question 10.
Enter the following transactions in the three-column cash book of Chozhan.

Solution:
In the books of Sri Chozhan
Three Columns Cash Book

Question 11.
Enter the following transactions, in a cash book with cash, bank, and discount columns of Sundari.

Solution:

Question 12.
Record the following transaction in the three-column cash book of Rajeswari for the month of June 2017.

Solution:
In the book of Miss. Rajeswari
Three columns cash book

Question 13.
Record the following transactions in three column cash book of Ramachandran.

Solution:
In the book of Mr. Ramachandran
Three columns cash book

Question 14.
Record the. following transactions in the three-column cash book of John Pandian.

Solution:
In the book of Mr. John Pandian
Three columns cash book

Question 15.
Prepare a triple column cash book of Rahim from the following transactions:

Solution:
In the book of Mr. Rahim
Three Columns cash book

Question 16.
Prepare analytical petty cash book from the following particulars under imprest system:

Solution:
Analytical petty cash book – Analysis of payments (in ₹)

Question 17.
From the following information prepare an analytical petty cash book under imprest system:

Solution:
Analytical petty cash book – Analysis of payments

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 of ₹ 2,000.

Solution:
Analytical petty cash book – Analysis of payments

Question 19.
Enter the following transactions in Iyyappan’s petty cash hook with analytical columns under the imprest system.

Solution:

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

I. Choose the correct answer.

Question 1.
Cash receipts are recorded on the ……………. of the cash book.
(a) debit side
(b) credit side
(c) journal
(d) ledger
Answer:
(a) debit side

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

Question 3.
All cash transactions are straightway recorded in the …………….
(a) cash book
(b) ledger
(c) journal
(d) contra
Answer:
(a) cash book

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

Question 5.
There are ……………. types of cash book (common).
(a) three
(b) four
(c) five
(d) two
Answer:
(a) three

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) Cashbook
d) Petty cash book
Answer:
d) Petty cash book

Question 7.
L.F. expands for ……………..
(a) Long file
(b) Ledger folio
(c) Line folio
(d) Link file
Answer:
(b) Ledger folio

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

Question 9.
As both the debit and credit aspects of a transaction are recorded in the cash book, such entries are called ……………. entries.
(a) Contra
(b) Journal
(c) Compound
(d) Opening
Answer:
(a) Contra

Question 10.
Which of the following books should be used to record the purchase of furniture on credit?
a) Purchases book
b) Goods account
c) Cashbook
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

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 Passbook
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) Cashbook
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) Cashbook
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) Bankbook
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 are prepared
c) Simple Cashbook 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) Cashbook
d) None of these
Answer:
c) Cashbook

Question 20.
The credit balance of the bank column in the cash book shows:
a) Overdraft
b) Cash deposited in the bank
c) Cash is 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

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

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 was 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.
Cashbook 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 the petty cashier. He has spent Rs.960during the month of January. On Feb 1st to make the imprest he will receive a 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

Question 31.
Payment of rent expenses is recorded on which side of the 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

II. Short Answer Questions

Question 1.
Enter the following transactions in the simple column cash book.

Solution:

III. Additional Questions & Answers

Question 1.
What is the importance of a 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, a cash book serves the purpose of a journal and a ledger.

Saves time and labor – 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 a cash book is a separate subsidiary book, an independent person can maintain it. Hence, businesses can get the benefit of division of labour.

Effective cash management – Cashbook provides all information regarding total receipts and payments of the business concern during a particular period. It helps in formulating effective policies 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 books?
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 a simple petty cash book.

Analytical petty cash book –
In the 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, the same amount is also recorded in the appropriate expense column. This is known as an analytical petty cash book.

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 a simple petty cash book.

Question 4.
What is an Analytical petty cash book?
Answer:
In the 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, the same amount is also recorded in the appropriate expense column. This is known as an analytical petty cash book.

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

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

Additional Sums:

Question 1.
Enter the following in the simple column cash book.

Solution:
Single Column Cash Book

Question 2.
Enter the following transactions in a petty cash book of Mr, Kishore Kumar with analytical columns the petty cashier begins with an imprest amount of Rs.1,000.

Solution:

Question 3.
Prepare petty cash book on imprest system from the Following Particulars given below.

Solution:

Question 4.
Prepare the analytical petty cash book of Mr. Keerthivasan from the Following.

Solution:

Question 5.
Thiru Suganthan started the 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.

Solution:
Single Column Cash Book of Mr. Suganthan

Question 6.
Enter the lowing transactions of Royce in Double Column Cash Book.

Solution:
Double Column Cash Book of Royce

Question 7.
Record the following transactions in the Double CoSusium cash book of Mr. X

Solution:
Double Column Cash Book of Mr. X

Question 8.
Enter the following transactions of a trader in a triple column cash book.
2015,
Nov.
1 – Nizam started the business with ₹ 1,00,000
2 – Deposited into a 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 the bank for personal use ₹ 500
30 – Cleared electricity bills ₹ 90
Solution:
Cash Book of a Trader

Question 9.
Enter the following transactions in the three columnar cash book of Mr.Z

Solution:
Three Column Cash Book of Mr.Z

Question 10.
Enter the following transactions in Gopi’s Three Column Cash Book:

Solution:
Three Column Cash Book of Mr.Z

Question 11.
Enter the following transactions in the 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 – Withdrew Rs. 10,000 from the bank for domestic purpose
30 – Paid Rent Rs. 10,000
31 – Paid to Prabhu Rs. 37,000 in a full settlement against his claim of Rs. 40,000 during 2017
Solution:
Triple Column Cash Book of Mr. K

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 a 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

Question 13.
From the following particulars prepare an analytical column of the 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

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

Question 15.
From the following transactions for the month of June 2017, drew up a Petty Cash Book in the analytical form:

Solution:
Analytical Petty Cash Book

Question 16.
Prepare Mr. Keerthivasan’s single-column cash book.

Solution:
Single column book of Mr. Kishore Kumar

Question 17.
Record the transactions given below in the double column cash book of cash book (with discount and cash columns) of Mr. Kirubakaran.

Solution:
Double column cash book or Mr. Kirunakaran (Cashbook with discount and cash column)

Question 18.
Enter the following transaction in the cash book with discount and cash columns of Mr. Guru.

Solution:
Double column cash book or Mr. Guru
(Cashbook with discount and cash column)

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 – A 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 used a cheque has reported that our cheque is dishounred
22 – Roshan got exchange for a Five hundred rupee note
31 – Paid into the bank all cash in excess of Rs.5000
Solution:
Trible column cash book or Mr. Guru
(Cashbook with discount and cash column)

Question 20.
Enter the following transactions in the triple column cash hook of Mr.Yogesh

Solution:
Trible column cash book or Mr. Kumaran
(Cashbook with discount and cash column)

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

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

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:
A computer can be described as an electronic device designed to accept raw data as input, processes them, and produces meaningful information as output. It has the ability to perform arithmetic and logical operations as per the given set of instructions called a program. Today, computers are used all over the world in several areas for different purposes.

Question 2.
What is CAS?
Answer:

1. A computerized 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. Computerized accounting system takes accounting transactions as inputs that are processed through accounting software.

Question 3.
What is hardware?
Answer:
The physical components of a computer constitute its hardware. The hardware consists of input devices and output devices that make a complete computer system.

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:
The main function of CAS is to perform the accounting activities in an organization and generate reports as per the requirements of the users. To obtain the desired results optimally, need-based software or packages are to be installed in the organization.

Question 6.
Name any two accounting packages.
Answer:

1. Readymade software
2. Customized software
3. Tailormade software

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 a grouping of accounts?
Answer:
In any organization, the main unit of classification is the major head which is further divided, into minor heads. Each minor head may have a number of subheads. After classification of accounts into various groups.

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. Examples are SJ – Sales Journals; HQ – Head Quarters.

III. Short Answer Questions

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

• These packages are standardized or readymade packages which can be used by the business enterprises immediately on procurement. These packages are used by small and conventional business enterprises.
• The cost of installation and maintenance is very low. The training cost is negligible and sometimes the vendor provides free of cost training.
• This software is used by 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, customized packages may help the business enterprise for fulfilling its requirements. Customized 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 systems, varied and specific information is frequently required by many users which may not be needed in the case of small or medium scale enterprises.
• In such enterprises, depending upon their functioning, need-based software 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 a computerized 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 computerized 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.

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 the computerized accounting systems.
Answer:

1. Liabilities and capital
2. Assets
3. Revenues and
4. Expenses.

Under Liabilities and Capital:
Capital, Non – current liabilities, and current liabilities.

Under Assets:
Non-current assets and Current assets.

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 monitors and printers are media to get the output from the computer.

11th Accountancy Guide Computerised Accounting Additional Important Questions and Answers

I. Choose the correct answer.

Question 1.
Which one is an output device?
(a) Monitor
(b) Keyboard
(c) Mouse
(d) Optical scanner
Answer:
(a) Monitor

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.
Which one is an operating system?
(a) File manager
(b) COBOL
(c) Windows
(d) PASCAL
Answer:
(c) Windows

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.
There are …………….. methods of codification.
(a) Two
(b) Three
(c) Four
(d) Five
Answer:
(b) Three

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

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

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

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 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 the desired output.
a) Procedure
b) Data
c) Connectivity
d) All the above
Answer:
a) Procedure

II. Short Answer Questions

Question 1.
Expands of MIS and CPU.
Answer:

1. MIS – Management Information System
2. CPU – Central Processing Unit

Question 2.
What is Programming software?
Answer:
Special software to accept data and interpret them in the form of machine/assembly language understandable 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 do you mean by DATA?
Answer:
The facts and figures that are fed into a computer for further processing are called data.

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:

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 a sequential coding scheme, i.e., the numbers increase consecutively.
For example:

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 customized to the needs of the user.
Example: Accounting software, payroll software, etc.

Question 11.
Explain the basic features of a computerized 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 an enhanced Management Information System (MIS), multi-lingual and data organization capabilities to simplify all the business processes of the organization easily and cost-effectively.

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

iii) Accuracy – Computers perform functions with a high degree of accuracy. If hardware, software, and input by people are proper, the computerized accounting system can assure an 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 has 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 specialized for the job.

Question 13.
Explain the Components of the Computerised Accounting System.
Answer:
i) Hardware – The physical components of a computer constitute its hardware. The 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 monitors and printers 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 the 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 printers, 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 computerized accounting systems.
Answer:

Question 15.
Compare ready-to-use software, customized software, and tailor-made software.
Answer:

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Accountancy Guide Pdf Chapter 9 Rectification of Errors Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Accountancy Solutions Chapter 9 Rectification of Errors

11th Accountancy Guide Bank Rectification of Errors Text Book Back Questions and Answers

I. Multiple Choice Questions

Choose the correct answer.

Question 1.
Error of principle arises when ________.
a) There is complete omission of a transaction
b) There is partial omission of a transaction
c) Distinction is not made between capital and revenue items
d) There are wrong postings and wrong castings
Answer:
c) Distinction is not made between capital and revenue items

Question 2.
Errors not affecting the agreement of trial balance are ________.
a) Errors of principle
b) Errors of overcasting
c) Errors of undercasting
d) Errors of partial omission
Answer:
a) Errors of principle

Question 3.
The difference in trial balance is taken to ________.
a) The capital account
b) The trading account
c) The suspense account
d) The profit and loss account
Answer:
c) The suspense account

Question 4.
A transaction not recorded at all is known as an error of ________.
a) Principle
b) Complete omission
c) Partial omission
d) Duplication
Answer:
b) Complete omission

Question 5.
Wages paid for installation of machinery wrongly debited to wages account is ah error of ________.
a) Partial omission
b) Principle
c) Complete omission
d) Duplication
Answer:
b) Principle

Question 6.
Which of the following errors will not affect the trial balance?
a) Wrong balancing of an account
b) Posting an amount in the wrong account but on the correct side
c) Wrong totaling of an account
d) Carried forward wrong amount in a ledger account
Answer:
b) Posting an amount in the wrong account but on the correct side

Question 7.
Goods returned by Senguttuvan were taken into stock, but no entry was passed in the books. While rectifying this error, which of the following accounts should be debited?
a) Senguttuvan account
b) Sales returns account
c) Returns outward account
d) Purchases returns account
Answer:
b) Sales returns account

Question 8.
A credit purchase of furniture from Athiyaman was debited tg purchases account. Which of the following accounts should be debited while rectifying this error?
a) Purchases account
b) Athiyaman account
c) Furniture account
d) None of these
Answer:
c) Furniture account

Question 9.
The total of purchases book was overcast. Which of the following accounts should be debited in the rectifying journal entry?
a) Purchases account
b) Suspense account
c) Creditor account
d) None of the above
Answer:
b) Suspense account

Question 10.
Which of the following errors will be rectified using suspense account?
a) Purchases returns book was undercast by ₹ 100
b) Goods returned by Narendran was not recorded in the books ;
c) Goods returned by Akila ₹ 900 was recorded in the sales returns book as ₹ 90
d) A credit sale of goods to Ravivarman was not entered in the sales book.
Answer:
a) Purchases returns book was undercast by ₹ 100

II. Very Short Answer Type Questions

Question 1.
What is meant by the rectification of errors?
Answer:
Correction of errors in the books of accounts is not done by erasing, rewriting, or striking the figures which are incorrect. Correcting the errors that have occured is called Rectification.

Question 2.
What is meant by the error of principle?
Answer:
The error of principle means the mistake committed in the application of fundamental accounting principles in recording a transaction in the books of accounts.

Question 3.
What is meant by the error of partial omission?
Answer:
When the accountant has failed to record a part of the transaction, it is known as an error of partial omission. This error usually occurs in posting. This error affects only one account.

Question 4.
What is meant by the error of complete omission?
Answer:
It means the failure to record a transaction in the journal or subsidiary book or failure to post both the aspects in the ledger. This error’ affects two or more accounts.

Question 5.
What are compensating errors?
Answer:
The errors that make up for each other or neutralize each other are known as compensating errors. These errors may occur in related or unrelated accounts. Thus, excess debit or credit in one account may be compensated by excess credit or debit in some other account. These are also known as offsetting errors.

III. Short Answer Questions

Question 1.
Write a note on the error of principle by giving an example.
Answer:
It means the mistake committed in the application of fundamental accounting principles in recording a transaction in the books of accounts.
Example:
Entering the purchase of an asset in the purchases book. Machinery purchased on credit for ₹ 10,000 by M/s. Anbarasi garments manufacturing company entered in the purchases book.

Question 2.
Write a note on the suspense account.
Answer:
1. When the trial balance does not tally, the amount of difference is placed to the debit (when the total of the credit column is higher than the debit column) or credit (when the total of the debit column is higher than the credit column) to a temporary account known as ‘suspense account

2. Suspense account will remain in the books until the location and rectification of errors.

3. Afterrectifying the errors and posting the rectification entries to the respective ledger accounts, the suspense account appearing in the ledger is to be balanced.

4. If all the errors are located and rectified, the suspense account gets closed.

Question 3.
What are the errors not disclosed by a trial balance?
Answer:
Certain errors will not affect the agreement of trial balance. Though such errors occur in the books of accounts, the total debit and credit balance will be the same. The trial balance will tally. Errors of complete omission, error of principle, compensating error, a wrong entry in the subsidiary books are not disclosed by the trial balance.

Question 4.
What are the errors disclosed by a trial balance?
Answer:
Certain errors affect the agreement of trial balance. If such errors have occurred in the books of accounts, the total of debit and credit balances will not be the same. The trial balance will not tally. The error of partial omission and error of commission affect the agreement of trial balance.
Examples of such errors are as follows:

• Entered in the journal but posted to one account and omitted to be posted to the other.
• Posting an amount to the wrong side of a ledger account
• Posting twice in a ledger account.
• Over-casting or under-casting in a subsidiary book.
• Posting a wrong amount to the wrong side of an amount.
• Errors in carrying forward the page total from one page to the next page of an account or subsidiary book.
• Errors arising in the balancing of an account.
• Omission to post an entry from a subsidiary book.

Question 5.
Write a note on one-sided errors and two-sided errors.
Answer:
(a) Rectification of one-sided errors before preparing trial balance:

• When a one-sided error is detected before preparing the trial balance, no journal entry is required to be passed in the books.
• In such cases, the error can be rectified by giving an explanatory note in the account affected as to whether the concerned account is to be debited or credited.
• Example: Sales book is undercast by ₹ 100.
• In this case, the sales book is undercast by ₹ 100.
• The total of sales book is posted to the credit side of the sales account in the ledger.
• The under casting has resulted in an under-crediting of sales accounts by ₹ 100.
• This is an error of commission.
• The error is only in the sales account. There is short credit in the sales account by ₹ 100. Hence, it is rectified by crediting sales account by ₹ 100.

(b) Rectification of two-sided errors before preparing the trial balance:
1. When a two-sided error is detected before preparing the trial balance, it must be rectified by passing a rectifying journal entry in the journal proper after analyzing the error.
Example: Goods sold to Anand for ₹ 1,000 on credit was not entered in the sales book. The entry will be

Method of deriving the rectifying entries

IV. Exercises

Question 1.
State the account/s affected in each of the following errors
a) Goods purchased on credit from Saranya for ₹ 150 was posted to the debit side of her account.
b) The total of purchases book ₹ 4,500 was posted twice.
Solution:
a) Saranya account should be credit with ₹ 300
b) Purchases account should be credit with ₹ 4,500

Question 2.
State the account/s affected in each of the following errors
a) Goods sold to Vasu on credit for ₹ 1,000 was not recorded in the sales book.
b) The total of the sales book ₹ 2,500 was posted twice.
Solution:
a) Sales account should be credit with ₹ 1,000
b) Sales account should be Debited with ₹ 2,500

Question 3.
Rectify the following errors discovered before the preparation of the trial balance
a) Sales book was undercast by ₹ 100
b) Purchases returns book was overcast by ₹ 200
Solution:
a) Sales account should be Credited with ₹ 100
b) Purchases returns account should be debited with ₹ 200

Question 4.
Rectify the following errors before the preparation of trial balance
a) Returns outward book was undercast by ₹ 2,000
b) Returns inward book total was taken as ₹ 15,000 instead of ₹ 14,000
c) The total of the purchases account was carried forward ₹ 100 less.
Solution:
a) Purchases return account should be Credited with ₹ 2,000
b) Sales returns account should be Debited with ₹ 1,000
c) Purchases accounts should be debited ₹ 100

Question 5.
Rectify the following errors assuming that the trial balance is yet to be prepared
a) Sales book was undercast by ₹ 400
b) Sales returns book was overcast by ₹ 500
c) Purchases book was undercast by ₹ 600
d) Purchases returns book was overcast by ₹ 700
e) Bills receivable book was undercast by ₹ 800
Solution:
a) Sales account should be credited with ₹ 400
b) Sales return accounts should be Credited with ₹ 500
c) Purchases account should be debited with ₹ 600
d) Purchases returns account should be debited with ₹ 700
e) Bills received account should be debited with ₹ 800

Question 6.
Rectify the following errors before preparing trial balance
a) The total of purchases book was carried forward ₹ 90 less.
b) The total of purchases book was carried forward ₹ 180 more.
c) The total of sales book was carried forward ₹ 270 less.
d) The total of sales returns book was carried forward ₹ 360 more.
e) The total of purchase returns book was carried forward ₹ 450 less.
Solution:
a) Purchases account is to be Debited with ₹ 90
b) Purchases account is to be Credited with ₹ 180
c) Sales account is to be Credited with ₹ 270
d) Sales returns account is to be Credited with ₹ 360
e) Purchases returns account is to be Credit with ₹ 450

Question 7.
The following errors were located by the accountant before the preparation of trial balance. Rectify them.
a) The total of the discount column of ₹ 1,100 on the debit side of the cash book was not yet osted.
b) The total of the discount column on the credit side of the cash book was undercast by ₹ 500.
c) Purchased goods from Anbuchelvan on credit for ₹ 700 was posted to the debit side of his account.
d) Sale of goods to Ponmukil on credit for ₹ 78 was posted to her account as ₹ 87.
e) The total sales returns book of ₹ 550 was posted twice.
Solution:
a) Discount account should be debited with ₹ 1,100
b) Discount account should be Credited with ₹ 500
c) Anbuchelvan account should be Credited with ₹ 1,400
d) Ponmuki account should be Credit with ₹ 9
e) Sales return account should be Credit with ₹ 550

Question 8.
The accountant of a firm located the following errors before preparing the trial balance. Rectify them.
a) Machinery purchased for ₹ 3,000 was debited to the purchases account.
b) Interest received ₹ 200 was credited to the commission account.
c) An amount of ₹ 1,000 paid to Tamil selvan as salary was debited to his personal account.
d) Old furniture sold for ₹ 300 was credited to sales account.
e) Goods worth ₹ 800 purchased from Soundarapandian on credit was not recorded in the books of accounts.
Solution:
Journal Entries

Question 9.
Rectify the following errors which were located before preparing the trial balance.
a) Wages paid ₹ 2,000 for the erection of machinery was debited to wages account.
b) Sales returns book was short totaled by ₹ 1,000.
c) Goods purchased for ₹ 200 were posted as ₹ 2,000 to the purchases account.
d) The sales book was overcast by ₹ 1,500.
e) Cash paid to Mukil ₹ 2,800 which was debited to Akhil’s account as ₹ 2,000.
Solution:
Rectification of Errors:

Question 10.
Rectify the following errors which were located at the time of preparing the trial balance
a) The total of the discount column on the debit side of the cash book of ₹ 225 was posted twice.
b) Goods of the value of ₹ 75 returned by Ponnarasan were not posted to his account.
c) Cash received from Yazhini ₹ 1,000 was not posted.
d) Interest received ₹ 300 has not been posted.
e) Rent paid ₹ 100 was posted to rent account as ₹ 10
Solution:
Rectification of Errors

Question 11.
The following errors were located at the time of preparing the trial balance. Rectify them.
a) A personal expense of the proprietor ₹ 200 was debited to the traveling expenses account.
b) Goods of ₹ 400 purchased from Ramesh on credit was wrongly credited to Ganesh’s account.
c) An amount of ₹ 500 paid as salaries to Mathi was debited to his personal account.
d) An amount of ₹ 2,700 paid for the extension of the building was debited to the repairs account.
e) A credit sale of goods of ₹ 700 on credit to Mekala was posted to Krishnan’s account.
Solution:
Rectification of Errors

Question 12.
Rectify the following journal entries.

Solution:
Rectification of Errors

Question 13.
Rectify the following errors discovered after the preparation of the trial balance
a) Rent paid was carried forward to the next page ₹ 500 short.
b) Wages paid were carried forward ₹ 250 excess.
Solution:
a) Rent account should be debited with ₹ 500
b) Wages account should be Credited with ₹ 250

Question 14.
Rectify the following errors after preparation of trial balance
a) Salary paid to Ram ₹ 1,000 was wrongly debited to his personal account.
b) A credit sale of goods to Balu for ₹ 450 was debited to Balan.
Solution:
Rectification of Errors

Question 15.
Pass necessary journal entries to rectify the following errors located after the preparation of trial balance
a) Sales book was undercast by ₹ 1,000.
b) A amount of ₹ 500 paid for wages was wrongly posted to the machinery Account.
Solution:
Rectification of Errors

Question 16.
Give journal entries to rectify the following errors discovered after the preparation of trial balance
a) Purchases book was overcast by ₹ 10,000.
b) Repairs to the furniture of ₹ 500 were debited to the furniture account.
c) A credit sale of goods to Akilnilavan for ₹ 456 was credited to his account as ₹ 654.
Solution:
Rectification of Errors

Question 17.
Rectify the following errors located after the preparation of trial balance
a) Purchases book was undercast by ₹ 900.
b) Sale of old furniture for ₹ 1,000 was credited to sales account.
c) Purchase of goods from Arul for ₹ 1,500 on credit was not recorded in the books.
Solution:
Rectification of Errors

Question 18.
The following errors were located after the preparation of the trial balance. Pass journal entries to rectify them. Assume that there exists a suspense account.
a) The total sales book was undercast by ₹ 350.
b) The total of the discount column on the debit side of the cash book ₹ 420 was not posted.
c) The total of one page of the purchases book of ₹ 5,353 was carried forward to the next page as ₹ 5,533.
d) Salaries ₹ 2,400 were posted as ₹ 24,000.
e) Purchase of goods from Sembiyanmadevi on credit for ₹ 180 was posted to her account as ₹ 1,800
Solution:
Rectification of Errors

Question 19.
Rectify the following errors assuming that the trial balance is already prepared and the difference was placed to suspense account
a) Sales book was undercast by ₹ 250
b) Purchases book was undercast by ₹ 120
c) Sales book was overcast by ₹ 130
d) Bills receivable book was undercast by ₹ 75
e) Purchases book was overcast by ₹ 35.’
Solution:
Rectification of Errors

Question 20.
The following errors were located after the preparation of the trial balance. The difference in trial balance has been taken to the suspense account. Rectify them.
a) The total of purchases book was carried forward ₹ 70 less.
b) The total sales book was carried forward ₹ 340 more.
c) The total of purchases book was carried forward ₹ 150 more.
d) The total of sales book was carried forward ₹ 200 less.
e) The total of purchase returns book was carried forward ₹ 350 less.
Solution:
Rectification of Errors

Question 21.
The following errors were located by the accountant after the preparation of the trial balance. There exists a suspense account. Rectify them.
a) The total of the discount column of ₹ 1,180 on the debit side of the cash book was not posted.
b) Purchase of goods from Arivuchelvan on credit for ₹ 600 was posted to the debit side of his account.
c) The total of the discount column on the credit side of the cash book was undercast by ₹ 400.
d) The total sales returns book of ₹ 570 was posted twice.
e) Sold goods to Mukil on credit for ₹ 87 was posted to her account as ₹ 78.
Solution:
Rectification of Errors

Question 22.
The accountant of a firm located the following errors after preparing the trial balance. Rectify them assuming that there is a suspense account.
a) Machinery purchased for ₹ 3,500 was debited to purchases account.
b) ₹ 1,800 paid to Raina as salary was debited to his personal account.
c) Interest received ₹ 200 was credited to the commission account.
d) Goods worth ₹ 1,800 purchased from Amudhanila on credit was not recorded in the books of accounts,
e) Used furniture sold for ₹ 350 was credited to the sales account.
Solution:
Rectification of Errors

Question 23.
The book-keeper of a firm found that the trial balance was cut by ₹ 922 (excess credit). He placed the amount in the suspense account and subsequently found the following errors
a) The total discount column on the credit side of the cash book ₹ 78 was not posted in the ledger.
b) The total of purchases book was short by ₹ 1,000.
c) A credit sale of goods to Natarajan for ₹ 375 was entered in the sales book as ₹ 735.
d) A credit sale of goods to Mekala for ₹ 700 was entered in the purchases book.
You are required to give rectification entries and prepare a suspense account.
Solution:
Rectification of Errors

Suspense Account

Question 24.
The books of Raman did not agree. The accountant placed the difference of ₹ 1,270 to the debit of the suspense account. Rectify the following errors and prepare the suspense account
a) Goods taken by the proprietor for his personal use ₹ 75 was not entered in the books.
b) A credit sale of goods to Shanmugam for ₹ 430 was credited to his account as ₹ 340.
c) A purchase of goods on credit for ₹ 400 from Vivek was entered in the sales book. However, Vivek’s account was correctly credited.
d) The total of the purchases returns book ₹ 300 was not posted.
Solution:
Rectification of Errors

Suspense Account

11th Accountancy Guide Rectification of Errors Additional Important Questions and Answers

I. Choose the correct answer.

Question 1.
The errors can be classified into ……………… types.
(a) One
(b) Two
(c) Three
(d) Four
Answer:
(d) Four

Question 2.
When one or both aspects of a transaction are recorded in the wrong category of an account, this is called ________.
a) Error of Principle
b) Error of Omission
c) Error of Commission
d) Error of original entry
Answer:
a) Error of Principle

Question 3.
The errors that make up for each other or neutralize each other are known as ………………
(a) Errors of commission
(b) Errors of principle
(c) Errors of omission
(d) Compensating errors
Answer:
(d) Compensating errors

Question 4.
₹ 60,000 paid on the extension of the building wrongly debited to Repairs account. This is called the error of ________.
a) Commission
b) Omission
c) Principle
d) None of these
Answer:
c) Principle

Question 5.
Sales book is undercast by ₹ 100, classify the error
(a) Errors of principle
(b) Errors of commission
(c) Errors in casting
(d) Errors of omission
Answer:
(c) Errors in casting

Question 6.
________ are those which cancel themselves out.
a) Error of principle
b) Error of Commission
c) Error of Omission
d) Compensating errors
Answer:
d) Compensating errors

Question 7.
________ errors can be located in the preparation of trial balance.
a) Error of principle
b) Error of Commission
c) Error of Omission
d) Compensating errors
Answer:
b) Error of Commission

Question 8.
An entry of ₹ 75 has been debited to Rajesh’s A/c as ₹ 57 is an error of ________.
a) Error of principle
b) Error of Commission
c) Error of Omission
d) Compensating errors
Answer:
b) Error of Commission

Question 9.
Casting errors are the result of ________.
a) Wrong totaling
b) Wrong Balancing
c) the wrong carry forward
d) None of the above
Answer:
a) Wrong totaling

Question 10.
Suspense account is usually closed when ________.
a) Accounts are finalized
b) After the completion of auditing
c) All the errors are rectified
d) None of the above
Answer:
c) All the errors are rectified

II. Very Short Answer Questions

Question 1.
What is error or omission?
Answer:
The failure of the accountant to record a transaction or an item in the books of accounts is known as an error of omission. It can be a complete omission or partial omission.

Question 2.
At what stages the errors can occur?
The following types of errors may occur in various stages:
Answer:

• At the stage of journalizing
• At the stage of posting
• At the stage of balancing
• At the stage of preparing trial balance

Question 3.
What do you mean by errors?
Answer:
Errors mean recording or classifying or summarising the accounting transactions wrongly or omissions to record them by a clerk or an accountant unintentionally.

Question 4.
What is an error or omission?
Answer:
The failure of the accountant to record a transaction or an item in the books of accounts is known as an error of omission. It can be a complete omission or partial omission.

Question 5.
What is an error of commission?
Answer:
When a transaction is incorrectly recorded, it is known as error of commission. It usually occurs due to lack of concentration or carelessness of the accountant.

Question 6.
Write a note on one-sided errors.
Answer:
When a one-sided error is detected before preparing the trial balance, no journal entry is required to be passed in the books. In such cases, the error can be rectified by giving an explanatory note in the account affected as to whether the concerned account is to be debited or credited.

Question 7.
Write a note on two-sided errors.
Answer:
When a two-sided error is detected before preparing the trial balance, it must be rectified by passing a rectifying journal entry in the journal proper after analyzing the error.

III. Short Answer Questions

Question 1.
What are the steps to be followed to locate the errors after the preparation of the trial balance?
Answer:
While preparing trial balance, if it does not tally, it is an indication of the presence of errors in the books of accounts. The difference in the trial balance is transferred to the suspense account and then errors are to be located and rectified.

The following are the steps to be followed to locate errors after preparing a trial balance

1. The totals of debit and credit columns of trial balance are to be checked
2. The balances of various ledger accounts shown in the trial balance are to be checked to ensure whether they are shown in the respective columns (debit or credit).
3. The difference in the trial balance must be halved and compared with the balances of the ledger to verify whether any ledger balance is recorded on the wrong side of the trial balance.
4. The totals of all the subsidiary books are to be checked, especially if the difference is ₹ 1, ₹ 100, etc.
5. If the difference is divisible by ‘9’, the difference may be due to the transposition of figures in the books (Writing ₹ 127 as ₹ 172). Hence, the possibilities of transposition of figures shall be checked.
6. The accounts of all the creditors and debtors are to be verified.
7. The correctness of the balances of various ledger accounts is to be ensured.
8. The correctness of the balances of various ledger accounts is to be ensured.
9. All the amounts carried forward from one page to the next are to be verified. .
10. If the difference still exists, as a final step all the entries in the journals should be verified.

Question 2.
What are the steps to be followed to locate the errors before preparation of trial balance?
Answer:
Errors may be located before preparing the trial balance either spontaneously or by intentional scrutiny of books of accounts.

The following are the steps to be followed to locate errors before preparing trial balance:

1. Scrutiny of entries made in the journal proper
2. Scrutiny of entries made in the subsidiary books
3. Checking the totals of the subsidiary books
4. Scrutiny of postings made to the ledger accounts
5. Scrutiny of balancing of ledger accounts

Question 3.
Spot out the location of errors before preparation of trial balance.
Answer:
Errors may be located before preparing the trial balance either spontaneously or by intentional scrutiny of books of accounts. The following are the steps to be followed to locate errors before preparing trial balance

1. Scrutiny of entries made in the journal proper.
2. Scrutiny of entries made in the subsidiary books.
3. Checking the totals of the subsidiary books
4. Scrutiny of balancing of ledger accounts.
5. Scrutiny of postings made to the ledger accounts

Question 4.
Rectify the following errors

1. Purchases Book is overcast by ₹ 3,500
2. Sales Book is undercast by ₹ 2,000
3. Purchases returns books have been overcast by ₹ 7,600
4. Sales returns book has been undercast by ₹ 500

Solution:
Rectification:

1. Credit Purchases Account with ₹ 3,500
2. Credit Sales Account with ₹ 2,000
3. Debit Purchases Returns account with ₹ 7,600
4. Debit Sales returns account with ₹ 500

Question 5.
Rectify the following errors
1. Sales book undercast by ₹ 5,000
2. Machinery purchased for ₹ 9000 passed through purchases Book.
3. Sales to Ram for ₹ 11,000 debited to his account as ₹ 10,100.
4. Repairs to building ₹ 3,640 debited to buildings account.
Solution:

Question 6.
Rectify the following errors
1. The purchase of machinery from A for ₹ 3,000 has been entered in the purchase daybook.
2. Received ₹ 1,000 from M but credited to N’s account.
3. ₹ 800 paid as wages for the erection of machine has been charged to Repairs account.
4. ₹ 250 received from Ganesh, previously written off, has been credited to Ganesh account
Solution:

Question 7.
Rectify the following Errors
1. Purchase book is overcast by ₹ 6,000
2. Sales book carried forward ₹ 630 instead of ₹ 360
3. Purchase from Sreesha ₹ 5, 000 has been posted to the debit side of her account.
4. Sale of old machinery for ₹ 50,000 has been entered in Sales book.
Solution:

Question 8.
Rectify the following error
1. Salary paid to manager ₹ 8,000 debited to his personal account.
2. Total the discount column in the debit side of the cash book is wrongly cast short. ₹ 540.
3. Total of sales book has been added ₹ 2,400 excess
4. ₹ 230 received in respect of a book debt was posted to the sales account
5. Goods sold for ₹ 3,873 to Raju were returned to us and recorded in the sales book.
Solution:

Question 9.
When a Trial Balance failed to agree, ₹ 37,900 was transferred to the credit of the suspense account. The following errors were discovered. Give journal entries and prepare a suspense account.
1. Sales daybook was undercast by ₹ 40,000
2. Purchase of machinery for ₹ 60,000 was passed through the purchase book.
3. Goods sold to Velu for ₹ 4,500 were posted to his account as ₹ 5,400.
4. Purchase returns book was overcast by ₹ 2,000
5. The total sales book from one page was carried forward to the next page as ₹ 12,000 instead of ₹ 11,000.
Solution:
Rectification of Entries

Suspense Account

Question 10.
In considering the trial balance, a book-keeper finds that the debit total exceeds the credit total by ₹ 3,520. The amount is placed to the credit of a newly opened suspense account. The following mistakes were discovered. Pass the necessary entries for rectifying the mistakes and show the suspense account.
a) Sales daybook was overcast by ₹ 1000
b) A sale of ₹ 500 to Rajesh was wrongly debited to Ramesh
c) General expenses ₹ 180 was posted as ₹ 800.
d) Cash received from Ganesh was debited to his account ₹ 1,500
e) While carrying forward the total of one page of the purchases day book to the next the amount of ₹ 12,350 was entered as ₹ 13,250.
Solution:
Rectification of Entries

Suspense Account

Question 11.
Pass journal entries to rectify the following entries
1. ₹ 4,500 received in respect of a book debt was posted to sales account
2. Defective goods worth ₹ 260 returned to Saran were recorded through the sales returns book.
3. Goods sold for ₹ 950 to Rakesh were returned to us and recorded in the sales book.
4. A purchase of ₹ 2,100 from Banu on the last day of the year was taken into stock, but the invoice was not passed through the purchase book.
Solution:
Rectification of Entries

Question 12.
Show how you will rectify the following entries.
1. A Credit sales of ₹ 650 to Raja were debited to Kaja.
2. A purchase of goods for ₹ 750 from Shaji was debited to his account.
3. An office typewriter purchased for ₹ 6,500 was debited to the Repairs account.
4. A sum of ₹ 3,900 received from a debtor was debited to his account.
5. Purchase of goods for the consumption of proprietor was debited to purchase account ₹ 1,000
Solution:
Rectification of Entries

Question 13.
Write down the rectifying journal entries for the following errors and show the suspense account.
1. The sales returns books have been undercast by ₹ 5,000
2. Goods worth ₹ 1,500 sold to Batiya have been credited to his account.
3. Purchase of furniture ₹ 7,000 has been entered in the purchases account.
4. Cash Rs.4,500 from Aadhira has been posted to his account as ₹ 5,400.
5. A bill received from X for ₹ 4,000 has been posted to the Bills payable account.
Solution:
Rectification of Entries

Suspense Account

IV. Long Question Answers

Question 1.
Explain the steps to be followed to locate errors after preparing a trial balance
Answer:
The following steps are to be followed to locate errors after preparing a trial balance

1. The totals of the debit and credit columns of the trial balance are to be checked.
2. The balances of various ledger accounts shown in the trial balance are to be checked to ensure whether they are shown in the respective columns (debit or credit).
3. The difference in the trial balance must be halved and compared with the balances of the ledger to verify whether any ledger balance is recorded on the wrong side of the trial balance.
4. The totals of all the subsidiary books are to be checked, especially if the difference is ₹1 to ₹ 100 etc.
5. If the difference is divisible by 9 the difference may be due to the transposition of figures in the books. (Writing ₹ 127 as ₹ 172). Hence, the possibilities of transposition of figures shall be checked.
6. The accounts of all the creditors and debtors are to be verified.
7. Postings from the subsidiary books to different accounts in the ledger are to be checked.
8. The correctness of the balances of various ledger accounts is to be ensured.
9. All the amounts carried forward from one page to the next area to be verified.
10. If the differences still exists, as a final step all the entries in the journals should be verified.

Question 2.
Briefly explain the Classification or errors
Answer:

The failure of the accountant to record a transaction or an item in the books of accounts is known as an error of omission. It can be a complete omission or partial omission.
1. Error of complete omission – It means the failure to record a transaction in the journal or subsidiary book or failure to post both the aspects in the ledger. This error affects two or more accounts.

2. Error of partial omission – When the accountant has failed to record a part of the transaction, it is known as an error of partial omission. This error usually occurs in posting. This error affects only one account.

3. Error of commission – When a transaction is incorrectly recorded, it is known as an error of commission. It usually occurs due to lack of concentration or carelessness of the accountant.

Errors of Principle: It means the mistake committed in the application of fundamental accounting principles in recording a transaction in the books of accounts.

4. Compensating errors – The errors that make up for each other or neutralize each other are known as compensating errors. These errors may occur in related or unrelated accounts. Thus, excess debit or credit in one account may be compensated by excess credit or debit in some other account. These are also known as offsetting errors.

5. Errors disclosed by the trial balance and errors not disclosed by the trial balance – Generally, one-sided errors are revealed by a trial balance. They will cause disagreement of totals of debit balances and credit balances. Two-sided errors are not revealed by a trial balance.

V. Additional Sums

Question 1.
Rectify the following errors
i) Purchases book overcast by ₹ 1,300
ii) Sales book under cast by ₹ 2,500
Solution:
i) Credit – Purchases A/c with ₹ 1,300
ii) Credit – Sales A/c with ₹ 2,500

Question 2.
Rectify the following errors
i) Purchases return book overcast by ₹ 750
ii) Sales return book under cast by ₹ 600
Solution:
i) Debit – Purchases return A/c with ₹ 750
ii) Debit – Sales return A/c with ₹ 600

Question 3.
Rectify the following errors
i) Purchases book is carried forward ₹ 850 Less
ii) Sales book total is carried toward ₹ 2,500 More
Solution:
i) Debit – Purchases A/c with ₹ 850
ii) Debit – Sales A/c with ₹ 2,500

Question 4.
Rectify the following errors
i) A total of ₹ 7,580 in the purchases book has been carried forward as ₹ 8,570
ii) The total of the sales book ₹ 7,500 or page 20 was carried forward to page 21 as ₹ 5,570
iii) Purchases return book was carried forward as ₹ 1,520 instead of ₹ 5,120
Solution:
i) Credit – Purchases A/c with ₹ 990
ii) Credit – Sales A/c with ₹ 1,980
iii) Credit – Purchases return A/c with ₹ 3,600

Question 5.
Rectify the following errors
i) Purchases from Bagavathi for ₹ 4,500 has been posted to the debit side of her account
ii) Sales to Vijay for ₹ 1,520 has been posted to his credit as ₹ 1,250
Solution:
i) Purchases from Bagavathi should have been posted to the credit of Bagavathi’s A/c, but it has been . debited. Hence, credit Bagavathi’s A/c with double the amount i.e, ₹ 9,000

ii) Sales to Vijay has to be debited in Vijay’s account but his account is credited with ₹ 1,250. Hence Debit Vijay’s A/c with ₹ 1,250 to ₹ 1,520 i.e, ₹ 2,770

Question 6.
Rectify the following errors
i) Purchases from should for ₹ 750 has been omitted to be posted to the personal A/c
ii) Sales to Khader for ₹ 780 has been posted to his account as ₹ 870
Solution:
i) This is an error of omission. Posting must be to the credit of Shakila’s A/c. Hence, post ₹ 750 to the credit of Skakila’s A/c.

ii) Here Khader’s has been debited with a wrong amount i.e., with an excess amount. To rectify this error, the excess amount must be credited to his account. Hence, Credit Khader’s A/c with ₹ 90.

Question 7.
The following errors were found in the book of pradhu. Give the necessary entries to correct them.
i) Salary of ₹ 10,000 paid to Murali has been debited to his personal account.
ii) ₹ 3,500 paid for a typewriter was charged to the office expenses account.
iii) ₹ 8,000 paid for furniture purchased has been charged to the purchases account.
iv) Repairs made were debited to the building account for ₹ 500
v) An amount of ₹ 5,000 withdrawn by the proprietor for his personal use has been debited to the trade expenses account.
iv) ₹ 2,000 received from Shanthi and Co. has been wrongly entered as from Shakila and Co.
Solution:
In the book of Prathu – Rectification of Errors

Question 8.
Give journal entries to rectify the following errors
i) Purchases of goods from Devi amounting to ₹ 25,000 have been wrongly passed through the sales Book.
ii) Credit sale of goods ₹ 30,000 to Rajan has been wrongly passed through the purchases Book
iii) Sold old furniture for ₹ 3,500 passed through the sales Book.
iv) Paid wages for the construction of Building debited to wages to account ₹ 1,00,000
v) Paid ₹ 10,000 for the installation of machinery debited to wages account.
vi) On 31st December 2003 goods worth ₹ 5,000 were returned by Manjia and were taken into stock on the same date, but no entry was passed in the books.
Solution:
Rectification of Errors

Question 9.
An accountant could not tally the Trial Balance. The difference of ₹ 5,180 was Temporality placed to the credit of suspense account for preparing the final account. The following errors were taken located.
i) Commission of ₹ 500 paid, was posted twice, once to, discount allowed account and once to commission account.
ii) The sales book was undercast by ₹ 1,000
iii) A Credit sales of ₹ 2,780 to Raja though correctly entered in the sale book, was posted wrongly to her account as Rs.3,860
iv) A Credit purchase from Nataraj of ₹ 1,500, though correctly entered in the purchases book, was wrongly debited to his personal account.
v) Discount column of the payments side of the book was wrongly added as ₹ 2,800 instead of ₹ 2,400
You are required to
i) Pass the necessary rectifying entries.
ii) Prepare suspense Account.
Solution:
Rectification of Errors

Suspense Account

Question 10.
Rectify the following Journal Entries
Rectification of Errors

Solution:
Rectification of Errors

Question 11.
Rectify the following Errors
i) ₹ 12,000 paid of salary to cashier Govind, stands debited to his personal account.
ii) An amount of ₹ 5,000 withdrawn by the proprietor for his personal use has been debited to trade Expenses A/c
iii) Cash received from Bala ₹ 300 was credited to Balu.
iv) A credit sale of ₹ 2,000 to Janakiram has been wrongly passed through the purchase book.
Solution:
Rectification of Errors

Question 12.
Rectify the following Errors
i) Repairs made were debited to building account ₹ 5,000
ii) Mahesh networked goods worth ₹ 2,000 no Entry was passed in the Book to this Effects
iii) Purchases of goods from Antony amounting to ₹ 1,500 have been debited to his accounts.
iv) ₹ 5,200 paid for the purchases of the typewriter was charged to the office expenses account.
Solution:
Rectification of Errors

Question 13.
Rectify the following Errors
i) Credit purchases of goods from Madhan of ₹ 300 have been wrongly Entered in the sales book.
ii) ₹ 500 received from Seivan has been credited to Selvi’s account
iii) ₹ 1,000 received as interest was credited to the commission account.
iv) Sales book total ₹ 878 was wrongly totaled as ₹ 788.
v) The total of this discount column, on the debit side of the cash book has been added shortly by ₹ 400.
Solution:
Rectification of Errors

Question 14.
Rectify the following Errors
A Book keeper found his trial balance not balanced, placed the difference amount in the suspense account, and subsequently found the following errors
a) Sales book was overcast by ₹ 1,500
b) ₹ 2900 received from Vani in full settlement of her account of ₹ 3,000 was posted in the cash book but omitted to be entered in her account.
c) The total of the sales book ₹ 12,000 was debited to sales return accounts.
d) ₹ 1,000 received as interest was credited to interest as ₹ 100 Give rectifying entries and show the suspense account.
Solution:
Rectification of Errors

Suspense Account

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

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

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

II. Very Short Answer Type Questions

Question 1.
Mention four types of subsidiary books.
Answer:

1. Purchase Book
2. Sales Book
3. Purchase Return Book
4. Sales Return Book

Question 2.
What is a purchase book?
Answer:

1. A 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 purchases of goods for cash are not entered in the purchases book.

Question 3.
What are purchases returns books?
Answer:
Purchases returns book is a subsidiary book in which transactions relating to the return of previously purchased goods to the suppliers, for which cash is not immediately received are recorded. 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 a sales book?
Answer:

1. A sales book is a subsidiary book maintained to record the 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 daybook, sold day book, sales journal, or sale register.

Question 5.
What is a sales returns book?
Answer:
Sales returns book is a subsidiary book, in which, details of the return of goods sold for which cash is not immediately paid are recorded. Just as goods may be returned to suppliers, goods may be returned by customers.

Question 6.
What is a 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 a credit note?
Answer:
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. Credit note is a statement prepared by a trader who receives back the goods sold from his customer. 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 a record of transactions, which do not find a place in the subsidiary books such as cashbook, purchases book, and sales book, purchases returns the 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 subdivisions of the 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 the previous year’s assets and liabilities.
2. These accounts are to be brought into the accounts of the current year.
3. Journal entry made at 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.

Question 11.
What Is an invoice?
Answer:
Entries in the purchases day book are made from invoices which are popularly known as bills. An 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. Thus, 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:

Question 2.
Mention the subsidiary books in which the following transactions are recorded.
Answer:

Question 3.
What are the advantages of subsidiary books?
Answer:
The advantages of maintaining subsidiary books are:
1. 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 transaction, individual transactions are properly and systematically recorded in the subsidiary books.

2. 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 all credit sales of goods are recorded in the sales book. It facilitates posting to purchases account, sales account, and concerning personal accounts.

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

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

5. Helpful in decision making: Subsidiary books provide complete details about every type of transaction 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 analyze the causes for sales returns and to adopt effective measures to remove deficiencies.

6. 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 checks, the possibility of the occurrence of errors or fraud may be avoided or minimized.

7. 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.

8. 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.

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

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

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 bills.
• The banker deducts a small amount of the bill which is called a 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?

Solution:

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.

Question 3.
From the following transactions write up the Sales daybook of M/s. Ram & Co., 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

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

Question 5.
Enter the following transactions in the purchases and sales books of Kannan, an automobile dealer, for the month of December 2017.

Solution:
In the books of Kannan
Purchase book

In the books of Kannan
Sales book

Question 6.
Prepare Purchases book and Sales book in the books of Santhosh Textiles Ltd., from the following transactions given for April 2017.

Solution:
In the books of Santhosh Textile Ltd,
Purchase Book

In the books of Santhosh Textile Ltd,
Sales Book

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.

Solution:
In the books of Robert Furniture Mart.
Purchases Book

In the books of Robert Furniture Mart.
Purchase return A/C

Ledger Account
Purchases Account

Balu Traders

Subash & Co.

Sunrise Furniture

Mouli Traders

Purchase Return Account

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.

Solution:
In the books of Suman

In the books of Suman
Purchase Returns Book

Question 9.
Enter the following transactions in the sales book and sales returns book of M/s. Guhan & Sons, who is a textile dealer.

Solution:
In the books of Guhan & Sons
Sales Books

In the books of Guhan & Sons
Sales Return Book

Question 10.
Record the following transactions in the sales book and sales returns book of M/s. Ponni & Co., and post them to the 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

In the books of Ponni & Co.
Sales Return Book

Ledger A/C
Sales Account

Senthil Account

Madhavan Account
Kanagasabai Account

Sales Return Account

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.

Solution:
In the books of Sachin account and Mukil account.
Purchase Book (Mukil Account)

Sales Book

Purchase Return Book

Sales return Book

Ledger
Sachin Account

Mukil Account

Question 12.
From the following information, prepare the necessary subsidiary books for Nalanda Book Stores.

Solution:
In the books of Nalanda Book Stores
Purchase Book

In the books of Nalanda Book Stores
Sales Book

Purchase return books

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 an 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

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) Cashbook

Question 11.
The cash discount allowed to a debtor should be 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 the purchase of furniture on credit?
a) Petty Cash Book
b) Journal Proper
c) Cash Book
d) None of the above
Answer:
b) Journal Proper

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 the 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 the 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 the 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 the book
Answer:
d) purchases return the 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

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

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

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 the 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 a stamp or it is drafted on 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 are 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 a 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 the 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.

Question 7.
Write notes on the 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 an 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 the purchase account. Pass rectifying entry on December 31, 2017.
Rectifying Entry

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 bills. The banker deducts a small amount of the bill which is called a discount and pays the balance in cash immediately to the holder of the bill.

Question 12.
State the reasons for returning 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 Return outward book.
2. Sales Return or Return inward book.

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 the 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.

Solution:
In the books of ram home appliances
Purchase book

Question 2.
Enter the following transactions in the purchases returns book of Hair who leading in automobiles and post them into 2017.
2017
Jan 5 – Returned to Anand 10 dutch plates @ ₹ 200 each not in accordance with the order.
Jan 14 – Returned to Chardran 5 brake shoes @ ₹ 200 each and 20 rearview Mirrors @ ₹ 350, each due to inferior quality
Solution:
In the books of Hari
Purchases Return book

Question 3.
From the transactions given below, Prepare the sales book of Kumar Stationery of July 2017,

Solution:
Sales account

Ledger Accounts
Sales Account

Yogesh Traders A/c

Kumaran & Co, A/c

Question 4.
Enter the following transaction in the returns inward book of Magesh a textile dealer.
2017
April 6 – Returned by Naren 40 shirts each costing ₹ 150 due to 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 the order.
Solution:
In the books of Magesh
Sales Return book

Question 5.
Enter the following transactions in proper subsidiary books.

Solution:
Purchase Book

Sales book

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

Sales Return Book

Question 7.
Write the following transaction in proper subsidiary books of Mr. Pugazh.

In the books of Mr. Pugazh
Purchased book

In the books of Mr. Pugazh
Purchased return book

Question 8.
Enter the following transaction in the proper subsidiary books of Mr. Somu.

Solution:
In the books of Mr. Somu
Purchase book

In the books of Mr. Somu
Purchased return book

In the books of Mr. Somu
Sales book

In the books of Mr. Somu
Sales return book

Question 9.
Enter the following transactions in the appropriate special M/s Padmini & Co.

Solution:
In the books of M/S Padmini
Purchase book

In the books of M/S Padmini
Sales book

In the books of M/S Padmini
Purchase return book

In the books of M/S Padmini
Sale return book

Question 10.
Enter the following transactions in the subsidiary books:

Solution:
Purchases Book

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

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

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

Question 14.
From the following transactions write up the sales daybook 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

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

Sales Return Book

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

Bills Payable Book

Tamilnadu State Board New Syllabus Samacheer Kalvi 12th Maths Guide Pdf Chapter 4 Inverse Trigonometric Functions Ex 4.6 Textbook Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 12th Maths Solutions Chapter 4 Inverse Trigonometric Functions Ex 4.6

Inverse Function Calculator is an online tool that helps find the inverse value for the given function.

Choose the most suitable answer from the given four alternatives:

Question 1.
The value of sin^-1(cos x), 0 ≤ x ≤ π is
(a) π – x
(b) x – \(\frac {π}{2}\)
(c) \(\frac {π}{2}\) – x
(d) x – π
Solution:
(c) \(\frac {π}{2}\) – x
Hint:
sin^-1(cos x) = sin^-1(sin(\(\frac {π}{2}\) – x)) = \(\frac {π}{2}\) – x

Question 2.
If sin^-1 x + sin^-1 y = \(\frac {2π}{3}\); then cos^-1 x + cos^-1 y is equal to
(a) \(\frac {2π}{3}\)
(b) \(\frac {π}{3}\)
(c) \(\frac {π}{6}\)
(d) π
Solution:
(b) \(\frac {π}{3}\)
Hint:
sin^-1x + cos^-1x + cos^-1y + sin^-1y = \(\frac {π}{2}\) + \(\frac {π}{2}\) = π
\(\frac {2π}{3}\) + cos^-1x + cos^-1y = π
cos^-1x + cos^-1y = π – \(\frac {2π}{3}\) = \(\frac {3π-2π}{3}\) = \(\frac {π}{3}\)

Question 3.
sin^-1\(\frac {3}{5}\) – cos^-1\(\frac {12}{13}\) + sec^-1\(\frac {5}{3}\) – cosec^-1\(\frac {13}{12}\) is equal to
(a) 2π
(b) π
(c) 0
(d) tan^-1\(\frac {12}{65}\)
Solution:
(c) 0
Hint:

Question 4.
If sin^-1 x = 2sin^-1 α has a solution, then
(a) |α| ≤ \(\frac {1}{√2}\)
(b) |α| ≥ \(\frac {1}{√2}\)
(c) |α| < \(\frac {1}{√2}\)
(d) |α| > \(\frac {1}{√2}\)
Solution:
(a) |α| ≤ \(\frac {1}{√2}\)
Hint:
If sin^-1 x = 2sin^-1 α has a solution then
–\(\frac {π}{2}\) ≤ 2sin^-1α ≤ \(\frac {π}{2}\)
–\(\frac {π}{4}\) ≤ sin^-1α ≤ \(\frac {π}{4}\)
sin(\(\frac {-π}{4}\)) ≤ α ≤ sin\(\frac {π}{4}\)
–\(\frac {1}{√2}\) ≤ α ≤ \(\frac {1}{√2}\)
-|α| ≤ \(\frac {1}{√2}\)

Question 5.
sin^-1(cos x) = \(\frac {π}{2}\) – x is valid for
(a) -π ≤ x ≤ 0
(b) 0 ≤ x ≤ π
(c) –\(\frac {π}{2}\) ≤ x ≤ \(\frac {π}{2}\)
(d) –\(\frac {π}{4}\) ≤ x ≤ \(\frac {3π}{4}\)
Solution:
(b) 0 ≤ x ≤ π
Hint:
sin^-1 (cosx) = \(\frac {π}{2}\) – x is valid for
cos x = sin (\(\frac {π}{2}\) – x)
cos x ∈ [0, π]
∴ 0 ≤ x ≤ π

Question 6.
If sin^-1 x + sin^-1 y + sin^-1 z = \(\frac {3π}{2}\), the value of show that x²⁰¹⁷ + y²⁰¹⁸ + z²⁰¹⁹ – \(\frac {9}{x^{101}+y^{101}+z^{101}}\) is
(a) 0
(b) 1
(c) 2
(d) 3
Solution:
(a) 0
Hint:

Question 7.
If cot^-1 x = \(\frac {2π}{5}\) for some x ∈ R, the value of tan^-1 x is
(a) –\(\frac {π}{10}\)
(b) \(\frac {π}{5}\)
(c) \(\frac {π}{10}\)
(d) –\(\frac {π}{5}\)
Solution:
(c) \(\frac {π}{10}\)
Hint:
tan^-1 x + cos^-1 \(\frac {π}{2}\)
tan^-1x = \(\frac {π}{2}\) – cot^-1 x = \(\frac {π}{2}\) – \(\frac {2π}{5}\)
= \(\frac {5π-4π}{10}\) = \(\frac {π}{10}\)

Question 8.
The domain of the function defined by f(x) = sin^-1 \(\sqrt {x-1}\) is
(a) [1, 2]
(b) [-1, 1]
(c) [0, 1]
(d) [-1, 0]
Solution:
(a) [1, 2]
Hint:
f(x) = sin^-1 \(\sqrt {x-1}\)
\(\sqrt {x-1}\) ≥ 0
-1 ≤ \(\sqrt {x-1}\) ≤ 1
∴ 0 ≤ \(\sqrt {x-1}\) ≤ 1
0 ≤ x – 1 ≤ 1
1 ≤ x ≤ 2
x ∈ [1, 2]

Question 9.
If x = \(\frac {1}{5}\) the value of cos(cos^-1x + 2sin^-1x) is
(a) –\(\sqrt{\frac {24}{25}}\)
(b) \(\sqrt{\frac {24}{25}}\)
(c) \(\frac {1}{5}\)
(d) –\(\frac {1}{5}\)
Solution:
(d) –\(\frac {1}{5}\)
Hint:
cos[cos^-1x + sin^-1x + sin^-1x] = cos(\(\frac {π}{2}\) + sin^-1x)
= -sin(sin^-1x)
[∵ cos(90+θ) = -sin θ]
= -x = –\(\frac {1}{5}\)

Question 10.
tan^-1(\(\frac {1}{4}\)) + tan^-1(\(\frac {2}{9}\)) is equal to
(a) \(\frac {1}{2}\)cos^-1(\(\frac {3}{5}\))
(b) \(\frac {1}{2}\)sins^-1(\(\frac {3}{5}\))
(c) \(\frac {1}{2}\)tan^-1(\(\frac {3}{5}\))
(d) tan^-1(\(\frac {1}{2}\))
Solution:
(d) tan^-1(\(\frac {1}{2}\))
Hint:

Question 11.
If the function f(x) = sin^-1(x² – 3), then x belongs to
(a) [-1, 1]
(b) [√2, 2]
(c) [-2, -√2]∪[√2, 2]
(d) [-2, -√2]
Solution:
(c) [-2, -√2]∪[√2, 2]
Hint:
-1 ≤ x² – 3 ≤ 1
-1 + 3 ≤ x² ≤ 1 + 3
⇒ 2 ≤ x² ≤ 4
±√2 ≤ x ≤ ± 2
[-2, -√2]∪[√2, 2]

Question 12.
If cot^-1 2 and cot^-1 3 are two angles of a triangle, then the third angle is
(a) \(\frac {π}{4}\)
(b) \(\frac {3π}{4}\)
(c) \(\frac {π}{6}\)
(d) \(\frac {π}{3}\)
Solution:
(b) \(\frac {3π}{4}\)
Hint:
A + B + C = π (triangle)
cot^-1 2 + cot^-1 3 + C = π

Question 13.
sin^-1(tan\(\frac {π}{4}\)) – sin^-1(\(\sqrt{\frac {3}{x}}\)) = \(\frac {π}{6}\). Then x is root of the equation
(a) x² – x – 6 = 0
(b) x² – x – 12 = 0
(c) x² + x – 12 = 0
(d) x² + x – 6 = 0
Solution:
(b) x² – x – 12 = 0
Hint:

Question 14.
sin^-1(2 cos²x – 1) + cos^-1(1 – 2 sin²x) =
(a) \(\frac {π}{2}\)
(b) \(\frac {π}{3}\)
(c) \(\frac {π}{4}\)
(d) \(\frac {π}{6}\)
Solution:
(a) \(\frac {π}{2}\)
Hint:
sin^-1(2 cos² x – 1) + cos^-1(1 – 2 sin²x)
= sin^-1 (2 cos² x – 1) + cos^-1 (1 – sin² x – sin² x)
= sin^-1(2 cos² x – 1) + cos^-1(cos² x – (1 – cos²x))
= sin^-1(2 cos² x – 1) + cos^-1(cos² x – 1 + cos²x)
= sin^-1(2 cos² x – 1) + cos^-1(2 cos² x – 1)
= \(\frac {π}{2}\) [∵ sin^-1 x + cos^-1 x = \(\frac {π}{2}\)]

Question 15.
If cot^-1(\(\sqrt {sinα}\)) + tan^-1(\(\sqrt {sinα}\)) = u, then cos 2u is equal to
(a) tan²α
(b) 0
(c) -1
(d) tan 2α
Solution:
(c) -1
Hint:
cot^-1 x + tan^-1 x = \(\frac {π}{2}\)
∴ u = \(\frac {π}{2}\)
cos 2u = cos 2(\(\frac {π}{2}\)) = cos π = -1

Question 16.
If |x| ≤ 1, then 2 tan^-1 x – sin^-1\(\frac {2x}{1+x²}\) is equal to
(a) tan^-1x
(b) sin^-1x
(c) 0
(d) π
Solution:
(c) 0
Hint:
sin^-1\(\frac {2x}{1+x²}\) = 2 tan^-1x
∴ 2 tan^-1 x – 2 tan^-1 x = 0

Question 17.
The equation tan^-1 x – cot^-1 x = tan^-1(\(\frac {1}{√3}\)) has
(a) no solution
(b) unique solution
(c) two solutions
(d) infinite number of solutions
Solution:
(b) unique solution
Hint:
tan^-1 x – cot^-1 x = tan^-1(\(\frac {1}{√3}\)) …….. (1)
tan^-1 x – cot^-1 x = \(\frac {π}{2}\) ……… (2)
Add 1 and 2
2 tan^-1 x = \(\frac {π}{6}\) + \(\frac {π}{2}\) = \(\frac {2π}{3}\)
tan^-1 x = \(\frac {π}{3}\)
x = √3 which is uniqe solution.

Question 18.
If sin^-1 x + cot^-1(\(\frac {1}{2}\)) = \(\frac {π}{2}\), then x is equal to
(a) \(\frac {1}{2}\)
(b) \(\frac {1}{√5}\)
(c) \(\frac {2}{√5}\)
(d) \(\frac {√3}{2}\)
Solution:
(b) \(\frac {1}{√5}\)
Hint:

Question 19.
If sin^-1 \(\frac {x}{5}\) + cosec^-1\(\frac {5}{4}\) = \(\frac {π}{2}\), then the value of x is
(a) 4
(b) 5
(c) 2
(d) 3
Solution:
(d) 3
Hint:

Question 20.
sin(tan^-1 x), |x| < 1 is equal to
(a) \(\frac {x}{\sqrt{1-x^2}}\)
(b) \(\frac {1}{\sqrt{1-x^2}}\)
(c) \(\frac {1}{\sqrt{1+x^2}}\)
(d) \(\frac {x}{\sqrt{1+x^2}}\)
Solution:
(d) \(\frac {x}{\sqrt{1+x^2}}\)
Hint:
tan a = x
W.K.T 1 + tan² a = sec² a
1 + x² = sec² a
sec a = \(\sqrt{1+x^2}\)
\(\frac {1}{cosa}\) = \(\sqrt{1+x^2}\)
cos a= \(\frac {1}{\sqrt{1+x^2}}\)
sin a = \(\sqrt{1-cos^2a}\) = \(\sqrt{1-\frac {1}{1+x^2}}\)
\(\sqrt{\frac{1+x^2 -1}{1+x^2}}\) = \(\frac {x}{\sqrt{1+x^2}}\)

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

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

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

II. Very Short Answer Type Question

Question 1.
What is meant by revenue Expenditure?
Answer:
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. It is recurring in nature. It is incurred to generate revenue for a particular accounting period. The revenue expenditure may be incurred in relation to revenue or in relation 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 assets is an example of 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 the sale of goods
• Interest on investments received
• Respect Received
• Dividend from investment in shares.

Question 5.
What is meant by deferred revenue expenditure?
Answer:
An expenditure which is revenue expenditure in nature, the benefits of which is to be derived over a subsequent period or periods is known as deferred revenue expenditure.

III. Short Answer Questions

Question 1.
Distinguish between capital expenditure and revenue expenditure.
Answer:

Question 2.
Distinguish between capital receipt and revenue receipt.
Answer:

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

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 on a 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 land ₹ 20,000.
2. Heavy advertising cost of ₹ 12,00,000 spent on introducing a new product.
3. Renewal of factory license ₹ 12,000.
4. A sum of ₹ 4,000 was spent on painting the factory.

Solution:

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

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. The 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

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

I. Choose the correct answer.

Question 1.
Cost of acquisition of land and building is an example of ………………
(a) Capital expenditure
(b) Revenue expenditure
(c) Capital receipts
(d) Revenue receipts
Answer:
(a) Capital 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.
……………… expenditure is recurring in nature.
(a) Capital expenditure
(b) Revenue expenditure
(c) Capital loss
(d) Capital profit
Answer:
(b) Revenue expenditure

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.
Considerable amount spent on advertising is an example of ……………… expenditure.
(a) capital
(b) revenue
(c) deferred
(d) none of these
Answer:
(c) deferred

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

Question 7.
The transaction which provides 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 the capital receipt?
Answer:
The receipt which is not revenue in nature is called a 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 2.
Write a short note on the Capital receipt.
Answer:
The receipt which is not revenue in nature is called a 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 benefits for more than one accounting period.
2. It includes the 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 wrote off) is shown on the assets side balance sheet.

Question 6.
Distinguish Capital, Revenue 8i Deferred revenue expenditure.
Answer:

III. Short Answer Questions

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

1. ₹ 10,000 spent as traveling 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 the 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 license 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.

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.

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.

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

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

II. Very Short Answer Type Questions

Question 1.
Write a note on the trading account.
Answer:
Trading refers to buying and selling of goods with the intention of making a profit. The trading account is a nominal account which shows the result of buying and selling goods for an accounting period. A trading account is prepared to find out the difference between the revenue from sales and the 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. For 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:
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.

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

1. Purchases returns or returns outwards are a normal part of the business.
2. Goods may be returned to the 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:
Direct expenses:

• Carriage inwards or freight inwards
• Wages Indirect expenses:

Indirect expenses:

• Office and administrative expenses
• Selling and distribution expenses

Question 6.
Mention any two differences between trial balance and balance sheet.
Answer:

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

1. Provides information about gross profit or gross loss.
2. Provides an opportunity to safeguard against possible losses.

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

1. Ascertainment of net profit and net loss
2. To compare the profits
3. To have control over 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:
Businessmen want to know the profitability and the financial position of the business. These can be ascertained by preparing the final accounts or financial statements. 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.

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 accounts.
2. It is done by passing necessary closing entries in the journal properly.
3. Purchases have a debit balance and a purchase return have a credit balance.
4. At the end of the accounting year, the balance in the purchases returns account is closed by transferring to the purchases account.
5. Similarly, sales account has a credit balance and sales returns have a debit balance.
6. At the end of the accounting year, the balance in the sales returns account is closed by transferring to the sales account.
7. The various closing entries are as follows:
   (e.g.) for closing purchases returns account
   

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:
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.

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 the 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 favorable if the assets exceed the external liabilities. The firm’s solvency position is not favorable if the external liabilities exceed the assets.

Question 6.
What is meant by grouping and Marshalling assets and liabilities?
Answer:
1. The term ‘grouping’ means showing the items of similar nature under a common heading. For example, the amount due from various customers will be shown under the head Sunday debtors’.

2. ‘Marshalling’ is the arrangement of various assets and liabilities in proper order. Marshaling can be made in one of the following two ways:

• In the order of liquidity
• In the order of permanence

IV. Exercises

Question 1.
Prepare trading account in the books of Sivashankar from the following figures

Solution:
Trading account

Question 2.
Prepare trading account in the books of Mr. Sanjay for the year ended 31^st December 2017

Solution:
Trading account as on 31^st Dec 2017

Question 3.
From the following balances taken from the books of Saravanan, calculate gross profit for the year ended December 31, 2017

Solution:
Trading account as on 31^st Dec 2017

Question 4.
From the following details for the year ended 31^st March 2018, prepare a trading account.

Solution:
Trading account as of 31^st Mar 2018

Question 5.
Ascertain gross profit or gross loss from the following:

Solution:
Trading account

Question 6.
From the following balances taken from the books of Victor, prepare a trading account for the 1st year ended December 31, 2017:

Solution:
Trading account as on 31^st Dec 2017

Question 7.
Compute cost of goods sold from the following information

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:

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

Question 9.
Prepare profit and loss account in the books of Kirubavathi for the year ended 31^st December, 2016 from the following information:

Solution:
Trading account as on 31^st Dec 2016

Question 10.
Ascertain net profit or net loss from the following:

Solution:
Trading account

Question 11.
From the following details, prepare a profit and loss account.

Solution:
Trading account

Question 12.
From the following information, prepare a profit and loss accounts for the year ending 31^st December 2016.

Solution:
Trading account as of 31^st Dec 2016

Question 13.
From the following balances obtained from the books of Mr. Ganesh, prepare trading and profit and loss accounts.

Solution:
Trading and Profit & loss account

Question 14.
From the following balances extracted from the books of a trader, ascertain gross profit and net profit for the year ended March 31^st, 2017.

Closing stock on December 31.12.2017 was ₹ 4,500
Solution:
Trading and Profit & loss A/c for the year ended 31^st Mar 2017

Question 15.
From the following particulars, prepare a balance sheet in the books of Bragathish as of 31^st December 2017

Solution:
Balance Sheet as of 31^st Dec 2017

Question 16.
Prepare trading and profit and loss account in the books of Ramasundari for the year ended 31^st December 2017 and balance sheet as on that date from the following information:

Solution:
Trading and Profit & loss A/c for the year ended 31^st Dec 2017

Balance Sheet as on Ramasundari on 31^st  December 2017

Question 17.
From the Trial balance, given by Saif, prepare final accounts for the year ended 31^st March 2018 in his books.

Closing stock (31-12-2017) ₹ 14,500
Solution:
Trading and Profit & loss A/c for the year ended 31^st Mar 2018

The balance sheet of saif on 31^st Mar 2018

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.

Closing stock (31^st March 2018) ₹ 8,000
Solution:
Trading and Profit & loss A/c for the year ended 31^st Mar 2018

Balance sheet of Deri as of 31^st March 2018.

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

I. Choose the correct answer.

Question 1.
The income statement is divided into ……………….. parts.
(a) one
(b) two
(c) three
(d) four
Answer:
(b) two

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

Question 3.
Balances of all ……………….. accounts are required to be closed on the last day of the accounting year.
(a) Nominal
(b) Personal
(c) Real
(d) Representative personal
Answer:
(a) Nominal

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.
Sales – Gross Profit = ………………..
(a) Sales
(b) Cost of goods sold
(c) Gross profit
(d) Gross loss
Answer:
(b) Cost of goods sold

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

Question 7.
Which one is correctly matched?
(a) Bad debts – Indirect expense
(b) Wages – Asset
(c) Salary – Trading account
(d) Net Profit – Asset
Answer:
(a) Bad debts – Indirect expense

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.
A balance sheet is a part of the ……………….. account.
(a) Trading
(b) Profit and Loss
(c) Income statement
(d) Final
Answer:
(d) Final

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

Question 11.
The balance sheet of business concern can be presented in the ……………….. forms.
(a) two
(b) three
(c) four
(d) six
Answer:
(a) two

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.
These are the assets which get exhausted gradually in the process of excavation.
(a) Wasting assets
(b) Nominal assets
(c) Liquid assets
(d) Current assets
Answer:
(a) Wasting assets

Question 14.
Net profit or Net loss ¡s transferred 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 purchases. As opening stock would have been sold during the year, the cost of opening stock is included in the 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 godown or place of business and to make them to the 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 godown or business premises is called carriage inwards or carriage on purchases or freight inwards.

Question 5.
What are 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 are Dock Charges?
Answer:
These are the charges levied for shipping the cargo while entering or leaving docks. When they are paid for the import of goods, they are treated as direct expenses.

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 realizable 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.

III. Short Answer Questions

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

1. Current assets are those assets that 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 the bank, short-term investments, bills receivable, debtors, prepaid expenses, accrued income, closing stock, etc.
4. Among these, the closing stock is valued at cost or realizable 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 cannot be seen or touched.
2. Examples: goodwill, trade-marks, copyrights, 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 that helps in producing the goods.

Question 3.
What is the Need for the preparation of a 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 the gross profit ratio by expressing the gross profit as a percentage of sales.
• It helps to compare and analyze the ratios of the previous years.
• Thus, it provides data for comparison, 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 analyze 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.
• The trading account also shows sales revenue, which is a direct income. With the help of a trading account, the 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 the preparation of profit and loss accounts?
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 the preparation of the balance sheet.

Question 5.
What is the Need for the preparation of a 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 in 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 the 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 if the external liabilities exceed the assets.

Question 6.
What are the Characteristics of the 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 debt 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 the assets side, whereas personal and real accounts having credit balances are shown on the left-hand side known as the liabilities side.

c) The totals of the two sides of the balance sheet must be equal. If the totals are not equal, it indicates the existence of the 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 the 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 the 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 the 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 of more than a year they are called long-term investments. If they are invested for a period of 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.

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 the 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.

Solution:
Trading Account

Question 2.
From the following figures, ascertain the gross profit

Solution:
Trading Account

Question 3.
Front the information given below prepare trading account.

Solution:
Trading Account

Question 4.
From the following particulars calculate gross profit.

Solution:
Trading Account

Question 5.
Calculate the Grose profit from the following figures

Solution:
Trading Account

Question 6.
Prepare profit and loss account for the year ending 31.3.2017

Solution:
Trading Account

Question 7.
From the following information, prepare the Profit and Loss Account of a Trader for the year ending 31st March 2017.

Solution:

Question 8.
Prepare Trading and Profit Si Loss account from the following information:

Solution:
Trading and Profit & loss A/c Cr

Question 9.
From the following information, prepare a Balance Sheet for Mr.A as of 31st March 2016.

Solution:

Question 10.
From the following information prepare a balance sheet

Solution:
Balance Sheet

Question 11.
From the following information prepare a trading account for the year ended 31.12.2016.

Solution:
Trading A/c for the year ended 31st Dec 2016

Question 12.
From the following balance extracted from the books of M/S Lavanya and sons, prepare a trading account for the year ended 31st March 2017.

Solution:
Trading A/c for the year ended 31st Mar 2017

Question 13.
Prepare trading account for the year ended 31st December 2017 from the following.

Closing stock is valued at ₹ 6,00,000
Solution:
Trading A/c for the year ended 31st Dec 2017

Note: Selling expenses, carriage on sales advertisement, and office rent will not appear in the trading account as they are indirect expenses.

Question 14.
Following in then extract of a trial balance as of 31st December 2017 prepare trading account.

Solution:
Trading A/c for the year ended 31st Dec 2017

Note:
Closing stock will not appear

Question 15.
From the following information prepare a trading account for the year ending 31st December 2017.

Solution:
Trading A/c for the year ended 31st Dec 2017

Question 16.
Compute the cost of goods sold from the following.

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 the cost of goods sold.

Question 17.
Find the number of sales from the following.

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

Question 18.
Following the information prepare a profit and loss account for 31st March 2018.

Solution:
Profit and loss account for the year ended 31st March 2018

Question 19.
Prepare the profit and loss account for the year ended 31st December 2017.

Solution:
Profit and loss account for the year ended 31st December 2017

Note: Carriage inwards will not appear in the profit and loss account as is a direct expense.

V. Long Answers

Question 1.
The following trial balance of Mr.A is extracted on 31.12.2017. Prepare Trading and Profit and Loss accounts. The closing stock is valued at ₹ 35,000,

Solution:
Trading and Profit & loss A/c for the year ended 31 Dec 2017

Balance Sheet of Mr. A as on 31.12.2017

Question 2.
From the following balances extracted from the accounts of Shri & Co for the year ending 31.03.2018, prepare Trading and Profit & loss account and also Balance sheet as of that date.

Solution:
Trading Account of Shri & Co for the year ended 31 Mar 2018

Balance Sheet as of 31 Mar 2018

Question 3.
From the trial balance of 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.

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

Balance Sheets as of 31 Dec 2017

Question 4.
The following particulars prepare profits and loss account year ended 31st December 2017.

Solution:
Profit and loss account for the year ended 31st Dec 2017

Question 5.
Following the balance of Niruban, prepare a balance sheet as of 31st December 2017.

Solution:
Balance Sheet as of 31^st Dec 2017

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

Solution:
Balance Sheet as on 31st Dec 2016

Balance sheet as of 31st December 2016

Question 7.
The trial balance of sharn, prepare trading and profit and loss account for the year ending 31st December 2013 was valued at 25,00,000

Solution:
Profit and loss account for the year ended 31st Dec 2013

Balance sheet as of sharan 31st December 2017

Question 8.
The trial balance of Ms. Kalpana shows the following balance on March 31.2017

Adjustment:
The closing stock was valued at ₹ 60,000

The balance sheet of Ms. Kalpana as of 31st March 2017

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

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

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

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

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 as depreciation. It is an allocation of cost against the benefits 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:

Question 4.
What is the annuity method?
Answer:
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. 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. To calculate the amount of depreciation, the annuity factor is used. The annuity factor can be found out from the annuity table or by using a formula. The amount of depreciation is computed as follows:
Amount of depreciation = Annuity factor x original cost of the asset.

Question 5.
What is the sinking fund method?
Answer:

1. The 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, the amount charged as depreciation is transferred to the depreciation fund and invested outside the business.
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.

III. Short Answer Questions

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

1. To find out the true profit or loss
2. To present the true and fair view of financial position
3. To facilitate the replacement of fixed assets
4. To avail tax benefits
5. To comply with legal requirements

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:

• Good maintenance naturally increases the life of the asset.
• When there is a lack of maintenance, there is the possibility of more depreciation.

6. Abnormal factors:

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

Question 3.
State the advantages and limitations of the straight-line method of depreciation.
Answer:
Advantages:

• Simple and easy to understand
• Equality of depreciation burden
• Assets can be completely written off
• Suitable for the assets having fixed working life

Limitations:

• Ignores the actual use of the asset
• Ignores the interest factor
• The total charge on the assets will be more when the asset becomes older
• Difficulty in the determination of scrap value

Question 4.
State the advantages and limitations of the 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:

IV. Exercises

Straight-line Method:

Question 1.
A firm purchased a plant for ₹ 40,000. Erection charges amounted to ₹ 2,000. The effective life of the plant is 5 years. Calculate the amount of depreciation per year under the straight-line method.
Solution:

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:

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 the straight-line method.
Solution:

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:

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:

Note:
Original cost = Purchases price + Expense to be Capitalized
= 80,000 + 20,000
= ₹ 1,00,000

Question 6.
Machinery was purchased on 1^st 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 the straight-line method. The books are closed on 31^st March each year. Calculate the amount of depreciation on machinery for the first two years.
Solution:
Calculation on the amount of depreciation on machinery

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

Question 7.
An asset is purchased on 1.1.2016 for ₹ 25,000. Depreciation is to be provided annually according to the straight-line method. The useful life of the asset is 10 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 the first two years.
Solution:

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:

Journal entries:

Machinary Account:

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.

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 install the machinery expenses incurred was ₹ 28,000. Depreciate machinery 10% p.a. under the 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:
Machinery Account

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 the straight-line method. Prepare machinery account and depreciation account for the years 2014-15 to 2016-17.
Solution:
Machinery Account

Depreciation Account

Notes

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 the diminishing balance method.
Solution:

Question 13.
A boiler was purchased on 1^st 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 31^st 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.

Question 14.
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:

Question 15.
A firm acquired a machine on 1^st 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 1^st April 2015.
Solution:
Machinery Account

Depreciation Account

Question 16.
A firm purchased a machine for ₹ 1,00,000 on 1-7-2015. Depreciation is written off at 20% on the reducing balance method. The firm closes its books on 31st December each year. Show the machinery account upto 31-12-2017.
Solution:
Machinery Account

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.

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 underwritten down value method by assuming the rate of depreciation as 10% p.a. and the accounts are dosed on 31st December every year.
Solution:

Machinery Account

Question 19.
Raj & Co purchased a machine on 1^st 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 the diminishing balance method. Accounts are closed on 31st December every year. Show the machinery account for the years 2014 and 2015.
Solution:

Machinery Account

11th Accountancy Guide Depreciation Accounting Additional Important Questions and Answers

I. Choose the correct answer.

Question 1.
Depreciation is the gradual and permanent decrease in the value of an asset from any cause ……………….
(a) Owen
(b) Wheeler
(c) Spicer and Pegler
(d) R.N. Carter
Answer:
(d) R.N. Carter

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 normal use of tangible asset results in physical deterioration which is called ……………….
(a) Wear and tear
(b) Abnormal factors
(c) Obsolescence
(d) Efflux of time
Answer:
(a) Wear and tear

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

Question 5.
………………. is also known as residual value.
(a) Book value
(b) Scrap value
(c) Amortization
(d) Wear and tear
Answer:
(b) Scrap 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 the rate of depreciation is 10%. What are the depreciation expenses for the current accounting period using the 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 a 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 the 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 the 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.
The cost of an asset is ₹ 3, 00,000. The rate of depreciation is 10% on the 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.
The 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 the WDV method of depreciation; the book value of assets after 4 years is 24% of the 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

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

II. Short Answer Questions

Question 1.
State R.N. Carter’s definition of depreciation.
Answer:
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 realized at the end of the estimated useful life of an asset is known as the scrap value of the asset. It is also known as residual value.
2. In determining the scrap value, costs to be incurred for the removal and sale of the asset should be deducted from the estimated gross realizable value.

Question 3.
What is obsolescence?
Answer:
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.

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 the ‘Straight Line Method’ of depreciation?
Answer:

1. Under this method, a fixed percentage of the original cost of the asset is charged every year by way of depreciation. Hence it is called the 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 a fixed installment 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 the straight-line method.

Question 6.
What is the written-down value method?
Answer:
Under this method, depreciation is charged at a fixed percentage on the written down value of the asset every year. Hence, it is called the written-down value method.

Question 7.
What is the ‘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 livestock, loose tools, etc.

Question 8.
What is the ‘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 a 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 the 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 the estimated useful life of an asset.
• It can be calculated in terms of the 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 computation 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 realized at the end of the estimated useful life of an asset is known as the scrap value of the asset. It is also known as residual value.
• In determining the scrap value, costs to be incurred for the removal and sale of the asset should be deducted from the estimated gross realizable value.

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

Question 10.
Write a note on the sum of years of digits method.
Answer:
This method is similar to the diminishing balance method. The amount of depreciation goes on decreasing year after year in proportion to the unexpired life of the asset. This method is suitable for those assets having more profitability of obsolescence and increased repair charges as the assets grow older. Under this method, the amount of depreciation per year is calculated by multiplying the cost of the asset and the number of remaining years of life and dividing it by the sum of the digits of all years of the life of the asset.

Question 11.
Find the amount of depreciation
Cost Price – ₹ 28,000 ; Estimated Life – 6 years; Scrap Value ₹ 4,000
Solution:

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:

Question 13.
A company purchased a plant for ₹ 2,00,000. The useful life of the asset is 10 years and the scrap value is ₹ 40, 000. Find the rate of depreciation under the straight-line method.
Solution:

III. Long Answer Questions

Question 1.
Find out the rate of depreciation under the straight-line method.
Cost of asset – ₹ 10,000
Scrap value – ₹ 1,000
Estimated Life 10 years
Solution:

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:

Question 3.
A machine was purchased For ₹ 2,40,000, on 1.1.2010. This is expected to last for five years. Estimated scrap at the end of a given year in ₹ 40,000. Find out the rate of depreciation under straight-line method.
Solution:

Question 4.
A company has purchased 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:

Question 5.
Monisha Garments purchased machinery on 1.4.2015 for ₹ 2,40,000. After three years the plane was sold for ₹ 1,80,000 The firm charges depreciation at the rate of 10% per annum on the straight 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:
Machinery Account

Depreciation Account

Question 6.
Pugazh & CO purchased 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 unsuitable and sold for ₹ 3,50,000. Prepare machinery A/C assuming that the account is closed on 31st March every year.

Solution:
Machinery Account

Question 7.
A Company purchased 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 off 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 closed 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 – I^st year
1.4.2002- 31.3.2003 = 24,000 – II^nd year
1.4.2003- 1.10.2003 = 12,000 – III^rd 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 – II^nd year
1.4.2003 – 31.3.2004 = 6,000 – III^nd year

III. Machinery purchased on 1.10.2003 for Rs.1,50,000
1.10.2003 – 31.3.2004 = 7,500 – III^rd year

Machinery Account

Depreciation Account

Question 8.
A plant is purchased for ₹ 90,000, It is depreciated as 10% p.a on reducing balance for the three years. When it becomes absolute due to a new method of production and is scrapped. The scrap produces ₹ 66,000 at the end of the third year. Prepare plant account for three years.
Solution:
Calculation of profit or loss on sales of the plant.

Plant Account

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 closes 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.

Machinery Account

Depreciation Account

Question 10.
Dhanuja Shree started business on 1st April 2001 and she purchased 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 the Diminishing balance method. The account is closed every year on 31^st March. Prepare machinery account and depreciation account for the first three years.
Solution:
Calculation of depreciation @ 15 % p.a.

Machinery Account

Depreciation Account

Question 11.
On 1^st 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 installment method. Prepare the machinery account.
Solution:

Machinery Account

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 the straight-line method. Prepare Machinery Account and Depreciation Account for the year 2014 to 2017.
Solution:
Machinery Account

Depreciation Account

Question 13.
Shreyan & Co. purchased a computer for ₹ 47,000 on 1st October 2012 and installed it by spending ₹ 3,000. Every year depreciation is to be charged at 10% on its cost. The computer is sold on 1st July 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

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

Question 15.
In a business, there was a machine for ₹ 90,000 on 1st January 2014. On 30.06.2014, another piece of 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 a fixed installment basis.
Solution:
Machinery Account

Tamilnadu State Board New Syllabus Samacheer Kalvi 11th Accountancy Guide Pdf Chapter 8 Bank Reconciliation Statement Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

11th Accountancy Guide Bank Reconciliation Statement Text Book Back Questions and Answers

I. Multiple Choice Questions

Choose the correct answer.

Question 1.
A bank reconciliation statement is prepared by ________.
a) Bank
b) Business
c) Debtor to the business
d) Creditor to the business
Answer:
b) Business

Question 2.
A bank reconciliation statement is prepared with the help of ________.
a) Bank statement
b) Cash book
c) Bank statement and bank column of the cash book
d) Petty cash book
Answer:
c) Bank statement and bank column of the cash book

Question 3.
Debit balance in the bank column of the cash book means ________.
a) Credit balance as per bank statement
b) Debit balance as per bank statement
c) Overdraft as per cash book
d) None of the above
Answer:
a) Credit balance as per bank statement

Question 4.
A bank statement is a copy of ________.
a) Cash column of the cash book
b) Bank column of the cash book
c) A customer’s account in the bank’s book
d) Cheques issued by the business
Answer:
c) A customer’s account in the bank’s book

Question 5.
A bank reconciliation statement is prepared to know the causes for the difference between:
a) The balance as per the cash column of the cash book and bank column of the cashbook
b) The balance as per the cash column of the cash book and bank statement
c) The balance as per the bank column of the cash book and the bank statement
d) The balance as per petty cash book and the cash book
Answer:
c) The balance as per the bank column of the cash book and the bank statement

Question 6.
When money is withdrawn from bank, the bank ________.
a) Credits customer’s account
b) Debits customer’s account
c) Debits and credits customer’s account
d) None of these
Answer:
b) Debits customer’s account

Question 7.
Which of the following is not the salient feature of bank reconciliation statement?
a) Any undue delay in the clearance of cheques will be shown up by the reconciliation
b) Reconciliation statement will discourage the accountant of the bank from embezzlement
c) It helps in finding the actual position of the bank balance
d) Reconciliation statement is prepared only at the end of the accounting period
Answer:
d) Reconciliation statement is prepared only at the end of the accounting period

Question 8.
Balance as per cash book is ₹ 2,000. Bank charge of ₹ 50 debited by the bank is not yet shown in the cash book. What is the bank statement balance now?
a) 1,950 credit balance
b) 1,950 debit balance
c) 2,050 debit balance
d) 2,050 credit balance
Answer:
a) 1,950 credit balance

Question 9.
Balance as per bank statement is 1, 000. Cheque deposited, but not yet credited by the bank is 2, 000. What is the balance as per bank column of the cash book?
a) 3,000 overdraft
b) 3,000 favourable
c) 1,000 overdraft
d) 1,000 favourable
Answer:
b) 3,000 favourable

Question 10.
Which one of the following is not a timing difference?
a) Cheque deposited but not yet credited
b) Cheque issued but not yet presented for payment
c) Amount directly paid into the bank
d) Wrong debit in the cash book
Answer:
d) Wrong debit in the cash book

II. Very Short Answer Questions

Question 1.
What is meant by bank overdraft?
Answer:
It is not possible to have unfavourable cash balance in the cash book. But, it is possible to have unfavourable balance in the bank account. When the business is not having sufficient money in its bank account, it can borrow money from the bank. As a result of this, the amount is overdrawn from the bank.

Question 2.
What is a bank reconciliation statement?
Answer:
The bank reconciliation statement is a statement that reconciles the balance as per the bank column of the cash book with the balance as per the bank statement by giving the reasons for such difference along with the amount. The internal record of the business (bank column of cash) can be reconciled with the external record (bank statement).

Question 3.
State any two causes of disagreement between the balance as per bank column of cash book and bank statement.
Answer:

1. Cheques issued but not yet presented for payment.
2. Cheques deposited into the bank but not yet credited.

Question 4.
Give any two expenses which may be paid by the banker as per standing instruction.
Answer:

1. Bank Charges
2. Interest

Question 5.
Substitute the following statements with one word/phrase
(a) A copy of the customer’s account issued by the bank.
(b) Debit balance as per bank statement.
(c) Statement showing the causes of disagreement between the balance as per cash book and balance as per bank statement.
Answer:
(a) Pass book
(b) Pass book favourable
(c) (1) Timing difference, (2) Errors in recording

Question 6.
Do you agree with the following statements? Write “yes” if you agree, and write “no” if you Disagree
Answer:

1. The bank reconciliation statement is prepared by the banker. – Yes
2. Adjusting the cash book before preparing the bank reconciliation statement is compulsory. – No
3. Credit balance as per bank statement is an overdraft. – No
4. Bank charges debited by the bank increases the balance as per bank statement. – No
5. Bank reconciliation statement is prepared to identify the causes of differences between balance as per bank column of the cash book and balance as per cash column of the cash book. – Yes

III. Short Answer Questions

Question 1.
Give any three reasons for preparing a bank reconciliation statement.
Answer:

1. To identify the reasons for the difference between the bank balance as per the cash book and bank balance as per bank statement.
2. To identify the delay in the clearance of cheques.
3. To ascertain the correct balance of the bank column of the cash book.
4. To discourage the accountants of the business as well as the bank from misusing funds.

Question 2.
What is meant by the term “cheque not yet presented?”
Answer:

1. When the cheques are issued by the business, it is immediately entered on the credit side of the cash book by the business.
2. This may not be entered in the bank statement on the same day.
3. It will be entered in the bank statement only after it is presented with the bank.

Question 3.
Explain why does money deposited into the bank appears on the debit side of the cash book, but on the credit side of the bank statement?
Answer:
When the cheques are deposited into the bank, the amount is debited in the cash book on the same day. But, these may not be shown in the bank pass book on the same day because these will be entered in the bank statement only after the collection of the cheques.

Question 4.
What will be the effect of interest charged by the bank, if the balance is an overdraft?
Answer:

1. If the business has taken any loan or overdrawn, interest has to be paid by the business.
2. The entries for bank charges and interest are made in the bank statement.
3. The cash book shows more balance than the bank statement.

Question 5.
State the timing differences in BRS with examples.
Answer:
The timing differences in BRS are:

1. cheques issued but not yet presented for payment
2. cheques deposited into the bank but not yet credited
3. bank charges and interest on loan and overdraft
4. interest and dividends collected by the bank
5. dishonour of cheques and bills
6. amount paid by parties directly into the bank
7. payment made directly by the bank to others
8. bills collected by the bank on behalf of its customer

IV. Exercises

Question 1.
From the following particulars prepare a bank reconciliation statement of Jayakumar as of 31st December 2016.
a) Balance as per cash book ₹ 7,130
b) Cheque deposited but not cleared ₹ 1,000
c) A customer has deposited ₹ 800 into the bank directly
Solution:
Bank reconciliation statement of Jayakumar as of 31st December 2016.

Question 2.
From the following particulars of Kamakshi traders, prepare a bank reconciliation statement as of 31st March 2018.
a) Debit balance as per cash book ₹ 10,500
b) Cheque deposited into bank amounting to ₹ 5,500 credited by bank but entered twice in the cash book
c) Cheques issued and presented for payment amounting to ₹ 7,000 omitted in the cash book
d) Cheque book charges debited by the bank ₹ 200 not recorded in the cash book.
e) Cash of ₹ 1,000 deposited by a customer of the business in cash deposit machine not recorded in the cash book.
Solution:
Bank reconciliation statement of Kamakshi traders as of 31st March 2018.

Question 3.
From the following information, prepare a bank reconciliation statement to find out the bank statement balance as of 31st December 2017.

Solution:
Bank reconciliation statement of Kamakshi traders as on 31st March, 2018.

Question 4.
On 31st March 2017, Anand’s cash book showed a balance of ₹ 1,12,500, Prepare bank reconciliation statement,
a) He had issued cheques amounting to ₹ 23,000 on 28,3.2017, of which cheques amounting to ₹ 9,000 have so far been presented for payment.

b) A cheque for ₹ 6,300 deposited into bank on 27.3.2017, but the bank credited the same only on 5th April 2017.

c) He had also received a cheque for ₹ 12,000 which, although entered by him in the cash book, was not deposited in the bank.

d) Wrong credit given by the bank on 30th March 2017 for ₹ 2,000.

e) On 30th March 2017, a bill already discounted with the bank for ₹ 3,000 was dishonoured, but no entry was made in the cash book.

f) Interest on debentures of ₹ 700 was received by the bank directly.

g) Cash sales of ₹ 4,000 wrongly entered in the bank column of the cash book.
Solution:
Bank reconciliation statement of Mr, Anand as on 31st March, 2017

Question 5.
From the following particulars of Siva and Company, prepare a bank reconciliation statement as of 31st December 2017.
a) Credit balance as per cash book ₹ 12,000
b) A cheque of ₹ 1,200 Issued and presented for payment to the bank, wrongly credited in the cash book
c) Debit side of bank statement was undercast by ₹ 100
Solution:
Bank reconciliation statement as of 31st December 2017.

Question 6.
From the following particulars of Raheem traders, prepare a bank reconciliation statement as of 31st March 2018.
a) Overdraft as per cash book ₹ 2,500
b) Debit side of cash book was under cash by ₹ 700
c) Amount received by the bank through RTGS amounting to ₹ 2,00,000, omitted in the cash book.
d) Two cheques issued for ₹ 1,800 and ₹ 2,000 on 29th March 2018. Only the second cheque is presented for payment.
e) Insurance premium on the car for ₹ 1,000 paid by the bank as per standing instruction not recorded in the cash book
Solution:
Bank reconciliation statement as of 31st March 2018.

Question 7.
From the following information, prepare a bank reconciliation statement as of 31st December,

Solution:
Bank reconciliation statement as on 31st December, 2017

Question 8.
Prepare bank reconciliation statement from the following data.

Solution:
Bank reconciliation statement

Question 9.
From the following particulars of Veera traders, prepare a bank reconciliation statement as on 31st December, 2017.
a) Credit balance as per bank statement ₹ 6,000
b) Amount received by bank through NEFT for ₹ 3,500, entered twice in the cash book.
c) Cheque dishonoured amounting to ₹ 2,500, not entered in cash book.
Solution:
Bank reconciliation statement as on 31st December, 2017.

Question 10.
Prepare bank reconciliation statement from the following data and find out the balance as per cash book as on 31st March, 2018.

Solution:
Bank reconciliation statement as on 31st March, 2018.

Question 11.
Ascertain the cash book balance from the following particulars as of 31st December 2017
i) Credit balance as per bank statement ₹ 2,500
ii) Bank charges of ₹ 60 have not been entered in the cash book
iii) Cheque deposited on 28th December 2017 for ₹ 1,000 was not yet credited by the bank
iv) Cheque issued on 24th December 2017 for ₹ 700, not yet presented for payment
v) A dividend of ₹ 400 collected by the bank directly but not entered in the cash book
vi) A cheque of ₹ 600 had been dishonoured, but no entry was made in the cash book
vii) Interest on term loan ₹ 1,200 debited by the bank but not accounted in the cash book
viii) No entry had been made in the cash book for a trade subscription of ₹ 500 paid vide banker’s order on 23rd December 2014
Solution:
Bank reconciliation statement as of 31st December 2017.

Question 12.
From the following particulars of Raja traders, prepare a bank reconciliation statement as on 31st January, 2018.
a) Balance as per bank statement ₹ 5,000

b) Cheques amounting to ₹ 800 had been recorded in the cash book as having been deposited into the bank on 25th January 2018, but were entered in the bank statement on 2nd February 2018.

c) Amount received by bank through NEFT amounting to ₹ 3,000, omitted in the cash book.

d) Two cheques issued for ₹ 3,000 and ₹ 2,000 on 29th March 2018. Only the first cheque is presented for payment.

e) Insurance premium on motor vehicles for ₹ 1,000 paid by the bank as per standing instruction not recorded in the cash book.

f) Credit side of cash book was undercast by ₹ 700

g) Subsidy received directly by the bank from the state government amounting to ₹ 10,000, not entered in the cash book.
Solution:
Bank reconciliation statement of Mr. Raja traders as of 31st January 2018.

Question 13.
From the following particulars of Simon traders, prepare a bank reconciliation statement as on 31st March 2018.
a) Debit balance as per bank statement ₹ 2,500
b) Cheques deposited amounting to ₹ 10,000, not yet credited by the bank.
c) Payment through net banking for ₹ 2,000, omitted in the cash book.
Solution:
Bank reconciliation statement as on 31st March 2018.

Question 14.
From the following particulars, ascertain the cash book balance as on 31st December 2016.
i) Overdraft balance as per bank statement ₹ 1,26,640
ii) Interest on overdraft entered in the bank statement, but not yet recorded in cash book ₹ 3,200
iii) Bank charges entered in the bank statement, but not found in cash book ₹ 600
iv) Cheques issued, but not yet presented for payment ₹ 23,360
v) Cheques deposited into the bank but not yet credited ₹ 43,400
vi) Interest on investment collected by the bank ₹ 24,000
Solution:
Bank reconciliation statement as of 31st December 2016.

Question 15.
From the following particulars of John traders, prepare a bank reconciliation statement as on 31st March, 2018.
a) Bank overdraft as per bank statement ₹ 4,000

b) Cheques amounting to ₹ 2,000 had been recorded in the cash book as having been deposited into the bank on 26th March 2018 but were entered in the bank statement on 4th April 2018.

c) Amount received by the bank through cash deposit machine amounting to ₹ 5,000, omitted in the cash book.

d) Amount of ₹ 3,000 wrongly debited to John traders account by the bank, for which no details are available.

e) Bills for collection credited by the bank till 29th March 2017 amounting to ₹ 4,000, but no advice received by John traders.

f) Electricity charges made through net banking for ₹ 900 were wrongly entered in the cash column of the cash book instead of the bank column.
Solution:
Bank reconciliation statement as of 31st March 2018.

Question 16.
Prepare bank reconciliation statement from the following data.

Solution:
Prepare bank reconciliation statement.

Question 17.
Prepare bank reconciliation statement as of 31st March 2017 from the following extracts of cash book and bank statement.
Cashbook (Bank column only)

Bank statement

Solution:
Bank reconciliation statement as on 31st March, 2017

Question 18.
A trader received his bank statement on 31st December 2017 which showed an overdraft balance of ₹ 12,000. On the same day, his cash book showed a debit balance of ₹ 2,000.
Analyze the following transactions. Choose the possible causes and prepare a bank reconciliation statement to show the causes of differences.
a) Cheque deposited for ₹ 2,000 on 21st December 2017. The bank credited the same on 26th December 2017.

b) Cheque issued for payment on 26th December 2017 amounting to ₹ 2,500, not yet presented until 31st, December 2017.

c) Bank charges amounting to ₹ 200 not yet entered in the cash book.

d) Online payment for ₹ 1,500 entered twice in the cash book.

e) Cheque deposited amounting to ₹ 1,000, but omitted in the cash book. The same cheque was dishonoured by bank, but not yet entered in the cash book.

f) Cheque deposited, not yet credited by bank amounting to ₹ 17,800.
Solution:
Bank reconciliation statement as of 31st December 2017.

11th Accountancy Guide Bank Reconciliation Statement Additional Important Questions and Answers

I. Choose the correct answer.

Question 1.
A Bank Reconciliation Statement is prepared with the help of ________.
a) Bank statement and bank column of the cash book
b) Journal
c) Ledger
d) None of the above
Answer:
a) Bank statement and bank column of the cash book

Question 2.
Bank reconciliation statement is ______
a) Part of bank statement
b) Part of the cash book
c) A separate statement
d) A sub-division of journal
Answer:
a) Part of bank statement

Question 3.
Uncollected cheques are also known as ______.
a) Outstanding cheques
b) Uncleared cheques
c) Outstation cheques
d) Both a & c
Answer:
d) Both a & c

Question 4.
When a cheque is not paid by the bank it is called as ______.
a) Honoured
b) Endorsed
c) Dishonoured
d) None of these
Answer:
c) Dishonoured

Question 5.
A bank reconciliation statement is prepared by ______.
a) Banker
b) Accountant of the business
c) Auditors₹
d) None of the above
Answer:
b) Accountant of the business

Question 6.
The cheque which is deposited into the bank but not cleared at the end of a particular year is called ______.
a) Uncredited cheque
b) Unpresented cheque
c) Omitted cheque
d) Dishonoured cheque
Answer:
b) Unpresented cheque

Question 7.
In cash book bank charges recorded in the ______.
a) Credit side
b) Debit Side
c) Both a & b
d) None of the above
Answer:
a) Credit side

Question 8.
An amount of Rs,2G0Q is debited twice in the bank statement. What will the reflect when overdraft as per the cash book is the starting point ______.
a) ₹ 2000 will be deducted
b) ₹ 2000 will be added
c) ₹ 4000 will be deducted
d) ₹ 4000 will be deducted
Answer:
b) ₹ 2000 will be added

Question 9.
If any amount is directly deposited into the bank then ______.
a) Cashbook will show less balance & bank book will show more
b) Cashbook will show more balance & bank book will show less
c) Cashbook will show double balance
d) Bank book will show double
Answer:
a) Cashbook will show less balance & bank book will show more

Question 10.
Which of the following error results in an unadjusted cash book balance?
a) Outstanding cheques
b) Unpresented Cheques
c) deposit in Transit
d) Omission of Bank charges
Answer:
d) Omission of Bank charges

Question 11.
Credit balance in the bank column of the cash book means ______.
a) Credit balance as per bank statement
b) Debit balance as per bank statement
c) Overdraft as per cash book
d) None of the above
Answer:
b) Debit balance as per bank statement

Question 12.
When balance as per Cash Book is the starting point, to ascertain balance as per bank statement interest allowed by Bank is ______.
a) Subtracted
b) added
c) not adjusted
d) None of the above
Answer:
b) added

Question 13.
When balance as per Cash Book is the starting point, to ascertain the balance as per bank statement interest charged by Bank is:
a) Added
b) subtracted
c) not adjusted
d) None of the above
Answer:
b) subtracted

Question 14.
When the balance as per Cash Book is the starting point to ascertain balance as per bank statement, direct deposits by customers are:
a) Added
b) subtracted
c) not adjusted
d) None of the above
Answer:
a) Added

Question 15.
When the balance as per Cash Book is the starting point to ascertain balance as per bank statement, direct payments by the bank are:
a) Added
b) subtracted
c) not adjusted
d) None of the above
Answer:
b) subtracted

Question 16.
______ is not possible to have unfavourable cash balance in the cash book.
a) Bank statement
b) Bank overdraft
c) Cash overdraft
d) Cashbook
Answer:
b) Bank overdraft

Question 17.
Bank overdraft is available only to the ______ holders.
a) Saving Account
b) Fixed Account
c) Joint Account
d) Current Account
Answer:
d) Current Account

Question 18.
______ is simply a copy of the customer’s account in the books of a bank.
a) Cashbook
b) Bank statement
c) Bank Account
d) None of these
Answer:
b) Bank statement

Question 19.
A bank statement is a copy of ______.
a) the cash column of a customer’s cash book
b) the bank column of a customer’s cash book
c) the customer’s account in the bank’s ledger
d) None of these
Answer:
c) the customer’s account in the bank’s ledger

Question 20.
Debit balance in the Cash Book means ______.
a) overdraft as per bank statement
b) credit balance as per bank statement
c) overdraft as per Cash Book
d) None of these
Answer:
b) credit balance as per bank statement

II. Additional Questions & Answers

Question 1.
Differences between bank column of cash book and bank statement.
Answer:
Bank column of cash book:

• It is prepared by a business concern.
• Cash deposits are entered on the debit side.
• Cash withdrawals are entered on the credit side.
• Cheque deposits are debited on the day of the deposit.
• Cheques issued are credited on the day of the issue of the cheque.
• Collections and payments as per standing instructions of the business are entered only after checking with the bank statement.
• It is balanced at the end of a specific period.

Bank statement:

• It is prepared by a bank (banker).
• Cash deposits are entered in the credit column.
• Cash withdrawals are entered in the debit column.
• Cheque deposits are credited only at the time of realization of the cheque.
• Cheques issued by customers are debited by the bank on the date on which the payment is made.
• Collections and payments as per standing instructions of the business are entered in the banker’s book on the date of realization of payment.
• It is balanced after each transaction.

Question 2.
What are the items recorded on the debit side of the bank column of the cash book?
Answer:

1. Cheques deposited but not credited.
2. Credits in the passbook only.
   • Interest credited in the bank statement
   • Dividend and other income
   • • Direct deposit by a party
3. Any error in the cash book/ bank statement has the effect of increasing the balance as per the bank statement.

Question 3.
What are the items recorded on the credit side of the bank column of the Cash Book?
Answer:

1. Cheques deposited but not credited
2. Cheques dishonoured but not entered in the cash book
3. Debits in bank statement only
   • Interest debited
   • Insurance premium, loan instalment, etc., paid as per standing instructions
   • Direct payment by banker
4. Any error in cash book/ bank statement which has the effect of decreasing the balance as per bank statement

Question 4.
What is meant by the term “Cheques deposited into bank but not yet credited?”
Answer:
When the cheques are deposited into bank, the amount is debited in the cash book on the same day. But, these may not be shown in the bank pass book on the same day because these will be entered in the bank statement only after the collection of the cheques.

For example, the balances as per cash book and bank statement are ₹ 20,000 for X & Co. X & Co. receives a cheque on 25th March 2016, from ABC Limited for ₹ 5,000. On the same day, X & Co, debits its cash book with ₹ 5,000.

But bank credits X & Co’s account only when the cheque is collected from ABC Limited’s bank. This shows that is a time gap between depositing the cheque by the customer (X & Co) and collection of cheque by the bank.

Question 5.
What will be the effect of Interest and dividends collected by the bank?
Answer:
The bank may collect dividends on its customer’s investment in shares and also interest on any investment. The entry for this will be made in the bank statement on the date of collection. But the entry is made in the cash book only when the bank statement is received by the customer. Till then, the cash book shows less balance than the bank statement.

Question 6.
What will be the effect of Dishonour of cheques and bills?
Answer:
When the cheque is received from outside parties, it is deposited with the bank and debited in the cash book. If the cheque is dishonoured, the bank cannot collect the amount of such cheque from outside parties’ bank. It is not credited in the bank statement. As a result of this, the two records would differ.

While discounting the bills receivables, in the cash book it is entered in the debit side and in the bank statement it is credited. When the bill is presented by the bank to the drawee of the bill and the payment is not received, the bank debits the same to cancel the credit.

But, credit is made in the cash book only when the customer gets the entries made in the bank statement is received. The bank may also charge some amount for such dishonour.

Question 7.
What will be the effect of Amount paid by parties directly into the bank?
Answer:
Sometimes, debtors or the customers of the business may directly deposit the money into bank account of the business. It may be done by directly visiting the branch of the bank by paying cash (including NEFT, RTGS) or swiping debit or credit or business card or depositing the money in cash deposit machine or transfer through online banking facility.

This will be credited in the banker’s book. But the entry is made in the cash book only when the bank statement is received by the customer. Until then, the cash book shows less balance than bank statement.

Question 8.
What will be the effect of Amount paid directly by the bank to others?
Answer:
Sometimes the bank may be instructed to make payments such as, insurance premium, instalment of loan, etc., as an agent of the customer on behalf of its customer. In all such cases, debit is made in bank statement. But, the entry is made in the cash book only when the bank statement is received by the customer. Till then, the cash book shows more balance than bank statement.

Question 9.
What will be the effect of Bills collected by the bank on behalf of its customers?
Answer:
When goods are sold by the business, the documents may be sent through the bank. When the bank collects the amount, it is credited in bank records. But, the entry is made in the cash book only when the bank statement is received by the business. Till then, the bank statement shows more balance than cash book.

Question 10.
Explain the differences arising due to errors in recording the entries.
Answer:
Errors committed in recording the transactions by the business in the cash book:
Sometimes, errors may be committed in the cash book. For example, omission or wrong recording of transaction relating to cheques deposited or issued, wrong balancing, etc. In these cases, obviously, there will be differences between bank balance as per bank statement and bank balance as per cash book.

Errors committed in recording the transactions by the bank:
Sometimes errors may be committed in the banker’s book. For example, omission or wrong recording of transaction relating to cheques deposited and wrong balancing. In these cases, obviously, there will be differences between bank balance as per bank statement and bank balance as per cash book.

Question 11.
What is the need for bank reconciliation statement?
Answer:

1. To identify the reasons for the difference between the bank balance as per the cash book and bank balance as per bank statement.
2. To identify the delay in the clearance of cheques.
3. To ascertain the correct balance of bank column of cash book.
4. To discourage the accountants of the business as well as bank from misusing funds.

Additional Sums:

Question 1.
Prepare bank reconciliation statement of Mr. Bala as on 31.03.2013.
a) Balance as per cash book ₹ 15,000
b) Cheques deposited but not cleared ₹ 1,000
c) Cheques issued but not yet present for payments ₹ 1500 d. Interest allowed by bank ₹ 200
Solution:
Prepare bank reconciliation statement

Question 2.
Prepare bank Reconciliation statement to find out balance as per bank statement on 31st March 2018,
1. Cheques deposited but not yet collected by the bank ₹ 1,000
2. Cheques issued but not yet presented for payment ₹ 2,000
3. Bank Interest Charged ₹ 200
4. Rent paid by bank as per standing Instruction ₹ 400
5. Cash book balances ₹ 600
Solution:
Prepare bank reconciliation statement

Question 3.
Form the following particulars of Ashok and company; prepare a bank reconciliation statement as on 31st March 2018.
a) Credit balance as per cash book ₹ 10,000
b) Cheques issued but not yet presented for payment ₹ 10,000
c) Cheques Deposited but not credited ₹ 9000
d) Rent collected by the bank as per standing Instruction ₹ 500
Solution:
Bank Reconciliation statement Mr. Ashok as on 31st March 2018

Question 4.
From the following information, Prepare bank Reconciliationstatement of Mr. Mohan as on 31st Dec. 2017 to find out the balance as per bank statement.
i) Overdraft as per cash book – 20000
ii) Cheques deposited but not yet credited – 10000
iii) Amount wrongly deposited by bank – 600
iv) Interest on overdraft debited by bank – 2000
v) Cheque issued but not yet present for payment – 2000
vi) Payment received from the customer directly by the bank – 1000
Solution:
Bank Reconciliation statement Mr. Mohan as on 31st Dec. 2018.

Question 5.
Prepare bank Reconciliation statement as on 31st December 2017. From the following in information.
a) Balance as perbank statement (pass book) is ₹ 50,000
b) Cheques deposited into bank amount into ₹ 7,000 were not yet collected.
c) Bank charges of ₹ 600 have not been entered in the cash book.
d) Cheques issued amount to ₹ 18,000 have not been presented by for payment.
Solution:
Bank Reconciliation statement as on 31st Dec. 2017.

Question 6.
From the following information, prepare bank Reconciliationstatement as of Mr. Pugazh as on 31st Dec. 2017.
i) Credit balance as per bank statement ₹ 12,000
ii) Cheques deposited on 28th December 2017 but not yet credited ₹ 4000
iii) Cheques issued for 20000 on 20th December 2017 but not yet presented for payment 6000.
iv) Interest on debentures directly in cash book ₹ 8000
v) Insurance premium on building directly paid by the bank ₹ 2000
vi) Amount wrongly credit by bank ₹ 1,000
Solution:
Bank Reconciliation statement of Mr. Pugazh as on 31st Dec. 2017.

Question 7.
From the following data, as certain the cash book balance as on 31st Dec. 2017.
1) Overdraft balance as per bank statement ₹ 13,000
2) Cheques deposited into the bank but not yet credited ₹ 21,000
3) Wrongly credit by the bank ₹ 1,000
4) Cheques issued, but not yet presented for payment₹ 6,000
5) Bank charges debited by bank ₹ 360
6) Insurance Premium on building directly paid by bank ₹ 200
Solution:
Bank Reconciliation statement on 31st Dec. 2017.

Question 8.
Prepare bank Reconciliation statement as on 31st Dec. 2017, From the following balance of cash book, and bank statement.
Cash book (Bank column)

Bank Statement

Solution:
Bank Reconciliation Statement on 31st Dec, 2017.

Question 9.
On 31st March 2017, the pass book of Mr, A showed a credit balance of Rs.92,500. A comparison of pass book and cash book revealed the following:

Solution:
Bank Reconciliation Statement of Mr. A as on 31st March 2017

Question 10.
The bank overdraft of Rajini on 31.12.2017 as per cash book is 90,000. From the following particulars, prepare bank reconciliation statement:

Solution:
Bank Reconciliation Statement as on 31,12.2017 3,000

Question 11.
Prepare a bank reconciliation statement from the following data as on 31.12.2017.
a) Balance as per cash book ₹ 1,25,500
b) Cheques issued but not presented for payment ₹ 9,000
c) Cheques deposited in bank but not collected ₹ 12,000
d) Bank paid insurance premium ₹ 5,000
e) Direct deposit by a customer ₹ 8,000
f) Interest on investment collected by bank ₹ 2,000
g) Bank charges ₹ 1,000
Solution:
Bank Reconciliation Statement as on 31.12.2017

Question 12.
The pass book of X with his bank shows a debit balance of Rs. 500 on 31.10.2017. On comparison of the pass book with the cash book, it is observed that:
i. Cheques issued by X in October 2017 amounted to ₹ 4, 535 of which cheques amounting to ₹ 3,535 were paid by the bank by 31st October 2017.

ii. X deposited cheques amounting to ₹ 5, 000 on 31st October 2017. These cheques were realised by the bank on 1st November, 2017.

iii. Y a customer of X had directly deposited a sum of ₹ 3, 000 on 24th October 2017 to the credit of X account with the bank. X recorded this receipt on 4th November, 2017.

iv. The bank had debited X’s account with ₹ 1, 520 on 31.1.2017 on account of a dishonoured bill. No entry for the same has been made in the account books.

v. On 31.10.1995 X’s account was credited with ₹ 130 being dividend collected by the bank. On the same day, his account was debited with ₹ 10 being bank charges. Both these entries were recorded by X only on 5th November, 2017.
Prepare the Bank Reconciliation Statement as at 31.10.2017.
Solution:
Bank Reconciliation Statement as on 31.10.2017

Question 13.
From the following particulars ascertain the bank balance as would appear in the pass‘book as on 31st December, 2016.
i. The bank overdraft (Credit balance) as per cash book on 31st December 2016 was ₹ 60,000
ii. Interest on overdraft, six months ending 31st December, amounting to ₹ 2,000 is debited in the pass book.
i. Bank charges for the above period also debited in the pass book which amounted to ₹ 500.
ii. Cheques issued but not presented for payment before 31st December amounted to ₹ 15,000.
iii. Cheques paid into the bank, but not cleared and credited before 31st December were ₹ 25,000.
iv. Interest on government securities collected by the bank and credited in the pass book amounted to ₹ 18,000.
Solution:
Bank Reconciliation Statement as on 31st March 2016

Question 14.
From the following information available from the books and records of X & Co., prepare BRS:

Solution:
Bank Reconciliation Statement for Bank A/c No. I

Bank Reconciliation Statement for Bank A/c No. II

Question 15.
From the following particulars ascertain the bank balance that would appear in the cash book of Son 31.12.2016.
i) The bank overdraft as per pass book on 31.12.2016 ₹ 6,340
ii) Interest on on for the year ending 31.12.2016 ₹ 160 is debited in the pass book
iii) Bank charges of ₹130 for the above period are also debited in the pass book.
iv) Cheques issued but not cashed prior to 31.12.2016 amounted to ₹ 11,168
v) Cheques paid into bank but not cleared before 31.12.2016 were ₹ 2170
vi) Interest on investments collected by the bankers and credited in the pass book, ₹ 1,200
Solution:
Bank Reconciliation Statement as on 31st December 2016

Tamilnadu State Board New Syllabus Samacheer Kalvi 12th Business Maths Guide Pdf Chapter 10 Operations Research Ex 10.4 Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 12th Business Maths Solutions Chapter 10 Operations Research Ex 10.4

Choose the correct answer

Question 1.
The transportation problem is said to be unbalanced if
(a) Total supply ≠ Total demand
(b) Total supply = Total demand
(c) m = n
(d) m + n – 1
Solution:
(a) Total supply ≠ Total demand

Question 2.
In a non – degenerate solution number of allocation is
(a) Equal to m + n – 1
(b) Equal to m + n + 1
(c) Not equal to m + n – 1
(d) Not equal to m + n + 1
Solution:
(a) Equal to m + n – 1

Question 3.
In a degenerate solution number of allocations is
(a) Equal to m + n – 1
(b) Not equal to m + n – 1
(c) Less then m + n – 1
(d) Greater then m + n – 1
Solution:
(c) Less then m + n – 1

Question 4.
The Penalty in VAM represents difference between the first
(a) Two largest costs
(b) Largest and Smallest costs
(c) smallest two costs
(d) None of these
Solution:
(c) smallest two costs

Question 5.
Number of basic allocation in any row or column in an assignment problem can be
(a) Exactly one
(b) At least one
(c) At most one
(d) None of these
Solution:
(a) Exactly one

Question 6.
North – West Corner refers to
(a) Top left corner
(b) Top right corner
(c) Bottom right corner
(d) Bottom left corner
Solution:
(a) Top left corner

Question 7.
Solution for transportation problem using method is nearer to an optimal
(a) NWCM
(b) LCM
(c) VAM
(d) Row Minima
Solution:
(c) VAM

Question 8.
In an assignment problem the value of iedsion variable x_ij is
(a) 1
(b) 0
(c) 1 or 0
(d) none of them
Solution:
(c) 1 or 0

Question 9.
If number of sources is not equal to number of destinations, the assignment problem is called
(a) balanced
(b) unsymmetric
(c) symmetric
(d) unbalanced
Solution:
(d) unbalanced

Question 10.
The purpose of a dummy row or column in an assignment problem is to
(a) prevent a solution from becoming degenerate
(b) balance between total activities and total resources
(c) provide a means of representing a dummy problem
(d) None of the above
Solution:
(b) balance between total activities and total resources

Question 11.
The solution for an assignment problem is optimal if
(a) each row and each column has no assignment
(b) each row and each column has atleast one assignment
(c) each row and each column has atmost one assignment
(d) each row and each column has exactly one assignment
Solution:
(d) each row and each column has exactly one assignment

Question 12.
In an assignment problem involving four workers and three jobs, total number of assignments possible are
(a) 4
(b) 3
(c) 7
(d) 12
Solution:
(b) 3

Question 13.
Decision theory is concerned with
(a) analysis of information that is available
(b) decision making under certainty
(c) selecting optimal decisions in sequential problem
(d) All of the above
Solution:
(d) All of the above

Question 14.
A type of decision – making environment is
(a) certainty
(b) uncertainty
(c) risk
(d) all of the above
Solution:
(d) all of the above