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Recording of Transactions - I

Madhya Pradesh Board · Class 11 · Accountancy

NCERT Solutions for Recording of Transactions - I — Madhya Pradesh Board Class 11 Accountancy.

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38 Questions Solved · 6 Sections

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Test Your Understanding - I

1Double entry accounting requires that :Show solution
In double entry accounting, every transaction is recorded with equal debits and credits. So the correct statement is (iii).

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2State different kinds of transactions that increase and decrease capital.Show solution
Capital increases when the business earns a net profit and when the owner introduces fresh capital. Capital decreases when the owner makes drawings and when the business suffers a net loss.

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3Does debit always mean increase and credit always mean decrease?Show solution
Debit does not always mean increase and credit does not always mean decrease. From the rules in the chapter, the effect depends on the type of account. For example, an increase in assets is debited, but an increase in liabilities or capital is credited.

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4Which of the following answers properly classifies these commonly used accounts:Show solution
From the chapter’s classification: Building and Godown rent paid in advance are assets; Credit purchases and Electricity charges due but not yet paid are liabilities; Fresh capital introduced is capital; Sales are revenue; Wages, discount paid, and drawings are treated as expenses/losses. So the correct classification is (ii).

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Illustration 1

1(i)Introduced ₹ 8,00,000 as cash and ₹ 50,000 by stock.Show solution
The transaction introduces capital into the business. It brings in cash ₹8,00,000 and stock ₹50,000 as assets, so capital also increases by ₹8,50,000.

### Effect on accounting equation
Assets = Liabilities + Capital

- Cash increases by ₹8,00,000
- Stock increases by ₹50,000
- Capital increases by ₹8,50,000

So:

₹8,50,000 = ₹8,50,000

### Journal entry
Cash A/c Dr. ₹8,00,000

Stock A/c Dr. ₹50,000

    To Capital A/c ₹8,50,000

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1(ii)Purchased plant for ₹ 3,00,000 by paying ₹ 15,000 in cash and balance at a later date.Show solution
The transaction increases plant and machinery by ₹3,00,000. Out of this, ₹15,000 is paid in cash, and the balance ₹2,85,000 remains payable as a liability.

### Effect on equation
- Plant and Machinery increases by ₹3,00,000
- Cash decreases by ₹15,000
- Liability/Creditor increases by ₹2,85,000

### Journal entry
Plant and Machinery A/c Dr. ₹3,00,000

    To Cash A/c ₹15,000

    To Creditor A/c ₹2,85,000

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1(iii)Deposited ₹ 6,00,000 into the bank.Show solution
Depositing cash into the bank does not change total assets; it only changes the form of assets.

- Cash decreases by ₹6,00,000
- Bank increases by ₹6,00,000

### Journal entry
Bank A/c Dr. ₹6,00,000

    To Cash A/c ₹6,00,000

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1(iv)Purchased office furniture for ₹ 1,00,000 and made payment by cheque.Show solution
Furniture is an asset. Buying office furniture for cash increases Furniture and decreases Cash by the same amount.

### Journal entry
Furniture A/c Dr. ₹1,00,000

    To Bank A/c ₹1,00,000

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1(v)Purchased goods worth ₹ 80,000 for cash and for ₹ 35,000 in credit.Show solution
This is two transactions:

- Goods purchased for cash ₹80,000
- Goods purchased on credit ₹35,000

So Purchases/Goods increase by ₹1,15,000. Cash decreases by ₹80,000, and creditors increase by ₹35,000.

### Journal entry
Purchases A/c Dr. ₹1,15,000

    To Cash A/c ₹80,000

    To Creditor A/c ₹35,000

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1(vi)Goods amounting to ₹ 45,000 was sold for ₹ 60,000 on cash basis.Show solution
Goods costing ₹45,000 are sold for ₹60,000 in cash.

- Cash increases by ₹60,000
- Stock/Goods decrease by ₹45,000
- Capital increases by the profit of ₹15,000

### Journal entry
Cash A/c Dr. ₹60,000

    To Sales A/c ₹60,000

And the cost side reduces stock:

Cost of Goods Sold / Purchases A/c Dr. ₹45,000

    To Stock A/c ₹45,000

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1(vii)Goods costing to ₹ 80,000 was sold for ₹ 1,25,000 on credit.Show solution
Goods costing ₹80,000 are sold for ₹1,25,000 on credit.

- Debtors increase by ₹1,25,000
- Stock/Goods decrease by ₹80,000
- Capital increases by profit of ₹45,000

### Journal entry
Debtors A/c Dr. ₹1,25,000

    To Sales A/c ₹1,25,000

And for cost:

Cost of Goods Sold / Purchases A/c Dr. ₹80,000

    To Stock A/c ₹80,000

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1(viii)Cheque issued to the supplier of goods worth ₹ 35,000.Show solution
Cheque issued to the supplier means payment to creditor.

- Creditors decrease by ₹35,000
- Bank decreases by ₹35,000

### Journal entry
Creditors A/c Dr. ₹35,000

    To Bank A/c ₹35,000

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1(ix)Cheque received from customer amounting to ₹ 75,000.Show solution
Receiving cheque from customer means collection from debtor.

- Bank increases by ₹75,000
- Debtors decrease by ₹75,000

### Journal entry
Bank A/c Dr. ₹75,000

    To Debtors A/c ₹75,000

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1(x)Withdrawn by owner for personal use ₹ 25,000.Show solution
Cash withdrawn by the owner for personal use is drawings.

- Drawings increase by ₹25,000
- Cash decreases by ₹25,000

### Journal entry
Drawings A/c Dr. ₹25,000

    To Cash A/c ₹25,000

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Test Your Understanding - II

1State the title of the accounts affected, type of account and the account to be debited and account to be credited :Show solution
For each transaction, identify the accounts affected, their type, and the debit/credit:

1. Issued a cheque for rent
- Rent A/c — Expense — Debit
- Bank/Cash A/c — Asset — Credit

2. Collected from debtors
- Debtors A/c — Asset — Credit
- Cash/Bank A/c — Asset — Debit

3. Purchased office stationary
- Office Stationery A/c — Expense/Asset — Debit
- Cash/Bank A/c — Asset — Credit

4. Purchased new machine and issued cheque
- Machine A/c — Asset — Debit
- Bank A/c — Asset — Credit

5. Issued cheque to creditor
- Creditors A/c — Liability — Debit
- Bank A/c — Asset — Credit

6. Returned damaged office stationary and received cash
- Cash A/c — Asset — Debit
- Office Stationery A/c — Asset/Expense — Credit

7. Provided services on credit
- Debtors A/c — Asset — Debit
- Service Income / Fees Income A/c — Revenue — Credit

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Test Your Understanding - III

1The ledger folio column of journal is used to:Show solution
The L.F. (Ledger Folio) column in the journal records the page number of the ledger account. So the correct answer is (d).

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2The journal entry to record the sale of services on credit should include:Show solution
Sale of services on credit means debtor increases and service/fees income increases. So the entry is Debit to debtors and credit to fees income. Hence, (d) is correct.

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3The journal entry to record purchase of equipment for ₹ 2,00,000 cash and a balance of ₹ 8,00,000 due in 30 days include:Show solution
Equipment worth ₹10,00,000 is purchased in total:

- ₹2,00,000 paid in cash
- ₹8,00,000 due later as creditors

So the correct entry is to debit equipment for ₹10,00,000 and credit cash ₹2,00,000 and credit creditors ₹8,00,000. Hence (b) is correct.

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4When an entry is made in journal:Show solution
In a journal entry, the account to be debited is written first in the Particulars column, followed by the credited account. So the correct answer is (b).

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5If a transaction is properly analysed and recorded:
6The journal entry to record payment of monthly bill will include:
7Journal entry to record salaries will include:

Test Your Understanding - IV

1Issued a cheque for ₹8,000 to pay rent. The account to be debited is ...
2Collected ₹ 35,000 from debtors. The account to be credited is ...
3Purchased office stationary for ₹ 18,000. The account to be credited is ...
4Purchased new machine for ₹ 1,70,000 and issued cheque for the same. The account to be debited is ...
5Issued cheque for ₹ 70,000 to pay off on of the creditors. The account to be debited is ...
6Returned damaged office stationary and received ₹ 50,000. The account to be credited is ...
7Provided services for ₹ 65,000 on credit. The account to be debited is ...

Test Your Understanding - V

1Voucher is prepared for:
2Voucher is prepared from:
3How many sides does an account have?
4A purchase of machine for cash should be debited to:
5Which of the following is correct?
6Cash withdrawn by the Proprietor should be credited to:
7Find the correct statement:
8The book in which all accounts are maintained is known as:
9Recording of transaction in the Journal is called:

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Recording of Transactions - I covers several key topics that are frequently asked in Madhya Pradesh Board Class 11 board exams. Focus on the core concepts listed on this page and practise related questions to build confidence.
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