Accounting for Business Transactions — Flashcards
NIOS · Class 12 · Accountancy
24 flashcards for Accounting for Business Transactions (NIOS Class 12 Accountancy) to test yourself on key terms and facts.
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What is a business transaction in accounting?
Answer
A business transaction is an exchange of values between two parties where goods or services are transferred in return for monetary or non-monetary consideration. Every transaction involves a 'Give and…
Define a source document and explain its importance in accounting.
Answer
A source document is the original written evidence that supports a business transaction. Examples include cash memos, invoices, receipts, and bills. Source documents are important because they: (1) pr…
What are the key features of accounting vouchers?
Answer
Accounting vouchers have the following features: (1) They are written documents prepared by the accountant, (2) They are based on evidence of the transaction (source documents), (3) They contain analy…
Classify accounting vouchers into types and explain each.
Answer
Accounting vouchers are classified into two main types: (1) Cash Vouchers - for cash transactions, further divided into: (a) Debit Vouchers - for cash payments (expenses, asset purchases, loan repayme…
When is a debit voucher used, and what does it record?
Answer
A debit voucher is prepared for recording transactions involving cash payments only. It is used to record: (1) Payment of expenses (salary, rent, insurance), (2) Purchase of assets (machinery, furnitu…
When is a credit voucher used, and provide an example.
Answer
A credit voucher is prepared for recording transactions involving cash receipts only. It is used to record: (1) Cash sales of goods, (2) Cash sales of assets, (3) Revenue income received in cash (inte…
What is the accounting equation and why is it important?
Answer
The accounting equation is: Assets = Liabilities + Capital (or A = L + C). It expresses the fundamental relationship that the total assets of a business are financed either by creditors (liabilities) …
How do expenses and revenues affect the accounting equation?
Answer
Expenses and revenues affect only the Capital side of the accounting equation: (1) Expenses reduce capital - when salary of ₹10,000 is paid, cash decreases by ₹10,000 (asset reduces) and capital decre…
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