Q3. From the following transactions, determine the accounts affected, classify them and state
whether it is to be debited or credited.
Rs.
Q4. What are the advantages of maintaining a Petty Cash Book? Explain the methods of
balancing and posting the Petty Cash Book.
Q5. What is a Journal Proper? Explain the transactions recorded in the Journal Proper.
Q6. Why is distinction between capital and revenue important? Give examples to show how
wrong classification can affect the ascertainment of profit.
Q7. Give a Performa of Profit and Loss Account. Also explain the closing entries for the P/L
Account.
Q8. What is a Suspense Account? When is it opened? How do you rectify the errors when a
suspense account has already been opened?
Q9. What do you understand by the Principle of Double Entry? Give the rules of debit and
credit with suitable examples.
A Purchased Furniture for Cash 75,000
B Purchased Machinery from Gamma Ltd. on Credit 2,00,000
C Rent Paid 2,500
D Received Commission 12,000
E Received Cash from Sudheer and Company 20,000
F Additional Capital Introduced in the Business 1,00,000
G Paid Cash to Ramlal Bros. 18,000
H Paid Carriage 5,000
I Goods Purchase from Shyam & Company on
Credit
10,000
J Goods Sold for Cash 25,000
Answers
question 8 a person which is suspend for any reason is known as suspension acount
Answer:
What are the advantages of maintaining a Petty Cash Book? Explain the methods of balancing and posting the Petty Cash Book.
Is used for recording payment of petty expenses. Petty cash includes conveyance, stationery, , etc. There are two ways to prepare the same:
An ordinary system wherein a fixed amount is given to them , and he/she maintain the account.
Imprest system wherein petty cash is given to the cashier, and at the end of the period, the amount spent by him is reimbursed.
Q5. What is Journal Proper? Explain the transactions recorded in the Journal Proper.
It is a general book where all the transaction is stored in chronological order. That transaction which cannot be easily stored in another book of records .It consists of transfer entries, rectification entries, compound entries , casual entries, closing entries.
Q6. Why is distinction between capital and revenue important? Give examples to show how wrong classification can affect the ascertainment of profit.
Capital expenditure is a one-time investment where revenue expenditure occurs frequently. Capital expenditure is shown on the asset side of the balance sheet whereas the revenue expenditure is shown on the income side. Capital investment is one time whereas; the revenue expenditure is frequent.
Q8. What is a Suspense Account? When is it opened? How do you rectify the errors when a suspense account has already been opened?
Suspense accounts come into use when there is an unidentified transaction. It works as a holding account until the error is discovered. The mistakes in the suspense account are rectified after preparing the final account. In this case, the suspense account is carried forward to the next accounting year.