Accounting Transactions Short Question Answer Study Notes

Effect on trial balance	This error does affect trial balance.	This error may affect trial balance.
Causes of error	This error is due to wrong classification of capital and revenue expenditure or personal and nominal account.	This error is due to complete omission of a transaction or partial omission.
Nature of error	This is not a clerical error.	This is a clerical error.
Effect on profit	This error affects profit of the business.	This error may not affect profit of the business.
Effect on balance sheet	This error will affect value of asset or liability.	This error may or may not affect value of asset or liability.

Q.10 Write a note on three column cash book.

Ans. Three column cash book contains three columns in both sodes namely, cash, bank and discount column. This cash book is very important and useful as so many bank transactions are done daily in the business units. Some transactions are of such type which are relared to both cash and bank . For example ,cash deposited into bank or cash withdrawn from bank . Cash discount from bamk. Cash discount is also allowed or received when payment is made. So, it is necessary to record this fact at the same place where the cash transaction is recorded. Three column cash book is used to serve this purpose. Following points should be followed at time of recording the transaction on cash book:

1. When cash or cheque is deposited into bank, bank column will be debited and cash column will be credited.

2. When any amount is paid by cheque, then it is recorded in the credit side of cash book in bank column.

3. When an amount is withdrawn from bank, then bank column will be credited and cash column will be debited.

4. When any transaction is related to cash and bank, then it is recorded in the both sides of this book. In such a case, ‘C’ is written in both sides. ‘C’ means Contra. Such type of entries are called Contra entries.

Q.11. Will the following errors affect trial balance or not? Explain:

1. Goods sold to Ram 1,000 was debited to Shyam’s account.

2. Bank balance was written as1,850 instead of 1,580. (2014)
Ans. 1. This error will not affect trial balance, as it is a case of wrong account recording but with correct side and correct amount. Trial balance will be matched inspite of this error. It is an error of wrong recording. This error will be rectified by passing the following journal entry:

Particulars	Amount (Dr.)	Amount (cr.)
Ram Dr.	1,000
To Shyam		1,000

2. This error will affect trial balance. As the bank balance is written more than the actural balance, i.e. (1850 – 1580) Rs 270. More than the actual balance. The debit side total will be more than credit side total by rs 270. This error will be rectified by passing the following journal entry:

Particulars	Amount (dr.)	Amount (Cr.)
Suspense A/c Dr.	270
To Bank A/c		270

Q.12. ‘Ledger is the principal book of accounts in the business.’ Explain.(2016)

Ans. The ledger is the most important book of accounts. The accounts of all types viz. Real, Personal and Nominal are maintained in this book. Since final information pertaining to the financial position of a business emerges only from accounts, the ledger is called the principal book. It is defined as a book which contains, in a summarised and classified form, a permanent record of all transactions.

In ledger, there are separate ledger accounts for different parties and heads and so the information regarding every account is collected at one place. This facilitates in ascertaining the current position of every account at a glance. It is worth mentioning here that it is very difficult from journal to get information of a particular account immediately. Further. ledger accounts facilitate the preparation of trial balance from which the arithmetical accuracy of the accounts can be checked and ledger accounts also facilitate the preparation of the financial statement to know the results of business operations and financial position of the business at a given time.

Q.13. Rectify the errors:

1. Goods sold to Adinath 350 were entered in the sales book as 530.

2. Rs. 2,000 paid for purchase of new office furniture charged to office Expenses Account. (2015)

Sol.

S. No.	Particulars	L. F.	Amount (Dr.) (rs)	Amount (Cr.) (Rs.)
	Sales A/c Dr. To Suspense A/c (Being Sales over – recording in sales book.		180	180
	Furniture A/c Dr. To Office Expenses A/c (Being purchase of office furniture wrongly debited to office exp.)		2,000	2,000

B.Com Ist Year Foreign Trade And Economic Growth Question Answer Notes

[PDF] B.Com 1st Year All Subject Notes Study Material PDF Download In English

Accounting Transactions BCOM 1st Year Short Question Answer Study Notes

Leave a Reply Cancel reply