<\/span><\/h2>\nWhat is the significance of transaction 2 recording?<\/strong><\/p>\nBusiness transaction recording is regarded as one of the greatest business practises since it provides a transparent status of the company as well as its management in making decisions based on credible sources. However, in order for the recorded transactions to be error-free, the recording must be done precisely and efficiently. The transactions are recorded in multiple books in a double-entry system and then tallied to guarantee the transactions are error-free.<\/p>\n
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<\/span>Access NCERT Solutions For Class 11 Accountancy Chapter 4<\/span><\/h2>\n<\/span>1. Briefly state how the cash book is both journal and a ledger?<\/strong><\/span><\/h3>\nTransactions are recorded directly from source documents in the Cash Book, so there is no need to record transactions in the Journal book. Further, on the basis of the cash transactions recorded in the Cash Book, cash and bank balances can be determined, and so there is no need to prepare cash account (which is a part of ledger) separately. Thus, the Cash Book serves the purpose of both Journal as well as ledger.<\/p>\n
<\/span>2. What is the purpose of contra entry?<\/strong><\/span><\/h3>\nContra entry represents deposits or withdrawals of cash from bank or vice versa. The purpose of contra entry is to indicate the
transactions that effect both cash and bank balances. This entry does not affect the financial positions of a business. A contra entry
is recorded in both sides of a two column Cash Book and is denoted by ‘C’ in the ledger folio column.<\/p>\n
<\/span>3. What are special purpose books?<\/strong><\/span><\/h3>\nBusiness transactions are large in number and difficult to record; so, journal is sub-divided for quick, efficient and accurate recording
of the business transactions. Special purpose books like, sales book and purchases book are maintained for those transactions that
are routine and repetitive in nature. Recording through these books is economical and enables division of work among accountants.<\/p>\n
<\/span>4. What is petty cash book? How it is prepared?<\/strong><\/span><\/h3>\nPetty Cash Book is used for recording payment of petty expenses, which are of smaller denominations like postage, stationery,
conveyance, refreshment, etc. Person who maintains petty cash book is known as petty cashier and these small expenses are termed as petty expenses. It is prepared by two methods:
1. Ordinary system: In this case, a fixed sum of money is paid to petty cashier for the payment of petty expenses and after spending the
whole amount, the account is submitted by the petty cashier to the main cashier.
2. Imprest system: In this case, a fixed sum of the money is given to the petty cashier in the beginning of a period and at the end of the
period the amount spent by him is reimbursed, so that he has a fixed amount in the beginning of every new period.<\/p>\n
<\/span>5. Explain the meaning of posting of journal entries?<\/strong><\/span><\/h3>\nPosting is the process of transferring the business transactions from Journal to ledgers.
Every transaction is first recorded in the Journal and subsequently transferred to their respective accounts.<\/p>\n
<\/span>6. Define the purpose of maintaining subsidiary journal.<\/strong><\/span><\/h3>\nThe process of accounting starts from identification of financial and non-financial events. Financial events are first recorded in a Journal. A small business has lesser number of transactions and thereby it may be possible to record these transactions through
Journal entry. However, on the contrary, as the business grows, there will be voluminous number of transactions and the firm may experience difficulty, thereby it becomes tedious to record through Journal entry. Thus, in order to save time and effort, it is recommended to sub-divide Journal. Sub-division of Journal provides scope for division of work. This leads to the improvement of efficiency and effectiveness and infuses higher degree of accountability to the accountants for the specific subsidiary Journal assigned to them. The purposes of maintaining subsidiary Journal are given below.
1. It saves time and efforts in recording.
2. It enables division of work, leading to an enhancement of efficiency and effectiveness, as particular accountant takes care of particular books.
3. It also makes each accountant more responsible and accountable for the books assigned to them.
4. It records routine and repetitive transactions at one place, which leads to easy accessibility of information and hassle-free communication.<\/p>\n
\n\n\n| \n Basis of Comparison<\/b><\/p>\n<\/td>\n | \n Return Inwards<\/b><\/p>\n<\/td>\n | \n Return Outwards<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Meaning<\/b><\/p>\n<\/td>\n | \n Goods returned to business by their customers<\/b><\/p>\n<\/td>\n | \n Goods purchased by business are returned to the suppliers.<\/p>\n<\/td>\n<\/tr>\n | \n| \n Balance<\/b><\/p>\n<\/td>\n | \n It has debit balance.<\/b><\/p>\n<\/td>\n | \n It has credit balance.<\/p>\n<\/td>\n<\/tr>\n | \n| \n Treatment<\/b><\/p>\n<\/td>\n | \n Deducted from Sales in the Trading Account.<\/b><\/p>\n<\/td>\n | \n Deducted from Purchases in the Trading Account.<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Issued<\/b><\/p>\n<\/td>\n | \n Credit note is prepared by the seller.<\/b><\/p>\n<\/td>\n | \n Debit note is prepared by the buyer.<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Reduction<\/b><\/p>\n<\/td>\n | \n Reduces the payment from the Debtors.<\/b><\/p>\n<\/td>\n | \n Reduces the payment made to the Creditors.<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Term<\/b><\/p>\n<\/td>\n | \n It is also known as Sales Returns.<\/b><\/p>\n<\/td>\n | \n It is also known as Purchases Returns.<\/b><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/span>7. What do you understand by ledger folio?<\/b><\/span><\/h3>\nIt refers to a column in the journal where page number of the ledger book on which the relevant account appears is recorded is called as Ledger Folio, also abbreviated as L.F<\/b><\/p>\n<\/span>8. What is difference between trade discount and cash discount?<\/b><\/span><\/h3>\n\n\n\n| \n Basis of Comparison<\/b><\/p>\n<\/td>\n | \n Trade Discount<\/b><\/p>\n<\/td>\n | \n Cash Discount<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Meaning<\/b><\/p>\n<\/td>\n | \n Discount offered on purchase of goods.<\/b><\/p>\n<\/td>\n | \n Discount for making payment.<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Recording in books<\/b><\/p>\n<\/td>\n | \n Not recorded in accounting books<\/b><\/p>\n<\/td>\n | \n Recorded in cash book either on debit or credit side depending on discount provided or received.<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Purpose<\/b><\/p>\n<\/td>\n | \n Encourage increase in sale.<\/b><\/p>\n<\/td>\n | \n Encourage on time payment.<\/b><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/span>9. Write the process of preparing ledger from a journal.<\/b><\/span><\/h3>\nThe following process describes the preparation of ledger from journal:<\/b><\/p>\n Locate the account to be debited in the ledger as entered in the journal<\/b><\/p>\n Enter date of transaction into date column of debit side.<\/b><\/p>\n Mention the account from which it is debited in journal, is written in the particulars column.<\/b><\/p>\n Enter the page number of the journal in the J.F. column. The corresponding page number of the ledger account is written in the L.F. column of the journal.<\/b><\/p>\n Enter amount in the amount column in the debit side.<\/b><\/p>\n For credit side follow the same procedure for crediting the entry.<\/b><\/p>\n<\/span>10. What do you understand by Imprest amount in petty cash book?<\/b><\/span><\/h3>\nImprest amount is a definite sum of money that is provided to petty cashier for a certain period which can be a week or month. Reimbursement is done after the end of the period in order to start a new cycle.<\/b><\/p>\n<\/span>Long Answers for NCERT Accountancy Solutions Class 11 Chapter 4<\/b><\/span><\/h2>\n<\/span>1. Explain the need for drawing up the special purpose books.<\/b><\/span><\/h3>\nSpecial purpose books are beneficial in:<\/b><\/p>\n\n- Accuracy: As each journal is managed by a different accountant having specific expertise, it improves accuracy and reduces defects.<\/b><\/li>\n<\/ul>\n
\n- Efficiency: Increases efficiency by dividing workload<\/b><\/li>\n<\/ul>\n
\n- Concise Descriptions: The journal describes the purpose of recording. For example a record in the purchase journal, will be understood by default that it is a purchase related transaction.<\/b><\/li>\n<\/ul>\n
\n- Minimal Posting: Reduces the volume of posting as totals can be done periodically.<\/b><\/li>\n<\/ul>\n
\n- Fraud Prevention: As recording of different journals are assigned to different individual, fraud prevention is prevented.<\/b><\/li>\n<\/ul>\n
Faster process: As multiple books are handled by multiple accountants, the recording work moves faster.<\/b><\/p>\n<\/span>2. What is cash book? Explain the types of cash book.<\/b><\/span><\/h3>\nA cash book is also known as book of original entry in which all transactions related to cash receipts and cash payments are recorded. All cash deposits and withdrawals are recorded in a sequential order. Cash receipts are recorded in cash column and bank deposits are recorded in bank column, and all cash deposits are added in cash column, cheque payment get recorded in credit side under bank column. It serves as a principal book.<\/b><\/p>\n Types of cash book are:<\/b><\/p>\n\n- Single Column Cash Book: In this type of cash book all recordings related to cash takes place, it is useful for organisations that maintain only cash transactions. It contains records of cash receipts and cash payments.<\/b><\/li>\n
- Double Column Cash Book: The two column cash book is also referred to as the double column cash book. It contains two money columns on both sides (i.e. debit and credit), one side is for recording cash transactions while the other is for recording bank transactions.<\/b><\/li>\n<\/ol>\n
Cash transactions are recorded in cash column and thus functions as a cash account whereas bank column records all bank related transactions such as payments made by cheques and functions as a bank account. Some organisations prefer the double column cash book as it contains both cash and bank columns and thus it is easy to maintain instead of maintaining two separate ledgers.<\/b><\/p>\n\n\n\n| \n Cash Book<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Dr.<\/b><\/p>\n<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \n Cr.<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Date<\/b><\/p>\n<\/td>\n | \n Particulars<\/b><\/p>\n<\/td>\n | \n L.F.<\/b><\/p>\n<\/td>\n | \n Cash<\/b><\/p>\n \u20b9<\/b><\/p>\n<\/td>\n | \n Bank<\/b><\/p>\n \u20b9<\/b><\/p>\n<\/td>\n | \n Date<\/b><\/p>\n<\/td>\n | \n Particulars<\/b><\/p>\n<\/td>\n | \n L.F.<\/b><\/p>\n<\/td>\n | \n Cash<\/b><\/p>\n \u20b9<\/b><\/p>\n<\/td>\n | \n Bank<\/b><\/p>\n \u20b9<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \u00a0<\/td>\n | \n Cash<\/b><\/p>\n<\/td>\n | \n (C)<\/b><\/p>\n<\/td>\n | \u00a0<\/td>\n | \n \u2013<\/b><\/p>\n<\/td>\n | \u00a0<\/td>\n | \n Bank<\/b><\/p>\n<\/td>\n | \n (C)<\/b><\/p>\n<\/td>\n | \n \u2013<\/b><\/p>\n<\/td>\n | \u00a0<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n- Triple Column Cash Book: Triple column cashbook is a type of cash book that has provisions for three columns which are cash, bank and discount. It is used by large firms that frequently deal with cash and bank transactions as well as which allow cash discounts. The procedure of recording data is similar to double column cash book. The cash and bank columns are periodically totalled and balanced, while the discount column is only totalled. Discount allowed is recorded on the debit while discount received from suppliers is recorded on credit side.<\/b><\/li>\n
- Petty Cash Book: A cash book that records all those expenses that are small and hold little value is called a petty cash book. The transactions related to stamps, stationery, postage, daily wages etc. are recorded in petty cash book.<\/b><\/li>\n
- What is contra entry? How can you deal this entry while preparing double column cash book?<\/b><\/li>\n<\/ol>\n
An entry that is recorded to reverse an entry on the opposite side of an account is called contra entry. For example when a debit entry gets recorded in an account, a contra entry will be posted in the credit side. Similarly a contra entry will be posted in debit side if an entry gets recorded in credit side.<\/b><\/p>\n Some transactions that can lead to contra entry are provided below.<\/b><\/p>\n\n- Opening of a bank account<\/b><\/li>\n<\/ul>\n
\n- Depositing cash into bank<\/b><\/li>\n<\/ul>\n
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