40 transactions with journal ledger and trial balance
When a cheque is received, it may be deposited into the bank on the same day or it may be deposited on another day. In case, it is deposited on the same day the amount is recorded in the bank column of the cash book on the receipts side.
If the cheque is deposited on another day, on the date of receipt it is treated as cash received and hence recorded in the cash column on the receipts side. On the day of deposit to the bank, it is shown in the Bank Column on receipt Dr.
This is a contra entry. Advantages of Maintaining Petty Cash Book. Saving of Time and efforts of chief cashier: It saves time and labour and helps chief cashier to discharge his duties more effectively.
Effective control over cash disbursements: Cash control becomes easy and effective because of division of work. This way the chances of making frauds and embezzlements become very difficult. Recording of petty disbursements in the main cash book makes it bulky and unmanageable. As the petty expenses are maintained in a separate book the cash book reveals only material and useful information. Recording of such small payments becomes easy as the totals of different types of expenses are posted to ledger.
It also saves time and effort of posting individual items in the ledger. In order to open new set of books in the beginning of new accounting year and record therein opening balances of assets, liabilities and capital, the opening entry is made in the journal. In order to update ledger account on accrual basis, adjustment entries are made at the end of the accounting period.
Such as Rent outstanding, Prepaid insurance, Depreciation and Commission received in advance. To rectify errors in recording transactions in the books of original entry and their posting to ledger accounts this journal is used.
Drawing account is transferred to capital account at the end of the accounting year. Expenses accounts and revenue accounts which are not balanced at the time of balancing are opened to record specific transactions. These are also called closing entries. In addition to the above mentioned entries recording of the following transaction is done in the journal proper: At the time of a dishonour of a cheque the entry for cancellation for discount received or discount allowed earlier.
Goods withdrawn by the owner for personal use. Goods distributed as samples for sales promotion. Endorsement and dishonour of bills of exchange. Transaction in respect of consignment and joint venture, etc.
Enter the following transactions in a simple cash book for December Enter the following transaction in Simple cash book for December Record the following transactions in a bank column cash book for December Prepare a double column cash book with the help of following information for December Prepare double column cash book from the following information for September Mohit Traders for January Bank Column Cash Book.
Prepare double column cash book from the following transactions for the year December Cash in hand Rs. He had the following transaction in the month of December, Prepare bank column cash book. Prepare petty cash book from the following transactions.
The imprest amount is Rs. Record the following transactions during the week ending Dec. Theory Base of Accounting. Recording of Transactions I. Trial Balance and Rectification of Errors. Depreciation, Provisions and Reserves. Financial Statements Final Accounts. Accounting and Database Management System. Accounting System using Database Management System. Date Debit Note No. Name of supplier Account to be debited L.
Question-3 Recording, Posting and Balancing Prepare proper subsidiary books and post them to the ledger from the following transactions for the month of February Purchases Book Date Invoice No. Name of supplier L.
F Amount Rs Cash Rs Bank Rs Amount Rs Date Particulars J. Question-5 Briefly state how the cash book is both journal and a ledger. The transactions relating to cash receipts and cash payments are recorded in this cash book. It starts with the cash or bank balances at the beginning of the period. In general, it is prepared on monthly basis. It is a very popular book and is maintained by all organisations, big or small, profit or not-for-profit.
It serves the purpose of both journal as well as the ledger cash account. It is also called the book of original entry. Question-6 What is the purpose of contra entry? When cash is paid into the bank, the amount deposited is written on the left side in the bank column and at the same time the same amount is entered on the right side in the cash column. The reverse entries are recorded when cash is withdrawn from the bank for use in the office.
Against such entries the word C , which stands for contra. Question-7 What are special purpose books? All the business transactions are first recorded in the journal and then they are posted in the ledger accounts. This is possible only incase of a small business entity.
As the business expands and the number of transactions becomes large, it may become cumbersome to journalise each transaction. So for easy, efficient and accurate recording of business transactions, Journal is sub-divided into special journals. Many of the business transactions are repetitive in nature. They can be easily recorded in special journals, which are used for recording all the transactions of a similar nature. These special journals are also called daybooks or subsidiary books. Transactions that cannot be recorded in any special journal are recorded in a journal called the Journal Proper.
Special journals are very economical and provide for division of labour in accounting work. Question-8 What is petty cash book? How it is prepared? In every organisation, there will be a large number of small payments such as conveyance, cartage, postage, telegrams and other expenses collectively recorded under miscellaneous expenses.
These are generally repetitive in nature. If all these payments are handled by the cashier and are recorded in the main cash book, the procedure is found to be very cumbersome. The cashier may be overburdened and the cash book may become very bulky. In order to avoid this, large organisations normally appoint one more cashier petty cashier and maintain a separate cash book to record these transactions. Question-9 Explain the meaning of posting of journal entries?
Posting is the process where the transactions are transferred from the original journal entry to its respective ledger accounts. It also means grouping all the transactions with respect to the particular account for a meaningful conclusion and to continue the accounting process. Question Write the difference between return Inwards and return outwards.
No Return Inwards Return Outwards 1. Return inwards is based on the goods sold to customers Return outwards is calculated based on the purchases made 2. The revenue that is earned by way of sale of goods is affected in case of return inwards Production of goods is affected when there is purchase return. Question What do you understand by ledger folio? At the time of posting the journal in its respective ledger, a separate column called the ledger folio column appears in the ledger which records the page number of the original book of entry at the time of recording.
This column is filled up at the time of posting. Question What is difference between trade discount and cash discount? No Trade discount Cash discount 1. Question Write the process of preparing ledger from a journal.
The process of posting from journal to ledger has been discussed below: Question What do you understand by Imprest amount in petty cash book? Question Explain the need for drawing up the special purpose books. Question What is cash book? Explain the types of cash book. When a cashbook is maintained, it is not required to record the transactions in the journal, and no separate account for cash or bank is required in the ledger.
Single Column Cash Book The single column cash book records all cash transactions of the business in a chronological order. Question What is contra entry? How can you deal this entry while preparing double column cash book? Both the cash deposited and withdrawn from the bank are recorded in the cash book.
Against such entries the word C , which stands for contra is written in the L. Question What is petty cash book? Write the advantages of petty cash book? Question Describe the advantages of sub-dividing the Journal. Question What do you understand by balancing of account? The ledger accounts are periodically balanced at the end of the accounting period, with the object of ascertaining the net position of each amount.
Balancing of an account means that the two sides are totaled and the difference between them is shown on the side, which is shorter in order to make their totals equal. In case the debit side exceeds the credit side, the difference is written on the credit side, if the credit side exceeds the debit side, the difference between the two appears on the debit side and is called debit and credit balance respectively.
Question Simple Cash Book Enter the following transactions in a simple cash book for December Amount Rs Date Particulars L. Kumar 1, 30 Paid rent Question Petty Cash Book Prepare petty cash book from the following transactions.
Date Jan Particulars V No. Sold to Arun Electronics as per bill no. Test Your Skills Now! This is only a practice test, it is designed to help you revise your concepts The test contains questions, only 1 option is correct for each question This is a timed test. After you have finished the test, press on the 'Finish Test' button to know your score and get the correct answers. Your total score is: What "comes" into the firm is the right to occupy premises for one quarter.
It's gonna be consumed during the coming quarter. Following traditional accounting we simply record them into a "Purchases account". The actual computation of the inventories and the goods sold will take place during the so-called "year-end-adjustments" at the end of the accounting cycle.
Usually suppliers are paid between 15 days and 45 days later. Instead of calling it "Suppliers account" or "Creditors account", we called it "Deirdre account". All this is up to us. But if this makes you feel more comfortable, it is the "Creditors account".
Miscellaneous stuff corresponding to shop expenses come into the firm, and will be consumed soon or are already consumed, like electricity. There again, pay attention to the fact that this is simply enough a page in our accounting system recording the money we have at the bank. We grant her credit, so we don't receive money, only an IOU from Sally. An IOU comes into the firm. Remember, this is the origin of double-entry accounting: This makes it easy to remember the rule: We called this account "Sally account".
Of course, it is a part of the debtors account. But we may very well split the debtors account into several accounts for each client to whom we grant credit, and give them the names we like.
As for what leaves the firm, here we use the "Sales account". Remember that it is a special account designed to conveniently compute, later on, the profit or loss of the cycle. The recording of the goods actually leaving the inventories will be taken care of during the year-end adjustments. Joe's firm sends a cheque to Jules garage in settlement of what we owe it. Since we are following the traditional accounting technique, during the accounting cycle we record all purchases into a "Purchases account".
We shall treat only at the end of the year the measurement of the value in inventory and the value buying price of goods actually sold during the cycle. Nothing prevents us, however, from having a glance at the physical inventory in our assets, and its evolution:.
Before transaction 5, we had nothing in inventory: We are not in the stockmarket, where it is possible to sell things we don't have