Chapter recording-of-transactions-i: Recording of Transactions - I Application Questions | accountancy Class 11 CBSE

Chapter recording-of-transactions-i: Recording of Transactions - I Application Questions | accountancy Class 11 CBSE | ByteNotes.in

Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 1

Applied Concept

Rohit started a business with ₹5,00,000 cash. He then purchased furniture worth ₹60,000 by issuing a cheque, and subsequently deposited ₹4,80,000 into SBI. Using accounting equation, show the effect of each transaction on the elements.

Transaction 1: Cash ₹5,00,000 (asset +) and Capital ₹5,00,000 (capital +). Equation: A ₹5,00,000 = L ₹0 + C ₹5,00,000. Both sides balance as assets equal capital.
Transaction 2: Bank ₹4,80,000 (asset +) and Cash ₹4,80,000 (asset –). Only the composition of assets changes; total assets, liabilities, and capital remain unchanged at ₹5,00,000.
Transaction 3: Furniture ₹60,000 (asset +) and Bank ₹60,000 (asset –). Again only asset composition changes; total assets remain ₹5,00,000, liabilities zero, capital ₹5,00,000. The equation A = L + C is maintained throughout.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 2

Applied Concept

M/s Saroj Mart purchased goods on credit from Manisha for ₹36,000 and later sold goods to Priya on credit for ₹16,000. Priya then paid by cheque. Journalise all three transactions.

Transaction 1 (Purchases on credit): Purchases A/c Dr. ₹36,000; To Manisha A/c Cr. ₹36,000. Narration: Goods purchased on credit from Manisha. Purchases (expense) increases — debited; Manisha (liability/creditor) increases — credited.
Transaction 2 (Credit sale to Priya): Priya A/c Dr. ₹16,000; To Sales A/c Cr. ₹16,000. Narration: Goods sold to Priya on credit. Priya (asset/debtor) increases — debited; Sales (revenue) increases — credited.
Transaction 3 (Cheque received from Priya): Bank A/c Dr. ₹16,000; To Priya A/c Cr. ₹16,000. Narration: Cheque received from Priya. Bank (asset) increases — debited; Priya's debt extinguished — asset decreases — credited.

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Application Question

Hard difficulty • Concept in a practical situation

Hard

Question 3

Applied Concept

A shopkeeper in Delhi buys goods worth ₹1,00,000 on credit (CGST @ 9%, SGST @ 9%) and sells the same goods for ₹1,35,000 on credit (CGST @ 9%, SGST @ 9%). Pass the journal entries.

Purchase entry: Purchases A/c Dr. ₹1,00,000; Input CGST A/c Dr. ₹9,000; Input SGST A/c Dr. ₹9,000; To Creditor A/c Cr. ₹1,18,000. CGST and SGST at 9% each on ₹1,00,000 = ₹9,000 each; total payable to creditor ₹1,18,000.
Sales entry: Debtor A/c Dr. ₹1,48,500; To Sales A/c Cr. ₹1,35,000; To Output CGST A/c Cr. ₹6,750; To Output SGST A/c Cr. ₹6,750. CGST and SGST at 9% each on ₹1,35,000 = ₹6,750 each; total receivable from debtor ₹1,48,500.
GST settlement: Output CGST A/c Dr. ₹6,750; Output SGST A/c Dr. ₹6,750; To Input CGST A/c Cr. ₹9,000; To Input SGST A/c Cr. ₹9,000. Since input tax credit (₹9,000) exceeds output liability (₹6,750), no net payment is due; the excess ITC is carried forward.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 4

Applied Concept

With reference to the ledger, Mallika Fashion House sold goods on credit to M/s Mohit Bros and later received a cheque from them. Show the posting of these two transactions in M/s Mohit Bros' Ledger Account.

When goods are sold on credit to Mohit Bros, the journal entry is: Mohit Bros A/c Dr.; To Sales A/c Cr. In the ledger, Mohit Bros A/c is debited — date and amount are entered on the Dr. side; in the Particulars column, 'Sales A/c' is written to show the source.
When cheque is received from Mohit Bros, the entry is: Bank A/c Dr.; To Mohit Bros A/c Cr. In Mohit Bros' ledger account, this amount is entered on the Cr. side; in the Particulars column, 'Bank A/c' is written showing settlement by cheque.
The balance of Mohit Bros' account (Dr. side total minus Cr. side total) represents the amount still outstanding from them. If fully paid, the account closes to zero, confirming complete settlement — a key utility of the ledger for tracking debtor balances.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 5

Applied Concept

A business pays rent of ₹2,500 in cash and salary of ₹5,000 in cash. Show how each transaction is recorded using the rules of debit and credit and its effect on the accounting equation.

Rent entry: Rent A/c Dr. ₹2,500; To Cash A/c Cr. ₹2,500. Rent is an expense — increases on the debit side. Cash is an asset — decreases on the credit side. Both rules correctly applied.
Salary entry: Salary A/c Dr. ₹5,000; To Cash A/c Cr. ₹5,000. Same logic: salary (expense) debited; cash (asset) credited. Total cash reduction = ₹7,500.
Accounting equation effect: assets (cash) decrease by ₹7,500 and capital decreases by ₹7,500 (because expenses reduce equity). Liabilities are unaffected. The equation A = L + C remains balanced as both A and C fall by equal amounts.

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Application Question

Hard difficulty • Concept in a practical situation

Hard

Question 6

Applied Concept

Suman of Bihar buys goods worth ₹3,50,000 from Jharkhand (IGST @ 18%) and sells them locally for ₹4,00,000 (CGST @ 9%, SGST @ 9%). Pass the journal entries and show the GST set-off.

Purchase entry (inter-state): Purchases A/c Dr. ₹3,50,000; Input IGST A/c Dr. ₹63,000; To Creditor A/c Cr. ₹4,13,000. IGST at 18% on ₹3,50,000 = ₹63,000; total payable to supplier ₹4,13,000.
Sales entry (intra-state): Debtor A/c Dr. ₹4,72,000; To Sales A/c Cr. ₹4,00,000; To Output CGST A/c Cr. ₹36,000; To Output SGST A/c Cr. ₹36,000. CGST and SGST at 9% each on ₹4,00,000 = ₹36,000 each.
GST set-off: IGST credit (₹63,000) is first applied against Output CGST (₹36,000 — fully set off); balance IGST ₹27,000 applied against Output SGST (₹36,000); net SGST payable = ₹9,000 via Electronic Cash Ledger.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 7

Applied Concept

Rohan's books show: plant and machinery purchased for ₹1,25,000 with ₹10,000 advance paid in cash and balance payable to Ramjee Lal. Prepare the journal entry and show the T-accounts.

Journal entry: Plant and Machinery A/c Dr. ₹1,25,000; To Cash A/c Cr. ₹10,000; To Ramjee Lal A/c Cr. ₹1,15,000. Narration: Bought Plant and Machinery; ₹10,000 advance paid in cash, balance due to Ramjee Lal.
T-account for Plant and Machinery: Dr. side shows ₹1,25,000 (debit — asset increases). T-account for Cash: Cr. side shows ₹10,000 (credit — asset decreases). T-account for Ramjee Lal: Cr. side shows ₹1,15,000 (credit — liability increases).
This is a compound journal entry because three accounts are affected — one debit and two credits. Total debit (₹1,25,000) equals total credit (₹10,000 + ₹1,15,000 = ₹1,25,000), confirming the double entry rule is satisfied.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 8

Applied Concept

A business has the following petty expenses for which no external documentary evidence exists. Explain how these should be handled in the accounting system with reference to source documents.

When no external document exists for petty expenses (e.g., tips, small cartage payments), an internal accounting voucher is prepared internally by the person incurring the expense or the accounts department.
The internal voucher must contain all essential elements: date, amount, nature of expense, name and signature of the preparer, and must be signed/approved by an authorised person within the organisation.
These approved internal vouchers are treated on par with external source documents — they are serially numbered, arranged chronologically in a separate file, and serve as the basis for recording the entries in the books of account.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 9

Applied Concept

Sita Ram House deposits ₹4,50,000 into a bank account (out of business cash), then purchases plant of ₹2,30,000 paying ₹30,000 cash and balance later. Show the effect of both transactions on the accounting equation.

Transaction 1 (Bank deposit): Cash (asset) decreases by ₹4,50,000 and Bank (asset) increases by ₹4,50,000. Only asset composition changes; total assets, liabilities, and capital are all unaffected. Equation remains balanced.
Transaction 2 (Plant purchase): Plant and Machinery (asset) increases by ₹2,30,000; Cash (asset) decreases by ₹30,000; Creditor — non-trade (liability) increases by ₹2,00,000. Net asset change: +₹2,30,000 – ₹30,000 = +₹2,00,000.
Liability also increases by ₹2,00,000, so both sides of the equation rise by ₹2,00,000. Capital is unchanged. Equation A = L + C is maintained as the increase in assets exactly matches the increase in liabilities.

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Application Question

Hard difficulty • Concept in a practical situation

Hard

Question 10

Applied Concept

With reference to Illustration 2 (Saroj Mart), explain how the entry for 'goods given as charity' differs from a normal sale entry and what accounts are affected.

In a normal sale, the business receives cash or creates a debtor; Sales A/c is credited (revenue earned). In a charity entry, no revenue is received — instead, Charity A/c is debited (expense/loss recorded) and Purchases A/c is credited (goods given away at cost, reducing the purchases balance).
Saroj Mart's entry: Charity A/c Dr. ₹1,500; To Purchases A/c Cr. ₹1,500. This records the outflow of goods as a loss/expense rather than revenue, and adjusts the purchases figure to reflect that these goods were not sold.
Effect on accounting equation: capital decreases (charity is an expense reducing equity) and assets (stock) decrease by the same amount. Liabilities are unchanged. The equation remains balanced as both A and C fall equally.

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Chapter sections

Chapter recording-of-transactions-i: Recording of Transactions - I | Application Questions

Rohit started a business with ₹5,00,000 cash. He then purchased furniture worth ₹60,000 by issuing a cheque, and subsequently deposited ₹4,80,000 into SBI. Using accounting equation, show the effect of each transaction on the elements.

M/s Saroj Mart purchased goods on credit from Manisha for ₹36,000 and later sold goods to Priya on credit for ₹16,000. Priya then paid by cheque. Journalise all three transactions.

A shopkeeper in Delhi buys goods worth ₹1,00,000 on credit (CGST @ 9%, SGST @ 9%) and sells the same goods for ₹1,35,000 on credit (CGST @ 9%, SGST @ 9%). Pass the journal entries.

With reference to the ledger, Mallika Fashion House sold goods on credit to M/s Mohit Bros and later received a cheque from them. Show the posting of these two transactions in M/s Mohit Bros' Ledger Account.

A business pays rent of ₹2,500 in cash and salary of ₹5,000 in cash. Show how each transaction is recorded using the rules of debit and credit and its effect on the accounting equation.

Suman of Bihar buys goods worth ₹3,50,000 from Jharkhand (IGST @ 18%) and sells them locally for ₹4,00,000 (CGST @ 9%, SGST @ 9%). Pass the journal entries and show the GST set-off.

Rohan's books show: plant and machinery purchased for ₹1,25,000 with ₹10,000 advance paid in cash and balance payable to Ramjee Lal. Prepare the journal entry and show the T-accounts.

A business has the following petty expenses for which no external documentary evidence exists. Explain how these should be handled in the accounting system with reference to source documents.

Sita Ram House deposits ₹4,50,000 into a bank account (out of business cash), then purchases plant of ₹2,30,000 paying ₹30,000 cash and balance later. Show the effect of both transactions on the accounting equation.

With reference to Illustration 2 (Saroj Mart), explain how the entry for 'goods given as charity' differs from a normal sale entry and what accounts are affected.

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