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(a) Purchases from Saranya should have been posted to the credit of Saranya’s A/c, but it has been debited. Hence, credit Saranya’s A/c with double the amount i.e., Rs. 300. 

(b) Credit the Purchases A/c.

(a) Sales account should be credited with Rs. 400

(b) Sales returns account should be credited with Rs. 500 

(c) Purchases account should be debited with Rs. 600 

(d) Purchases returns account should be debited with Rs. 700 

(e) Bills receivable account should be debited with Rs. 800

(a) Returns outward Account should be credited with Rs. 2,000 

(b) Sales returns account should be credited with Rs. 1,000 

(c) Purchases account should be debited with Rs. 100

(a) Sales account should be credited with Rs. 100 

(b) Purchases returns account should be debited with Rs. 200

(a) Purchases account should be debited Rs. 90 

(b) Purchases account should be credited Rs. 180 

(c) Sales account should be credited Rs. 270 

(d) Sales returns account should be credited with Rs. 360 

(e) Purchases returns account should be credited with Rs. 450

Correct option is (a) Trial Balance

Correct option is (a) compensating

Correct option is (b) Suspense

Correct option is (c) credit

This statement is True. 

The error of Principle is those where some basic principles of bookkeeping and accountancy are not properly followed while recording a business transaction. Eg.: Capital expenditure is shown as revenue expenditure or Vice-a-Varsa and they are called an error of principle.

This statement is False. 

The complete omission of a transaction will bot disclosed by a trial balance. Trial balance, balances will be agreed with such errors. So the omission of transaction or an error of omission will not be disclosed by Trial Balance.

Correct option is (c) Errors of principle

Correct option is (b) Suspense A/c

Correct option is (c) Errors of principle

Correct option is (b) Errors of omission

Correct option is (c) Journal Proper

Correct option is (b) Error of principle

Preferntial allotment means allotment of shares of a predetermined price to the pre-identified people means who are interested in taking strategic stake in the company such as promoters, venture capitalists, financial institutions buyers of the companies products or its suppliers.

Shares issued without any consideration by a company to its shareholders out of accumulated profit are known as bonus share.

Correct option is (C) Life Insurance Corporation of India.

Correct option is (C) 90 %

(1) Land and Building – Real a/c 

(2) Rama’s a/c. – Personal a/c 

(3) Salaiya/c – Nominal a/c 

(4) State Bank of India – personal a/c 

(5) Machinery’s a/c – Real a/c 

(6) Renta/c (8) Drawings a/c 

(7) Furhiture’s a/c – Real a/c 

(9) Wages a/c – Nominal a/c 

(10) Capital a/c – personal a/c 

(11) Stationery a/ – Nominal a/c 

(12) Cash a/c – Real a/c 

(13) o/s commission a/c – personal a/c 

(14) Mysore mines a/c – Real a/c 

(15) Stock a/c – Real a/c 

(16) Goodwill a/c – Real a/c 

(17) Repairs a/c – Nominal a/c 

(18) Discount paid – Nominal a/c 

(19) Loan a/c – personal a/c 

(20) Investment a/c – Real a/c 

(21) Motor vehicle a/c -Real a/c 

(22) Bad debts – Nominal a/c 

(23) Bank a/c – Real a/c 

(24) Purchases a/c – Real a/c 

(25) Interest a/c – Nominal a/c 

(26) Loose tools a/c – Real a/c 

(27) Bank overdraft a/c – personal a/c 

(28) Postage a/c – personal a/c 

(29) Bills Receivable a/c – Real a/c 

(30) Provision for bad debts – personal a/c 

(31) Bank loan a/c – personal a/c 

(32) Sales a/c – Reala/c 

(33) Rent received in advance- personal a/c 

(34) Depreciation -Nominal a/c 

(35) Goods loss on fire – Nominal a/c 

(36) National college a/c – personal a/c 

(37) Fixed Deposit a/c – Real a/c 

(38) Purchase return – Real a/c

(39) Bad debts recovered – Real a/c 

(40) Provision for Discount on creditors a/c – personal a/c 

(41) Bills payable a/c – Real a/c 

(42) Provision for Depreciation a/c – personal a/c 

(43) Rent Receivable – personal a/c 

(44) Mangalore’s Trading co – personal a/c 

(45) Donation – Nominal a/c 

(46) Depreciation Fund – Real a/c 

(47) Sports club – personal a/c 

(48) Sales Returns a/c – Real a/c 

(49) Discount Received a/c – Nominal a/c 

(50) Debtors a/c – personal a/c

The process of preparing ledger from Journal can be explained with the help of an example. Let us suppose that machinery is purchased from Mr. X, so, the journal entry will be: Machinery A/c Dr To Mr. X Account

In this example, Machinery Account is debited and Mr. X Account is credited. Let us understand the process of preparing ledger from the journal entry.

Account which is debited in the entry:

Step 1: Identity the account in ledger that is debited, i.e., ‘Machinery Account’. 

Step 2: Enter date in the debit side of the ‘Machinery Account’ in the ‘Date column. 

Step 3: Enter the name of the account as ‘Mr. X Account’ (which is credited in the entry) in the ‘Particulars’ column in the debit side of the Machinery Account. 

Step 4: Enter the page number of the journal, where the entry is recorded in the ‘ J.F’. (Journal folio) column. ‘ 

Step 5: Post the corresponding amount in the ‘Amount’ column, which is recorded against ‘Machinery Account’ in the journal entry.

Account which is credited in entry: 

Step 1: Identify the account in ledger that is credited, i.e., ‘Mr. X Account’. 

Step 2: Enter date in the credit side of ‘Mr. X Account’ in the ‘Date’ column. 

Step 3: Enter the name of the account as ‘Machinery Account’ (which is debited in the entry) in the ‘Particulars’ column in the credit side of the ‘Machinery Account’. 

Step 4: Enter the page number of the journal where the entry is recorded in the ‘J.F’. (journal folio) column. 

Step 5: Post the corresponding amount in the ‘Amount’ column, which is recorded against ‘Mr. X Account’in the journal entry.

Accounts are prepared on weekly, fortnightly, monthly, quarterly or on daily basis. At the end ; of each period they are balanced. 

The balancing of the accounts is done in the manner given below: –

• The totals of the debit and credit of an account is calculated, to ascertain which one them is higher.

• The higher figure among debit and credit side is written in the grand total cello on both sides of the account, i.e., in debit and in credit side. 

• The next step is to ascertain the difference between the debit total and the credit total. This difference is called ‘Closing Balance’ or ‘Balance carried down’, and is denoted by‘Balance c/d’. 

• The ‘Balance c/d’ will be shown either in the debit or credit side, whichever totals up into lower amount. 

• If ‘Balance c/d’ is written in the debit side, then the balance is called ‘Credit balance’. On the other hand, if ‘Balance c/d’ is written in the credit side, then the balance is called ‘Debit Balance’. 

• On closing the account, ‘Balance c/d’ is brought forward to the subsequent period, and it is written as ‘Balance b/d’.

Usually, the closing balances of real and personal accounts are forwarded to the next period by this manner. For nominal accounts, Step lto 3 remain same and they are closed by transferring the closing balances either to Trading Account or to Profit and Loss Account. 

Generaly we can spend equivatent to reciept or less than that because of this cash always have debit balance or tallied both the side of cash book.

Correct option is (C) Finance Dept.

Correct option is (C) 1991 A.D.

Correct option is (A) 60%

Correct option is (C) 20%

Correct option is (B) Called up share capital

Correct option is (D) 90

When the company issues debentures at a price which is less than their face value or nominal value, the debentures are said to have been issued at discount. Thus, the difference between face value and issued price is known as debenture discount.

Some accounting systems are called double accounting systems because under this system there are two aspects of every transaction, i.e., every transaction has dual effect. Every transaction affects two accounts simultaneously, that is represented by debiting one account and crediting the other account. It is based on the fact that if there is receiver, there should be a giver.

The evidence provided by the source document is important in the following manners: 

• It provides evidence that a transaction has actually occurred.

 • It provides important and relevant information about date, amount, parties involved and other details of a particular transaction. 

• It acts as a proof in the court of law. 

• It helps in verifying transactions during the auditing process.

“Debit increase in expenses Credit decrease in expenses”.

a. As per the rule of double entry system, there are two colums of ‘Amount’ in the journal format namely ‘Debit Amount’ and ‘Credit Amount’. The way of recording in a journal is quite different from normal recording. Journal entry is recorded in journal format in which the ‘Debit Amount’ column is listed before the ‘Credit Amount’ column.

b. Credits are indented. Indentation is leaving a space before writing any word. Journal entry has its own jargon. While journalizing, in the ‘Particulars’ column of journal format, debited account is written first and credited account is in the next line leaving some space, which is indentation.

a. A transaction should be recorded first in a journal because journal provides complete details of a transaction in one entry. Further, a journal forms the basis for posting the transactions into their respective accounts into ledger. Transactions are recorded in journal in chronological order, i.e. (Date wise) in the order of occurrence with the help of source documents.

b. Journal is also known as ‘Book of original entry, because with the help of source document, transactions are originally recorded in books. The process of recording the transactions in journal and then in ledger is presented in the below given flow chart.

1. If a transaction has a decreasing effect on an asset, then this decrease is recorded as credit. This is because, as all assets have debit balance and if assets decrease, then it is credited. For example, sale of furniture results in decrease in furniture (asset); so, the sale of furniture will be credited.

2. If a transaction has a decreasing effect on a liability, then this decrease is recorded as debit. This is because all liabilities have credit balance. If the liability increases, then it is credited and if the liability decreases, then it is debited. For example, payment to the . creditors results in a decrease in the creditors (liability); so, the creditors account will be debited.

The features of journal are 

1. Journal is a day book or daily recording transaction book. 

2. Transactions are recorded systematically in chronological order (Date-wise).

Examples for personal a/c are : 

1. Vijaya college a/c 

2. Rama’s a/c 

3. Prepaid expenses a/c 

4. Vijaya Bank a/c

Example for artificial persons a/c are : 

1. Vijaya institute’s a/c 

2. SAk college for commerce and management a/c 

3. Syndicate Bank a/c 

4. BHSHES a/c.

It is beyond human capabilities to memorise each financial transaction and that is why, source documents have their own importance in accounting system. They are considered as an evidence of transactions and can be presented in the court of law. Transactions supported by evidence can be verified. Source documents also ensure that transactions recorded in the books are free from personal biases. A few events that are supported by source document are given below.

a. Sale of goods worth Rs. 20,000 on credit, supported by sales invoice/bill 

b. Purchase of goods worth Rs 5,000 on credit, supported by purchase invoice/bill 

c. Cash sales worth Rs 10,000, supported by cash memo 

d. Cash purchase of goods worth Rs 400, supported by cash memo 

e. Goods worth Rs 1000 returned by customer, supported by credit note 

f. Return of goods purchased on credit worth Rs 2000, supported by debit note 

g. Payment worth Rs 1,200 through bank, supported by cheques. 

h. Deposits into bank worth Rs 500, supported by pay-in slips

Out of the above events, only those events that can be expressed in monetary tenns, are recorded in the books of accounts. However, the non-monetary events are not recorded in accounts; for example, 

promotion of manager cannot be recorded but increment in salary can be recorded at the time when salary is paid or due. 

Source document in accounting is important because of the below given reasons.

a. It provides evidence that transaction has actually occurred. 

b. It provides information about the date, amount and parties involved and other details of a particular transactions. 

c. It acts as evidence in the count of law. 

d. It helps in verifying the transaction during the auditing process.

J.F. number is the number that is entered in the ledger at the time of posting entries into their respective accounts. It helps in determining whether all transactions are properly posted in their accounts. It is recorded at the time of posting and not at the time of recording the transactions. 

The purpose of entering J.F. number in the ledger is because of the below given benefits.

• J.F. number helps in locating the entries of accounts in the journal book. In other words, J.F number helps to locate the position of the related journal entiy and subsidiary book in the journal book. 

• J.F. number in accounts ensures that recording in the books of original entry has been posted or not. 

........Account

Debit originated from the Italian word debito, which in turn is derived from the Latin word debeo, which means ‘owed to proprietor’ and credit comes from the Italian word credito, which is derived from the Latin word credo, which means belief, i.e., ‘owed by proprietor’. According to the dual aspect concept, all the business transactions that are recorded in the books of accounts have two aspects- debit and credit. 

The dual aspect can be better understood by the help of an example; bought goods worth Rs. 500 on cash. This transaction affects two accounts with the same amount simultaneously. As goods are brought in exchange of cash, so the cash balances in the business reduce by Rs 500, i.e. why the cash account is credited. Simultaneously, the amount of goods increases . by Rs 500, so purchases account will be debited. Debit and credit depend on the nature of accounts involved; such as assets, expenses, income, liabilities and capital. There are five types of Accounts.

Two fundamental rules are followed to record the changes in these accounts:

For recording changes in Assets/Expenses (Losses) 

a. “Increase in asset is debited, and decrease in asset is credited.” 

b. “Increase in expenses/losses is debited, and decrease in expenses/ losses is credited.” 

For recording changes in Liabilities and Capital/ Revenues (Gains): 

a. “Increase in liabilities is credited and decrease in liabilities is debited ” 

b. “Increase in capital is credited and decrease in capital is debited.” 

c. “Increase in revenue / gain is credited and decrease in revenue/gain is debited.” 

• Increase in revenue Increase in revenue is credited as it increases the capital. Capital has credit balance and if capital increases, then it is credited. 

• Decrease in expense Decrease in expense is credited as all expenses have debit balance. If expense decreases, then it is credited. 

• Record drawings Capital has credit balance; if the capital increases, then it is credited. If capital decreases, then it is debited. Drawings are debited as they decrease the capital. 

• Record of fresh capital introduced by the owner – credit Capital has credit balance, if capital increases, then it is credited. The introduction of fresh capital increases the balance of capital, and so, it is credited.

a. Every business acquires funds from internal as well as from external sources. According to the business entity concept, the amount borrowed from the external sources together with the internal sources like, capital invested by the proprietor, it termed as liability to the business. Business entity entity concept treats business and business owner separately. 

b. Capital of the owner is treated as liability to the business because the business has to repay the amount of capital to the owner, in case of closure of the business. As liability incurred is credited, in the same way, fresh capital introduced and net profit increases the owner’s capital, and so, captial is credited. 

c. On the other hand, if liability is paid, it reduces liability, and so, it is debited. Similarly, drawings from capital and net loss reduce the capital, and so, capital is debited. Thus the rules of debit and credit are same for both liability and capital.

Every transaction is recorded in the original book of entry (journal) in order of their occurrence; however, if we want to know that how much we receive from our debtors or how much to pay to the creditors, it is not possible to determine at a single movement. Hence, we prepare accounts to know the position of business activities in the meantime. 

There are some steps to record transactions in accounts: 

Step 1: Locate the account in ledger, 

Step 2: Enter the date of transaction in the date column of the debit side of Account. 

Step 3: In the ‘Particulars’ column of the debit side of Account, the name of corresponding account is to be written 

Step 4: Enter the page number of the ledger in the Journal Folio (J.F.) column of Account. 

Step 5: Enter the amount in the ‘Amount’ column. 

Step 6: Same steps are to be followed to post entries in the credit side of Account. 

Step 7: After entering all the transactions for a particular period, balance the account by totaling both sides and write the difference in shorter side, as ‘Balance c/d’. 

Step 8: Total of account is to be written on either side.

The rule of personal a/c is – 

“DEBIT THE RECEIVER – 

CREDIT the Giver”.

The journal proper is used for recording only those transactions which cannot be recorded in any of the other subsidiary books.