ACCOUNTANCY FLASHCARDS

Q1. (a) What is meant by Contra Entries?

Contra entries are those entries which affect both Cash and Bank accounts at the same time. They are recorded in both debit and credit columns of the Double Column Cash Book. These do not affect the total cash or bank balance, only transfer between them.

Q1. (b) State two advantages of Petty Cash Book.

1. Helps in recording small, daily expenses systematically.

2. Reduces the burden of main Cash Book and saves the accountant’s time.

Q2. What is Purchases Book? Explain the procedure of writing it.

Purchases Book

Purchases Book is a special subsidiary book used to record all credit purchases of goods (that are meant for resale).

Procedure of writing Purchases Book:

1. Record only credit purchases of goods.

2. Enter the date, supplier’s name, invoice number, details of goods, amount, and trade discount.

3. Total the Purchases Book at the end of the period and post the total to the Purchases Account in the Ledger.

Q3. What is Sales Book? Explain the method of recording transactions in it.

Sales Book

Sales Book is used to record all credit sales of goods.

Method of Recording:

1. Enter date, customer’s name, details of goods sold, invoice number, and net amount.

2. Record only credit sales of goods (not cash sales).

3. At the end of the month, total the book and post the total to the Sales Account.

Q4. What is meant by Contra Entries? For which type of transactions are they made? Also provide examples.

Meaning:

Contra entries are entries that affect both Cash and Bank accounts simultaneously.

Used For:

1. Cash deposited into Bank

2. Cash withdrawn from Bank for office use

Examples:

• Cash Deposited into Bank → Bank A/c Dr. To Cash A/c

• Cash Withdrawn for Office Use → Cash A/c Dr. To Bank A/c.

Q6. Prepare Purchases Book from the given transactions (Kantilal).

Purchases Book – 2016

Date Particulars Details Amount (₹) Jan 2 Purchased goods from Deepak & Sons, Bhopal ₹500 less 10% trade discount 500 – 10% = 450 450

Jan 10 Purchased goods from Naresh 320

Jan 16 Purchased goods from Shyam & Bros. ₹200 less 5% trade discount 200 – 5% = 190 190

Jan 24 Purchased goods from Ratan for cash (Cash purchase → Not entered in Purchases Book) — —

Total Purchases Book = ₹450 + ₹320 + ₹190 = ₹960

Q7. Prepare Sales Book of Shri Kamlesh Kumar (2016).

Sales Book – 2016

Date Particulars Details Amount (₹) Aug 1 Sold to Chetan – 5 bags of rice @ ₹120 each 5 × 120 600

Aug 18 Sold to Harish – 40 bags of wheat @ ₹200 each 40 × 200 8000

Aug 30 Sold to Ankur – 10 tins of ghee @ ₹300 each 10 × 300 3000

Total Sales Book = ₹600 + ₹8000 + ₹3000 = ₹11,600

Q8. Record the following transactions in a Double Column Cash Book (with Cash & Bank).

Opening Balances: (Jan 1, 2017)

• Cash Balance = ₹6200

• Bank Balance = ₹2000

DOUBLE COLUMN CASH BOOK

Date Particulars Cash (Dr) Cash (Cr) Bank (Dr) Bank (Cr) Jan 1 Balance b/d 6200 — 2000 —

Jan 4 Cash deposited into bank — 3000 3000 —

Jan 15 Cheque received from Rakesh and deposited — — 1915 —

Jan 25 Received from Aman 795 — — —

Jan 28 Bought furniture (Cash) — 1200 — —

Jan 30 Paid by cheque to Ram — — — 1240

Jan 31 Paid shop rent (Cash) — 250 — —