Accountancy plays a vital role in keeping the business up and running. One of the main aims of Accountancy is to record business transactions that can be communicated to the users of accounting data. Hence the transactions and the source documents form an important part of this accounting process. Chapter 3 in Accountancy in the CBSE curriculum is Recording of Transactions-1 explains the same. This chapter deals with recording entries into the books of accounts by using the rules of debit and credit, understanding the nature and importance of source documents and posting journal entries into the ledger accounts.
The Important Questions Class 11 Accountancy Chapter 3, collated by Extramarks considering various study resources, helps students establish a solid knowledge base for solving practical sums.
Accountancy is a subject that talks about both theories as practical questions. Chapter 3 of Recording of Transaction-1 is in itself an essential chapter. At Extramarks, we understand the importance of practising and solving questions and thus we have created a list of the Important Questions Class 11 Accountancy Chapter 3. The questions are created with the help of many sources such as NCERT books, reference books, CBSE past years’ papers, etc. With solutions provided by experts, students can easily comprehend the questions and prepare well for examinations.
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Important Questions for Class 11 Accountancy Chapter 3 with Solutions
Here is a list of Important Questions Class 11 Accountancy Chapter 3 provided with detailed solutions.
Question 1. The basis of recording transactions is-
Answer 1: a. Vouchers
Explanation: A voucher is a source document that provides evidence of a transaction.
Question 2. Should a transaction be first recorded in a journal or ledger? Why?
Answer 2: The journal is known as the ‘book of original entry’ because the transactions are recorded in a journal for the first time with the help of source documents. The transactions are recorded chronologically and provide all the details about the complete transaction with the journal entries. The journal forms the basis for the transactions posted in the ledger. Hence for a correct accounting process, the transaction should be first recorded in a journal, and then from that, they should be posted in the ledger.
Question 3. Choose the correct option from the following:
- Capital = Liabilities + Assets
- Capital = Asset – Liabilities
- Asset = Capital – Liabilities
- Liabilities = Capital + Assets
Answer 3: b. Capital= Assets – Liabilities
Explanation: Capital is the difference between the value of assets and liabilities.
Question 4. State three fundamental steps in the accounting process.
Answer 4: The fundamental steps in the accounting process include:
- Identification of financial transactions, with the help of source document.
- Recording in books of original entries in the journal.
- Classification of an individual account in the ledger account.
- Preparing financial statements, which are; profit and loss account and balance sheet
- Communication to different users, including internal and external users.
Question 5. State journal entries that are subdivided into a number of books of original entry
Answer 5: The journal is subdivided into a number of books of original entry mentioned as follows
- Journal Proper
- Cashbook
- Other books:
- Purchases (journal) book
- Sales (journal) book
- Purchase Returns (journal) book
- Sale Returns (journal) book
- Bills Receivable (journal) book
- Bills Payable (journal) book
Question 6. Why are the rules of debit and credit same for both liability and capital?
Answer 6: Every business raises funds from both internal and external sources. The amount borrowed from external sources along with internal sources like the capital invested by the proprietor is both referred to as liabilities to the business as per the business entity concept.
The concept of a business entity separates the business from the business owner.
- The owner’s capital is viewed as a liability to the business as, in the event of a liquidation, the owner must receive repayment of the capital. Similar to how newly added capital and net profits boost the owner’s capital, capital is credited when a liability is incurred.
- If liability is paid, it decreases liability and is therefore debited. Similar to how net losses and capital withdrawals reduce capital, capital is debited. As a result, both liability and capital are subject to the same debit and credit restrictions.
Question 7. Pass the following Journal entries:
May 02, 2019:- Goods purchased from Rajesh for Rs. 59,000
May 06, 2019:- Goods Sold to Narmada for Rs. 24,000
May 12, 2019:- Insurance premium paid by cheque of Rs. 35,000
May 18, 2019:- Cheques received from Manu of Rs. 16,000
May 24, 2019:- Sam paid Rs. 14,000 in cash
May 25, 2019:- Payment of salary made in cash for Rs. 24,000
May 30, 2019:- Goods purchased from John on credit for Rs. 32,000
Answer 7: Journal Entries
Date 2019 |
Particulars |
L.F. |
Debit Amount(Rs.) |
Credit Amount(Rs.) |
May. 01 |
Purchase A/c Dr.
To Rajesh A/c
(Being goods purchased from Rajesh) |
|
59,000 |
59,000 |
May. 06 |
Narmada A/c Dr.
To sales A/c
(Being goods sold to Narmada) |
|
24,000 |
24,000 |
May. 12 |
Insurance A/c Dr.
To bank A/c
(Goods insurance premium paid) |
|
35,000 |
35,000 |
May. 18 |
Bank A/c Dr.
To Manu
(Being cheque received from Manu) |
|
16,000 |
16,000 |
May. 24 |
Cash A/c Dr.
To Sam A/c
(Being Sam paid amount in cash) |
|
14,000 |
14,000 |
May. 25 |
Salary A/c Dr.
To Cash A/c
(Being Sam paid amount in cash) |
|
24,000 |
24,000 |
May. 30 |
Purchases A/c Dr.
To John A/c
(Being goods purchased on credit) |
|
32,000 |
32,000 |
Question 8. What entry (debit or credit) would you make to:
(a) increase revenue
(b) decrease in expense
(c) record drawings
(d) record the fresh capital introduced by the owner.
Answer 8: The entries that will be recorded are as follows:
- Increase Revenue: Increase in revenue is credited as it increases the capital. Capital is known to have a credit balance, so a capital increase is credited.
- Decrease in Expense: Decrease in expense is credited as all expenses have a debit balance, and a reduction in expense will therefore be credited.
- Record Drawings: Capital is debited as it reduces. As drawings reduce capital, they are debited.
- Record the fresh capital introduced by the owner: If capital increases, it is credited. It is credited when new capital is added since it enhances the balance of the capital.
Question 9. Define ledger accounts and draw cash ledger format.
Answer 9: Ledgers are essential records for accounting purposes because they reveal the different transactions made in a single transaction. A ledger account is known as a book of accounts that records specific transactions. All relevant credit, debit, account, and journal data are kept in the ledger for future use. Each account is stored on a separate page or combined in a ledger account. Accounts are typically opened in ledgers to facilitate simple posting and placement.
Date |
Particulars |
J.F. |
Amount(Dr.) |
Date |
Particulars |
J.F. |
Amount(Cr.) |
|
To Capital |
|
– |
|
By Bank |
|
– |
|
|
|
|
|
By Purchase |
|
– |
|
|
|
|
|
By Cartage |
|
– |
Question 10. Differentiate between source documents and vouchers.
Answer 10:
Basis of Difference |
Source Documents |
Vouchers |
Meaning |
It refers to written records that specify economic occurrences or transactions. |
Voucher is the term used when the original document is regarded as proof of a transaction or an event. |
Purpose |
Source documents are used to prepare vouchers |
Vouchers are used for transaction analysis |
Recording |
The basis of preparation of accounting vouchers is that they help in recording the transactions |
They are the basis for recording transactions. |
Preparation |
Prepared at the time of the event. |
Prepared either when the transaction occurs or post the transaction. |
Legality/Validity |
Used as a piece of evidence in the court of law. |
It can be used to assess the authenticity of transactions. |
Prepared By |
They are prepared by the persons who are involved directly with the transactions or those who are authorised to prepare and/or approve such documents. |
It is prepared by the accountants. |
Examples |
Cash memos, invoices, pay-in-slip, etc. |
Cash memo, invoice, pay-in-slip (if used as evidence), debit note, credit note, cash vouchers, transfer vouchers, etc. |
Question 11. What are the two rule to follow when changing record in assets/expenses (Losses)?
Answer 11: The two rules to follow when changing records in liabilities and capital change/Revenue(Losses) are.
- An increase in the liabilities is credited, and the decrease in liabilities is debited.
- An increase in the capital is credited, and the decrease in the capital is debited.
Question 12. Use accounting equation to show the effect of the following transactions of M/s Royal Traders:
|
|
Rs |
(a) |
Started business with cash |
1,20,000 |
(b) |
Purchased goods for cash |
10,000 |
(c) |
Rent received |
5,000 |
(d) |
Salary outstanding |
2,000 |
(e) |
Prepaid Insurance |
1,000 |
(f) |
Received interest |
700 |
(g) |
Sold goods for cash (costing Rs 5,000) |
7,000 |
(h) |
Goods destroyed by fire |
500 |
Answer 12:
S.No. |
Explanation |
Assets |
= |
Liabilities |
+ |
Capital |
Cash |
+ |
Stock |
+ |
Prepaid Expenses |
|
Outstanding Expenses |
|
|
(a) |
Increase in cash |
1,20,000 |
|
|
|
|
|
|
|
|
|
Increase in capital |
|
|
|
|
|
|
|
|
1,20,000 |
|
|
1,20,000 |
|
|
|
|
= |
NIL |
+ |
1,20,000 |
(b) |
Increase in stock |
|
|
10,000 |
|
|
|
|
|
|
|
Increase in cash |
(10,000) |
|
|
|
|
= |
|
|
|
|
|
1,10,000 |
+ |
10,000 |
|
|
= |
NIL |
+ |
1,20,000 |
(c) |
Increase in cash |
5,000 |
|
|
|
|
|
|
|
|
|
Increase in capital (Profit) |
|
|
|
|
|
|
|
|
5,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,15,000 |
+ |
10,000 |
|
|
= |
NIL |
+ |
1,25,000 |
(d) |
Increase in outstanding expenses |
|
|
|
|
|
= |
2,000 |
|
|
|
Decrease in capital (Expense) |
|
|
|
|
|
|
|
|
(2,000) |
|
|
1,15,000 |
+ |
10,000 |
|
|
= |
2,000 |
+ |
1,23,000 |
(e) |
Increase in prepaid expenses |
|
|
|
|
1,000 |
|
|
|
|
|
Decrease in cash |
(1,000) |
|
|
|
|
|
|
|
|
|
|
1,14,000 |
+ |
10,000 |
+ |
1,000 |
= |
2,000 |
+ |
1,23,000 |
(f) |
Increase in cash |
700 |
|
|
|
|
|
|
|
|
|
Increase in capital (Profit) |
|
|
|
|
|
|
|
|
700 |
|
|
1,14,700 |
+ |
10,000 |
+ |
1,000 |
= |
2,000 |
+ |
1,23,700 |
(g) |
Increase in cash |
7,000 |
|
|
|
|
|
|
|
|
|
Decrease in stock |
|
|
(5,000) |
|
|
|
|
|
|
|
Increase in capital (Profit) |
|
|
|
|
|
|
|
|
2,000 |
|
|
1,21,700 |
+ |
5,000 |
+ |
1,000 |
= |
2,000 |
+ |
1,25,700 |
(h) |
Decrease in stock |
|
|
(500) |
|
|
|
|
|
|
|
Decrease in capital (Loss) |
|
|
|
|
|
= |
|
|
(500) |
|
|
1,21,700 |
+ |
4,500 |
+ |
1,000 |
= |
2,000 |
+ |
1,25,200 |
|
|
|
|
|
|
|
|
|
|
|
Benefits of Solving Important Questions Class 11 Accountancy Chapter 3
Chapter 3 of Class 11 Accountancy marks the beginning of the practical sums that will build up their base in the subsequent chapters. Strong knowledge of Chapter 3 can help students go a long way in solving further questions that have a raised level of difficulty. Going through the Important Questions Class 11 Accountancy Chapter 3 prepared by Extramarks can help the students in doing a thorough revision of the chapter and practice sums that will also build their confidence.
Here are a few benefits students can achieve while revising the Important Questions Class 11 Accountancy Chapter 3 available at Extramarks:
- Easy to understand step-by-step solutions covering all the chapter-related accounting problems.
- The Important Questions Class 11 Accountancy Chapter 3 are collated from various important sources such as NCERT books, reference books, past years’ question papers, etc., which provides a variety of different difficulty level questions to the students.
- The list of important questions gives the students a fair idea about the type of questions that might appear in their examinations.
- Subject experts curate the answers to these Important Question Class 11 Accountancy Chapter 3 which makes them utmost reliable and trustworthy.
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