CBSE Class 11 Accountancy Chapter 3 Important Questions
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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CBSE Class 11 Accountancy Important Questions
|Sr No.||Chapters||Chapters Name|
|1||Chapter 1||Introduction to Accounting|
|2||Chapter 2||Theory Base of Accounting|
|3||Chapter 3||Recording of Transactions – 1|
|4||Chapter 4||Recording of Transactions II (Financial Accounting – I)|
|5||Chapter 5||Bank Reconciliation Statement|
|6||Chapter 6||Trial Balance and Rectification of Errors|
|7||Chapter 7||Depreciation, Provisions & Reserves|
|8||Chapter 8||Bill of Exchange|
|9||Chapter 9||Financial Statements – 1|
|10||Chapter 10||Financial Statements 2|
|11||Chapter 11||Accounts from Incomplete Records|
|12||Chapter 12||Applications of Computers in Accounting|
|13||Chapter 13||Computerised Accounting System|
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-
- Order form
- Quotation list.
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
- 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)
|May. 06||Narmada A/c Dr.
To sales A/c
(Being goods sold to Narmada)
|May. 12||Insurance A/c Dr.
To bank A/c
(Goods insurance premium paid)
|May. 18||Bank A/c Dr.
(Being cheque received from Manu)
|May. 24||Cash A/c Dr.
To Sam A/c
(Being Sam paid amount in cash)
|May. 25||Salary A/c Dr.
To Cash A/c
(Being Sam paid amount in cash)
|May. 30||Purchases A/c Dr.
To John A/c
(Being goods purchased on credit)
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.
|To Capital||–||By Bank||–|
Question 10. Differentiate between source documents and vouchers.
|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:
|(a)||Started business with cash||1,20,000|
|(b)||Purchased goods for cash||10,000|
|(g)||Sold goods for cash (costing Rs 5,000)||7,000|
|(h)||Goods destroyed by fire||500|
|Cash||+||Stock||+||Prepaid Expenses||Outstanding Expenses|
|(a)||Increase in cash||1,20,000|
|Increase in capital||1,20,000|
|(b)||Increase in stock||10,000|
|Increase in cash||(10,000)||=|
|(c)||Increase in cash||5,000|
|Increase in capital (Profit)||5,000|
|(d)||Increase in outstanding expenses||=||2,000|
|Decrease in capital (Expense)||(2,000)|
|(e)||Increase in prepaid expenses||1,000|
|Decrease in cash||(1,000)|
|(f)||Increase in cash||700|
|Increase in capital (Profit)||700|
|(g)||Increase in cash||7,000|
|Decrease in stock||(5,000)|
|Increase in capital (Profit)||2,000|
|(h)||Decrease in stock||(500)|
|Decrease in capital (Loss)||=||(500)|
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.
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Q.1 Which of the following statements explains the relationship between journal and ledger
A. First recording in a journal and then posting to the respective ledger, completes the double entry of the transaction.
B. The journal is the book of original entry, whereas the ledger is the book of the second entry.
C. The journal is the book for analytical record and ledger is the book for chronological record.
D. The process of recording in the journal is called Journalising, and the process of recording in the ledger is called posting.
A book of original entry is a journal in which all business transactions are recorded first in chronological order, whereas a ledger is a book in which all journal entries are recorded in individual ledger accounts.
Q.2 Read the given statements carefully and select the correct option.
Assertion: Accounting information refers only to events or transactions which are concerned with a business firm.
Reason: Accounting information is a part of financial statements.
A. Both A and R are correct, and R is the correct explanation for A
B. Both A and R are correct, but R is not the correct explanation for A
C. A is correct, but R is incorrect
D. Both A and R are incorrect
Both A and R are correct, and R is the correct explanation for A
Both the reason and the assertion are correct in the given question, and the reason is the correct explanation for the assertion. Accounting information only refers to events pertaining to the business firm, and accounting information is presented in financial statements. The transactions that are only related to the business are included in the financial statements.
Q.3 The liabilities of a firm are 60,000 and the capital of the proprietor is 40,000. What will be the total assets of the firm
Assets = Capital + Liabilities
Assets = 60,000 + 40,000
Assets = 1,00,000
Q.4 Pass the journal entries for the following transactions:
- Purchased goods from Vimal 80,000 plus IGST @12% at 10% Trade Discount and 3% cash Discount. Half of the amount paid at the time of purchase.
- Sold goods to Ankit for 40,000 plus CGST and SGST @ 6% each, allowed him 10% Trade Discount and 3% Cash Discount. Received half of the amount by cash and balance by cheque within agreed time.
- Sold goods to Amit for 1,00,000 plus CGST and SGST @ 6% each at 10% Trade Discount and 2% Cash discount. Half of the amount received by cheque within specified time.
- Sold goods costing 80,000 to Anis against a current dated cheque at a profit of 25% on cost less 20% trade discount plus IGST @ 12%. Cash discount is allowed @2%.
Working Note:Calculation of Trade Discount and Cash Discount
|Input IGST A/c||Dr.||8,640|
|To Cash/Bank A/c||39,110|
|Input IGST A/c||Dr.||8,640|
|To Cash/Bank A/c||39,110|
|To Discount Received A/c||1,210|
|(Being the goods purchased, paid IGST @ 12% at 10% Trade Discount and 3% Cash Discount, half of the amount paid)|
|Discount Allowed A/c||Dr.||1,210|
|To Sales A/c||36,000|
|To Output CGST A/c||2,160|
|To Output SGST A/c||2,160|
|(Being the sold, charged CGST and SGST @ 6% each, half the amount received in cash and balance by cheque, allowed Trade Discount @ 10% and Cash Discount @ 3%)|
|Discount Allowed A/c||Dr.||1,008|
|To Sales A/c||90,000|
|To Output CGST A/c||5,400|
|To Output SGST A/c||5,400|
|(Being the goods sold, charged CGST and SGST @ 6% each. Allowed Trade Discount @ 10% and cash Discount @ 2% Half the amount received)|
|Discount Allowed A/c||Dr.||1,792|
|To Sales A/c||80,000|
|To Output IGST A/c||9,600|
|(Being the goods sold by cheque, charging IGST @ 12%)|
|3. Sales Value (Gross)||1,00,000|
|Less: Trade Discount 10%||10,000|
|Add CGST @6%||5,400|
|SGST @ 6%||5,400|
|Cash transaction (1/2 of 1,00,000)||50,400|
|1. Cost||80,000||Less :Cash Discount 2%||1,008|
|Less: Trade Discount 10%||8,000||49,392|
|Add IGST @ 12%||8,640|
|Credit Transaction||40,320||Add: profit 25% on cost||20,000|
|Less: Cash Discount 3%||1,210||Less: Trade Discount 20%||20,000|
|2. Sale Value (Gross)||40,000||Add: IGST @12%||9,600|
|Less: Trade Discount 10%||4,000||89,600|
|36,000||Less: Cash Discount 2%||1,792|
|Net Amount Received||87,808|
|Add CGST @6%||2,160|
|SGST @ 6%||2,160|
|Less Cash Discount 3%||606||604|
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Accountancy is a new subject for students in Class 11, and at first it might appear a little daunting but with proper practice and understanding of the concepts students can find Accountancy to be one of the most interesting subjects. Class 11 Accountancy will focus on the foundations of the subject which are logical and easy to understand.
With proper concentration and practice, you will not find the Accountancy subject difficult at all.
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