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Recording of Transactions - II Test 36

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Recording of Transactions - II Test 36
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  • Question 1
    1 / -0
    The source document for recording in purchase book is ________.
    Solution
    All credit purchases of goods are recorded in the purchase journal whereas cash purchases are recorded in the cash book. 
    The source documents for recording entries in the book are inward invoices or bills received by the firm from the supplies of the goods. Inward invoice is received by the buyer from the seller. 
    On the receipt of invoice, the buyer stamps it with date of receipt. The inward invoice number is entered n the purchase journal.
  • Question 2
    1 / -0
    Book in which small payments are recorded is ____________.
    Solution
    The petty cash book is defined as a relatively small amount of cash kept at hand for making quick payments for miscellaneous small expenses in the business concern. A cash book that is created for the small payments of an organization i.e. taxi fare, car fare, bus fare, postage and stamps etc. has a separate fund to meet the day to day petty expenses in the office is called as petty cash book. It is established in the responsibility of petty cashier who maintains a separate cash book to record, such small payments only. It's a cash book to enter daily expenses like the cost of stationery, postage and so on. The petty cash book will be maintained by a separate cashier known as a petty cashier in the accounting field. 
  • Question 3
    1 / -0
    ________is the book in which cash discount received and allowed is recorded.
    Solution
    A book maintained to record transactions, which do not find place in special journals, is known as Journal Proper or Journal Residual. When the journal is sub-divided into various subsidiary books, such as, Sales Book, Purchase Book, etc. The Journal becomes the residuary book in which only those transactions are recorded that cannot be recorded in any other subsidiary book. This type of journal is called journal proper. The following types of entries are recorded in Journal Proper:
    a. Opening entry
    b. Closing entry
    c. Transfer entries
    d. Rectification entries
    e. Adjustment entries
    f. Miscellaneous entries such as discount received, bad debts written off, etc.
    Thus, cash discount received and allowed is recorded in the journal proper.
  • Question 4
    1 / -0
    ____________recorded in cash book.
    Solution
    Option A: 5000 received from Rahul
    Due to this transaction, there is an increase in cash, therefore it will be recorded in the Cash Book.

    Option B: 6500 paid to Gopal
    There is a decrease in cash by 6500 therefore it will be recorded in the Cash Book.

    Option C: Loan taken from bank Rs. 51000
    Therefore, there is an increase in cash due to this transaction 

    All the transaction involve inflow or outflow of cash therefore, all will be recorded in the cash book.
  • Question 5
    1 / -0
    _________ is the book which is used for the purpose of recording the payment of petty cash expenses.
    Solution
    In every organisation, a large number of small payments such as conveyance, cartage, postage, telegrams and other expenses are made. These are generally repetitive in nature. 
    If all these payments are handled by the cashier and are recorded in the main cash book, the procedure is found to be very cumbersome. The cashier may be overburdened and the cash book may be become very bulky. 
    To avoid this, large organisations normally appoint one more cashier and maintain a separate cash book to record these transactions. Such a cash book maintained by petty cashier is called petty cash book. It is used for the purpose of recording the payment of petty cash expenses.
  • Question 6
    1 / -0
    Sale of computer by a computer dealer on credit is recorded in __________.
    Solution
    The firm is doing the business of computer. Sale of computer by the entity will be an operating activity and hence computers are goods in business and not treated as fixed assets. Sales book records transactions of credit sales.
    Computer when sold on credit, will be recorded in sales day book as it is a business activity of sale of goods on credit.
  • Question 7
    1 / -0
    _______ does not have any credit side.
    Solution
    The purchases journal, sometimes referred to as the purchase day book, is a special journal used to record credit purchases. It should be noted that the purchases from suppliers and does not for example, include cash purchases or purchase returns.
  • Question 8
    1 / -0
    Provisions for bad debts is journalized in ________.
    Solution
    All adjustment entries are passed through general journal. Other than cash, credit sales and credit purchase all transaction are to be recorded in general journal. Provision for bad debts is an adjustment and hence is to be recorded in general journal.
  • Question 9
    1 / -0
    While adjusting the cash balance which one of the following is not taken into account?
    Solution
    When there is a difference between bank column of cash book and pass book, there may be confusion that which balance should be taken to "Balance Sheet" as "Bank Balance" while preparing financial statements. 
    Since there is a difference between bank column of cash book and pass book taking either of the two balances will not reflect a true picture of the "Bank Balance". 

    Therefore, at the end of the financial year, cash book must be adjusted for all the omissions/errors etc. It is known as "Adjusted Cash Book". Such adjusted cash book will be taken to balance sheet as "Bank Balance". No errors of the pass book will be taken into account while adjusting the cash balance.
  • Question 10
    1 / -0
    Which of these items are taken into consideration for preparing adjusted cash book?
    Solution
    When there is a difference between bank column of cash book and pass book, there is confusion that which balance should be taken to "Balance Sheet" as "Bank Balance" while preparing financial statements. 

    Since there is a difference between bank column of cash book and pass book, taking either of the two balances will not relevant a true picture of the "Bank Balance". 

    Therefore, at the end of the financial year, cash book must be adjusted for all the errors/omissions etc. It is called as "Adjusted Cash Book". All errors made in the cash book are to be taken into consideration for preparing adjusted cash book.
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