📝 Chapter Test

Recording of Transactions – II

Take a notebook and pen first. Solve each question yourself, then pick an option. Only your first choice counts in the score, so do not rush.

Score: 0 / 10 Attempted: 0

Part A: MCQ (1 mark each)

Q1. The cash book is:

only a book of original entry
only a ledger account
both a book of original entry and a ledger account
a subsidiary ledger of debtors

Cash transactions are recorded in it first (journal function) and it also works as the Cash Account (ledger function), so no separate Cash A/c is opened in the ledger.

Q2. A double column cash book (as in NCERT) has two amount columns on each side for:

cash and discount
cash and bank
bank and discount
cash and credit transactions

The double column cash book records cash and bank transactions in separate columns on both sides.

Q3. Machinery bought on credit from Arjun Engineering is recorded in the:

Purchases Book
Cash Book
Journal Proper
Purchases Return Book

The purchases book records only credit purchases of goods. Machinery is an asset, so its credit purchase goes to the journal proper.

Q4. The imprest amount is ₹5,000. At the end of the month the petty cashier has ₹740 in hand. The reimbursement will be:

₹5,000
₹4,260
₹5,740
₹740

Reimbursement = amount spent = 5,000 − 740 = ₹4,260.

Q5. The periodic total of the purchases return book is posted to the:

debit of Purchases A/c
debit of Purchases Return A/c
credit of suppliers' accounts
credit of Purchases Return A/c

Suppliers are debited individually; the total is credited to Purchases Return A/c.

Q6. A debit note is prepared by:

the buyer, when goods are returned to the supplier
the seller, when goods are returned by the customer
the bank, when a cheque is dishonoured
the petty cashier, for small payments

The buyer tells the supplier "we have debited your account" for the goods returned. It is the source document of the purchases return book.

Q7. A cheque received from a customer on 10 April is deposited into the bank on 12 April. On 10 April it is recorded in the:

bank column, receipts side
cash column, receipts side
journal proper
bank column, payments side

A cheque not deposited on the day of receipt is treated as cash. On the day of deposit a contra entry is passed.

Q8. Goods costing ₹2,000 distributed as free samples are recorded as:

Sales A/c Dr. To Advertisement A/c
Drawings A/c Dr. To Purchases A/c
Advertisement A/c Dr. To Purchases A/c
Advertisement A/c Dr. To Sales A/c

Samples are a sales promotion expense; the goods go out without a sale, so Purchases A/c is credited at cost.

Q9. Assertion–Reason Assertion (A): Entries marked "C" in the cash book are not posted to the ledger.
Reason (R): Both the debit and the credit aspects of a contra entry are recorded in the cash book itself.

Both Assertion (A) and Reason (R) are true, and R is the correct explanation of A.
Both Assertion (A) and Reason (R) are true, but R is not the correct explanation of A.
Assertion (A) is true, but Reason (R) is false.
Assertion (A) is false, but Reason (R) is true.

Since both effects (cash and bank) are already in the cash book, which itself serves as the Cash and Bank accounts, no posting is needed. R explains A.

Q10. Assertion–Reason Assertion (A): The cash column of a cash book can show a credit balance.
Reason (R): A bank overdraft appears as a credit balance in the bank column of the cash book.

Both Assertion (A) and Reason (R) are true, and R is the correct explanation of A.
Both Assertion (A) and Reason (R) are true, but R is not the correct explanation of A.
Assertion (A) is true, but Reason (R) is false.
Assertion (A) is false, but Reason (R) is true.

Cash payments can never exceed cash available, so the cash column always shows a debit balance; A is false. R is a correct statement about the bank column.

Part B: Exam-style questions

Dost Sir: In accountancy, marks are given for correct accounts, correct amounts, proper format and narration. First write the full answer in your notebook, then press “Show solution” and compare line by line.

Q1.3 marks

What is a contra entry? Give two examples and explain how such entries are treated while posting the cash book.

I got it right

Q2.3 marks

Distinguish between a debit note and a credit note on any three bases.

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✍️ Write it like this (board answer)

Basis	Debit Note	Credit Note
Prepared by	The buyer, when goods are returned to the supplier (or an extra amount is recoverable from a party)	The seller, when goods are returned by a customer (or an allowance is given to a party)
Message	Informs the other party that its account has been debited	Informs the other party that its account has been credited
Book supported	Source document of the Purchases Return (Return Outwards) Book	Source document of the Sales Return (Return Inwards) Book

(1 mark for each correct basis. Credit notes are traditionally written in red ink.)

Q3.4 marks

Prepare a single column cash book of Sharma Kirana Store for May 2026:

May 1	Cash in hand	₹12,000
May 4	Cash sales	₹8,600
May 7	Purchased goods for cash	₹5,400
May 10	Received from Ritu	₹3,100
May 14	Paid wages	₹2,200
May 18	Bought goods on credit from Lal Traders	₹7,000
May 22	Paid cash to Lal Traders	₹4,000
May 26	Withdrew cash for personal use	₹1,500
May 31	Deposited into bank	₹6,000

I got it right

✍️ Write it like this (board answer)

Books of Sharma Kirana Store — Cash Book

Dr.				Cr.
Date	Receipts	L.F.	₹	Date	Payments	L.F.	₹
2026 May 1	To Balance b/d		12,000	2026 May 7	By Purchases A/c		5,400
May 4	To Sales A/c		8,600	May 14	By Wages A/c		2,200
May 10	To Ritu's A/c		3,100	May 22	By Lal Traders A/c		4,000
				May 26	By Drawings A/c		1,500
				May 31	By Bank A/c		6,000
				May 31	By Balance c/d		4,600
			23,700				23,700
Jun 1	To Balance b/d		4,600

Note: the credit purchase of May 18 is not a cash transaction, so it is not recorded in the cash book (it goes to the purchases book). Cash in hand on 31 May 2026 = ₹4,600.

Q4.4 marks

Prepare the Purchases Book and the Purchases Return Book of Kumar Electronics for June 2026:

Jun 3: Bought from Delta Electricals (Invoice 210) 20 table fans @ ₹1,500, trade discount 10%.
Jun 8: Bought from Star Appliances (Invoice 76) 10 mixers @ ₹2,400, trade discount 5%.
Jun 12: Returned 2 table fans to Delta Electricals (Debit Note 11).
Jun 18: Bought a computer for office use on credit from Tech World ₹32,000.
Jun 25: Returned 1 mixer to Star Appliances (Debit Note 12).

I got it right

✍️ Write it like this (board answer)

Purchases Book

Date	Invoice No.	Name of Supplier	Details ₹	Amount ₹
2026 Jun 3	210	Delta Electricals: 20 table fans @ ₹1,500 = 30,000 less TD 10% 3,000	30,000 (3,000)	27,000
Jun 8	76	Star Appliances: 10 mixers @ ₹2,400 = 24,000 less TD 5% 1,200	24,000 (1,200)	22,800
Jun 30		Purchases A/c Dr.		49,800

Purchases Return Book

Date	Debit Note No.	Name of Supplier	Details ₹	Amount ₹
2026 Jun 12	11	Delta Electricals: 2 table fans @ ₹1,500 = 3,000 less TD 10% 300	3,000 (300)	2,700
Jun 25	12	Star Appliances: 1 mixer @ ₹2,400 less TD 5% 120	2,400 (120)	2,280
Jun 30		Purchases Return A/c Cr.		4,980

Note: the computer (Jun 18) is an asset, not goods; it is recorded in the journal proper. Returns are valued at the same trade discount as the purchase.

Q5.6 marks

Prepare a double column cash book of Mittal Traders for July 2026 and balance it:

Jul 1	Cash in hand ₹14,000; bank overdraft ₹6,000
Jul 3	Cash sales ₹18,500
Jul 5	Deposited cash into bank ₹15,000
Jul 8	Purchased goods by cheque ₹7,200
Jul 10	Received a cheque from Suresh ₹4,600
Jul 12	Suresh's cheque deposited into bank
Jul 15	Paid rent in cash ₹3,500
Jul 18	Sales received through UPI ₹6,800
Jul 20	Withdrew cash from bank for office use ₹5,000
Jul 22	Suresh's cheque returned dishonoured
Jul 25	Paid electricity bill through UPI ₹1,450
Jul 28	Paid salary in cash ₹9,000
Jul 31	Bank charges debited by the bank ₹120

I got it right

✍️ Write it like this (board answer)

Books of Mittal Traders — Cash Book

Dr.					Cr.
Date	Receipts	L.F.	Cash ₹	Bank ₹	Date	Payments	L.F.	Cash ₹	Bank ₹
2026 Jul 1	To Balance b/d		14,000		2026 Jul 1	By Balance b/d			6,000
Jul 3	To Sales A/c		18,500		Jul 5	By Bank A/c	C	15,000
Jul 5	To Cash A/c	C		15,000	Jul 8	By Purchases A/c			7,200
Jul 10	To Suresh's A/c		4,600		Jul 12	By Bank A/c	C	4,600
Jul 12	To Cash A/c	C		4,600	Jul 15	By Rent A/c		3,500
Jul 18	To Sales A/c			6,800	Jul 20	By Cash A/c	C		5,000
Jul 20	To Bank A/c	C	5,000		Jul 22	By Suresh's A/c (cheque dishonoured)			4,600
					Jul 25	By Electricity A/c			1,450
					Jul 28	By Salary A/c		9,000
					Jul 31	By Bank Charges A/c			120
					Jul 31	By Balance c/d		10,000	2,030
			42,100	26,400				42,100	26,400
Aug 1	To Balance b/d		10,000	2,030

Working notes: (1) The opening overdraft is shown on the payments side of the bank column. (2) Suresh's cheque was not deposited on the day of receipt, so it was first entered in the cash column; its deposit is a contra entry. (3) The dishonour is entered in the bank column on the payments side against Suresh. (4) Cash in hand ₹10,000; cash at bank (debit balance) ₹2,030.

Q6.Case Study · 4 marks

Neelam runs Neelam General Store. Her June 2026 transactions include: Jun 2 Sold goods on credit to Pooja Traders ₹6,400 (Invoice 51). Jun 5 Cash sales ₹3,900. Jun 9 Sold goods to Kiran Stores, list price ₹10,000, trade discount 10% (Invoice 52). Jun 14 Sold the shop's old refrigerator on credit to Mehul ₹5,000. Jun 20 Pooja Traders returned goods worth ₹400 (Credit Note 7). Jun 26 Sold goods on credit to Pooja Traders ₹3,250 (Invoice 53).

(i) In which books will the transactions of Jun 5 and Jun 14 be recorded? (1 mark)
(ii) What is the total of the Sales Book for June? (1 mark)
(iii) What is the balance of Pooja Traders' account on 30 June, and is it a debit or credit balance? (1 mark)
(iv) How are the totals of the Sales Book and the Sales Return Book posted in the ledger? (1 mark)

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