Chapter 3: Recording of Transactions – I — Online MCQ Test
ACCOUNTANCY · CLASS 11 FIRST PUC · Karnataka State Board
Practice Chapter 3: Recording of Transactions – I with a free chapter-wise online MCQ test.
This chapter covers: Business transactions, Source documents, Vouchers, Accounting Equation, Rules of Debit and Credit, Journal entry, Ledger posting, Balancing accounts, Cash Book (Single and Double C....
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Chapter 3: Recording of Transactions – I — Important Questions & Answers
What is a source document in accounting?
- A. A document that provides evidence of a business transaction
- B. A ledger account prepared by the accountant
- C. A summary of all journal entries
- D. A document used only for cash transactions
Answer: A. A document that provides evidence of a business transaction
Source documents like invoices, receipts, and bills provide original evidence of business transactions and form the basis for accounting records.
Source documents like invoices, receipts, and bills provide original evidence of business transactions and form the basis for accounting records.
Which of the following is NOT a source document?
- A. Invoice
- B. Receipt
- C. Journal
- D. Cheque
Answer: C. Journal
A journal is a book of original entry used for recording transactions, not a source document. Invoices, receipts, and cheques are primary source documents.
A journal is a book of original entry used for recording transactions, not a source document. Invoices, receipts, and cheques are primary source documents.
A voucher is a document that:
- A. Proves the occurrence and authenticity of a transaction
- B. Records all transactions in a chronological order
- C. Summarizes monthly balances of all accounts
- D. Lists all debtors and creditors of the business
Answer: A. Proves the occurrence and authenticity of a transaction
A voucher is a supporting document that provides evidence of a transaction's occurrence and authenticity, such as a receipt or invoice.
A voucher is a supporting document that provides evidence of a transaction's occurrence and authenticity, such as a receipt or invoice.
The accounting equation is represented as:
- A. Assets = Liabilities + Capital
- B. Assets = Liabilities - Capital
- C. Liabilities = Assets + Capital
- D. Capital = Assets - Liabilities
Answer: A. Assets = Liabilities + Capital
The fundamental accounting equation states that Assets equal Liabilities plus Capital (Owner's Equity), which must always remain balanced.
The fundamental accounting equation states that Assets equal Liabilities plus Capital (Owner's Equity), which must always remain balanced.
When a business purchases goods on credit, which of the following entries will be recorded?
- A. Debit Purchases, Credit Creditor
- B. Debit Cash, Credit Purchases
- C. Debit Creditor, Credit Purchases
- D. Debit Purchases, Credit Cash
Answer: A. Debit Purchases, Credit Creditor
Purchases account is debited (expense increases) and the Creditor account is credited (liability increases) when goods are purchased on credit.
Purchases account is debited (expense increases) and the Creditor account is credited (liability increases) when goods are purchased on credit.
A businessman paid rent of ₹5,000 for his office. What will be the double effect of this transaction?
- A. Rent expense increases; cash decreases
- B. Rent expense decreases; assets increase
- C. Liabilities increase; capital decreases
- D. Capital increases; expenses decrease
Answer: A. Rent expense increases; cash decreases
Paying rent increases the rent expense account (debit) and decreases the cash account (credit), maintaining the accounting equation balance.
Paying rent increases the rent expense account (debit) and decreases the cash account (credit), maintaining the accounting equation balance.
In a double column cash book, which of the following statements is correct?
- A. The bank column can show a debit balance only
- B. The cash column and bank column can both show debit or credit balances
- C. Both columns must always show equal balances
- D. The bank column is used for recording petty cash only
Answer: B. The cash column and bank column can both show debit or credit balances
In a double column cash book, both the cash and bank columns can independently show debit or credit balances depending on the nature of transactions.
In a double column cash book, both the cash and bank columns can independently show debit or credit balances depending on the nature of transactions.
A trader receives ₹10,000 as payment against an outstanding receivable of ₹15,000. What is the effect on his accounting records?
- A. Debit Cash ₹10,000; Credit Receivables ₹10,000; Debit Bad Debts ₹5,000
- B. Debit Cash ₹10,000; Credit Receivables ₹10,000
- C. Debit Cash ₹15,000; Credit Receivables ₹15,000
- D. Debit Receivables ₹10,000; Credit Cash ₹10,000
Answer: B. Debit Cash ₹10,000; Credit Receivables ₹10,000
Only the amount received (₹10,000) is recorded: cash is debited and receivables are credited. The remaining ₹5,000 continues to be shown as outstanding receivables.
Only the amount received (₹10,000) is recorded: cash is debited and receivables are credited. The remaining ₹5,000 continues to be shown as outstanding receivables.
A petty cash custodian has a balance of ₹2,500 in the petty cash box. If the imprest amount is ₹4,000, this situation indicates:
- A. ₹1,500 has been spent and needs reimbursement
- B. There is an excess of ₹1,500
- C. The petty cash account should be credited with ₹2,500
- D. No entry is required as the balance is within limits
Answer: A. ₹1,500 has been spent and needs reimbursement
If the imprest is ₹4,000 and only ₹2,500 remains, then ₹1,500 has been spent and should be reimbursed to restore the imprest to ₹4,000.
If the imprest is ₹4,000 and only ₹2,500 remains, then ₹1,500 has been spent and should be reimbursed to restore the imprest to ₹4,000.
A company's accountant discovers that a ₹12,000 purchase was recorded in the journal but never posted to the ledger. When the trial balance was prepared, this error would result in:
- A. Trial balance showing total debits higher than credits by ₹12,000
- B. Trial balance showing total credits higher than debits by ₹12,000
- C. Trial balance being balanced despite the error
- D. Trial balance showing equal imbalance on both debit and credit sides
Answer: B. Trial balance showing total credits higher than debits by ₹12,000
The journal entry would debit Purchases and credit Creditor (or Cash). If not posted, the credit side (₹12,000) is missing, causing credits to be ₹12,000 less than debits.
The journal entry would debit Purchases and credit Creditor (or Cash). If not posted, the credit side (₹12,000) is missing, causing credits to be ₹12,000 less than debits.