Chapter Exam

Chapter 3: Recording of Transactions – I — Online MCQ Test

Q: Which of the following is NOT a source document?

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.

Q: The accounting equation is represented as:

Answer: A. Assets = Liabilities + Capital — The fundamental accounting equation states that Assets equal Liabilities plus Capital (Owner's Equity), which must always remain balanced.

Q: When a business purchases goods on credit, which of the following entries will be recorded?

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.

Q: A businessman paid rent of ₹5,000 for his office. What will be the double effect of this transaction?

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.

Q: A trader receives ₹10,000 as payment against an outstanding receivable of ₹15,000. What is the effect on his accounting records?

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.

Q: 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:

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.

ACCOUNTANCY · Grade 11 · CBSE(NCERT)

Practice Chapter 3: Recording of Transactions – I with a free chapter-wise online MCQ test for CBSE(NCERT) Grade 11 ACCOUNTANCY. 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.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 3: Recording of Transactions – I — Important Questions & Answers (FAQ)

Frequently asked questions from CBSE(NCERT) Grade 11 ACCOUNTANCY — Chapter 3: Recording of Transactions – I, with answers and explanations. These are sample questions; the exam has its own separate question set.

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.

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 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.

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.

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.

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.

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.

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.

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.

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.

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Chapter 4: Recording of Transactions – II