Chapter : 3
Recording of Transactions-I
Questions for Practice
Short Answers
- State the three fundamental steps in the accounting process.
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- Why is the evidence provided by source documents important to accounting?
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- Should a transaction be first recorded in a journal or ledger? Why?
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- Are debits or credits listed first in journal entries? Are debits or credits indented?
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- Why are some accounting systems called double accounting systems? Ans:
- Give a specimen of an account.
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- Why are the rules of debit and credit same for both liability and capital?
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- What is the purpose of posting J.F numbers that are entered in the journal at the time entries are posted to the accounts.
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- 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.
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- If a transaction has the effect of decreasing an asset, is the decrease recorded as a debit or as a credit? If the transaction has the effect of decreasing a liability, is the decrease recorded as a debit or as a credit? Ans:
Long Answers
- Describe the events recorded in accounting systems and the importance of source documents in those systems?
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- Describe how debits and credits are used to analyse transactions.
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- Describe how accounts are used to record information about the effects of transactions?
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- What is a journal? Give a specimen of journal showing at least five entries. Ans:
- Differentiate between source documents and vouchers
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- Accounting equation remains intact under all circumstances. Justify the statement with the help of an example.
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- Explain the double entry mechanism with an illustrative example.
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