DK Goel Solutions Class 11 Accountancy Chapter 11 Books of Original Entry Cash Book

Short Answer Questions

Question 1. 

Solution  1: It is convenient to maintain a separate book for each such class of transactions-one to record cash transactions, another to record credit purchase of goods and yet another to record credit sale of goods. All of these books are called the books of original entry or primary entry or subsidiary books - it is a special form of Journal, a sub-division of Journal.

Question 2. 

Solution  2: Below are the books of original entries:-

1. Cash Book
2. Purchases Book
3. Sales Book
4. Purchases Return Book
5. Sales Return Book
6. Bills Receivable Book
7. Bills Payable Book
8. Journal Proper

Question 3.

Solution  3: (a) Only Cash transactions are recorded in Cash Book because only cash or bank related transactions are recorded in this book. Also Cash Book always shows a debit balance. Cash Column in the Cash Book cannot show a credit balance because cash payments cannot exceed cash receipts. At best, it can show nil balance when total cash receipt are equal to total payment.

(b) Cash Book is both Journal and Ledger because cash Book is a book in which all transactions relating to cash receipts and cash payments are recorded. It starts with the cash or bank balances at the beginning of the period. Generally, it is made on monthly basis. This is a very popular book and is maintained by all organisations, big or small, profit or not-for-profit. It serves the purpose of both journals as well as ledger account.

Question 4. 

Solution  4: Cash book plays both roles as an original books and a ledger. Cash Book serves the dual purpose or both books of original entry and the Ledger. When we are make cash book no need to make a separate cash account. A transaction is only to be recorded in cash book or cash account if there is either inflow or outflows of cash. Thus cash book serves dual purpose. 

Question 5. 

Solution  5: Some transactions are recorded in a Two-Column Cash Book which relate to both cash and bank, i.e., balance of one will decrease and the other will increase due to such transactions. Such transactions are entered on both sides of the Cash Book. Such entries are knows as Contra Entries. Let us take an example to understand it better.

(a) Cash deposited into the Bank 10,000: In this transaction, Bank Account is to be debited and Cash Account is to be credited. Debit aspect is recorded on the debit side of the Bank Column and credit aspect is recorded on the credit side of Cash Column.

(b) Cash withdrawn from Bank for Office Use 1,000: In this transaction Cash Account is to be debited and Bank Account is credited. Debit aspect is recorded on the debit side of the Double Column Cash Book in the Cash Column and credit aspect is recorded on the credit side of the Double Column Cash Book in the Bank Column.

Against such entries, the letter 'C' is written in the L.F. column to indicate that these are contra transactions and are not posted into the Ledger Account.

Question 6. 

Solution  6: The three advantages of Sub-Division of Journal are:-

(i) Division of work according to ability.

(ii) Easiness in posting.

(iii) Time Saving

Question 7. 

Solution  7: (i) Deposit of Cash into Bank:-

Journal entry:

Bank a/c Dr.

To Cash A/c

In the above transaction both the account are affected a cash account and bank account. Hence it is contra entry because cash and bank both accounts is affected on same time. The cash account is credited this shows by recording the amount in the cash column of the cash book on the credit side to show a decrease in the asset of cash and the bank account is debited and this is shown by recording a debit in the bank column of the cash book.

(ii) Withdrawal of money from bank for office use:-

Journal entry:

Cash a/c Dr.

To Bank A/c

In the above transaction both the account are affected a cash account and bank account. Hence it is contra entry because cash and bank both accounts is affected on same time. The bank account is credited this shows by recording the amount in the bank column of the cash book on the credit side to show a decrease in the asset of cash and the cash account is debited and this is shown by recording a debit in the cash column of the cash book it show the increase in the cash.

(iii) Deposit of cheque (received from other) into Bank:-

In this case we should pass a journal entry in Journal proper.

Cheque-in-hand A/c

To Debtors A/c

On the debit side "To Cheque-in-hand a/c" and on credit side “By Debtors a/c” with the same amount recorded.

(iv) Dishonour of cheque deposited into Bank:-

In this case we should pass a journal entry in Journal proper.

Debtor a/c Dr

To Bank a/c

On the credit side "By Debtor a/c" and amount will be credited into the bank account.

Question 8.

Solution 8:

(i) Similarities of Cash Book with Journal:-

1. Just like a journal, transactions in the cash book are recorded for the first time from source documents.
2. Just like a journal, transactions in the cash book are recorded date-wise, i.e. in a chronological order, as and when they place.
3. Just like a journal, transactions from cash book are also posted to the relevant accounts in the ledger.
4. Just like a journal, a cash book also contains a ledger folio column.

(ii) Similarities of cash book with ledger:-

1. Form of cash book closely resembles to a ledger account. It has two equally divided sides having identical columns. The left side (receipts side) is the debit side and the right side is the credit side and the right side (payment side) is the credit side.
2. Cash book itself serves as a cash account also and as such when a cash book is maintained, Cash account is not opened is not opened in the ledger. The cash book, hence, is a part of ledger also.
3. Just like a ledger account, the words ‘To’ and ‘By’ are used in a cash book also.
4. It is balanced just like a ledger account.

Question 9. 

Solution  9: Contra entries means entries which are recorded on both sides of the cash book. These entries are made while depositing or withdrawing cash from the bank. Contra entries are affect the two accounts, Cash Account and Bank Account. These two accounts appear together in the Cash Book only so, the effect of Entries is completed in Cash Book and there is no need to post them in the ledger.

Question 10. 

Solution  10: Cash book is a journalised Ledger, it is a journal since cash and bank transactions are first recorded in it and a ledger since it serves the purpose of a cash account also. When a cash book is prepared, no separate Cash Account is opened in the ledger.

Question 11. 

Solution  11: Cash Book:- Cash Book is a book of prime entry in which cash and bank transactions are recorded in a chronological order, i.e., as they occur. Cash receipts are recorded on the debit side of the Cash Book and cash payments on the credit side. A balance is struck by deducting the total cash payments from the total cash receipts to know the cash in hand necessary and useful information.

Cash Account:- A cash account is a ledger account used for record day to day cash transactions of the business. On the debit side of the account cash receipts are recoded and or other side cash payments are recorded. Cash Account is an account which is traced cash transactions of the company. Cash book is a type of ledger.

Question 12. 

Solution  12: Petty Cash Book is the book which is used for the purpose of recording expenses involving petty amounts. Besides petty expenses, receipts from main cash are recorded. Petty Cash Book is prepared by Petty Cashier and acts as the Petty Cash Account. It is maintained as in a business besides large payments, number of small payments, such as for conveyance, stationary, cartage, etc., have to be made.

Question 13. 

Solution  13:

Question 14.

Solution  14: The imprest system of Petty Cash is explained below. Under this system, an estimate is made of amount required for petty expenses for a certain period (say for a week, a fortnight or a month). The amount so ascertained is given to the petty cashier in the beginning of a period and is reimbursed the amount paid by him during the period. Thus, he will again have the fixed amount in the beginning of the new period. This amount is called imprest money. This system of paying advance in the beginning and reimbursing the amount spent from time to time is called imprest system.

Practical Questions

Question 1. 

Solution 1:

Point of Knowledge:-

The Balancing of cash book done like any other account. Debit Column (Receipt column) is always greater than the Credit Column(payment column).

Question 2.   

Solution 2:

Point of Knowledge:-

In the cash book only cash transaction are recorded. Credit transactions are not recorded.

The debit side is always greater than the credit as payments are never exceeds the cash available.

Question 3.

Solution 3:

Point of Knowledge:-

The Balancing of cash book done like any other account. Debit Column(Receipt column) is always greater than the Credit Column(payment column).

Question 4.  

Solution 4:

Point of Knowledge:-

Cash book is maintained to record only cash transaction so, the credit purchases are not recorded in the cash book.

Question 5.     

Solution 5:

Point of Knowledge:-

Cash Book is a book of prime entry in which cash and bank transactions are recorded in a chronological order, i.e., as they occur. Cash receipts are recorded on the debit side of the Cash Book and cash payments on the credit side. A balance is struck by deducting the total cash payments from the total cash receipts to know the cash in hand necessary and useful information.

Question 6.   

Solution 6:

Point of Knowledge:-

Contra Entry is an entry which includes both Cash & Bank Account and it is recorded in both debit & credit side of the double column cash book. When a contra entry posted in cash book there is a reference column, the letter “C” is written this denotes that the entry is a contra entry. This entry will not be posted to any ledger account.

Question 7.

Solution 7:

Question 8.

Solution 8: (A)

Question 8.

Solution 8: (B)

Point of Knowledge:-

When a cheque is received and deposited into the bank on the same day the amount of the cheque is entered in the bank column on debit side.

When a cheque is received and does not represent on the same day, the amount of the cheque is entered in the cash column.

Question 9.

Solution 9:

Working Note:-

1. On 20^th April, Entry for Credit sales of Rs. 80,000 plus CGST and SGST @ 6% each will he recorded in journal.

Question 10.

Solution 10: (A)

Working Note:-

1. Cheque received from Prem Mohan on 9^th and from Gopal on 20^th will be recorded through Journal. These will be recorded in the Cash Book on the dates of their deposit into the Bank.

2. Since cheque from Prem Mohan has been dishonoured, the discount previously allowed to him would be withdrawn. Entry for discount will be recorded in Journal.

Question 10. 

Solution 10: (B)

Point of Knowledge:-

When a cheque is received and deposited into the bank on the same day the amount of the cheque is entered in the bank column on debit side.

When a cheque is received and does not represent on the same day, the amount of the cheque is entered in the cash column.

Question 11.

Solution 11: (A)          

Question 11. 

Solution 11: (B)     

Calculation of Cash deposit into the Bank:-

Cash deposit into bank = Balance of cash column of Debit side - Total of Cash Column of Credit side + Cash Balance

= 50,000 - 29,000 + 450

= 50,000 - 29,450

= 20,550

Question 12.    

Solution 12:

Calculation of Cash Deposit into Bank:-

Cash deposit into bank = Balance of cash column of Debit side - Total of Cash Column of Credit side + Cash Balance

= 28,300 - 14300 + 4,000

= 28,300 - 18,300

= 10,000

Question 13. 

Solution 13: (A)

Working Note:-

Transaction of the 18^th March: The amount of head debts will not be recorded in the Cash Book.

Transaction on 20^th March: It will assume that the cheque has been deposited into the bank on the same day.

Question 13. 

Solution 13: (B)

Working Note:-

May 6^th : Life Insurance Premium is treated as Drawings.

May 12^th : Entry for receipt of cheque will be recorded in Journal Proper.

May 15^th : To cheque in hand a/c Rs. 28,000 in bank column

May 18^th : by Varun Rs. 28,025 in Bank Column, Entry for discount withdrawn Rs. 2,000 will be passed through Journal Proper.  

Calculation of Cash Deposit into Bank:-

Cash deposit into bank = Balance of cash column of Debit side - Total of Cash Column of Credit side + Cash Balance

= 36,700 - 24,200 + 5,000

= 36,700 - 29,200

= 7,500          

Question 14. 

Solution 14:

Calculation of Cash Deposit into Bank:-

Cash deposit into bank = Balance of cash column of Debit side - Total of Cash Column of Credit side + Cash Balance

= 23,350 - 5,400 + 7,500

= 23,350 - 12,900

= 10,450

Question 15. 

Solution 15:

Point of Knowledge:-

Petty Cash Book is the book which is used for the purpose of recording expenses involving petty amounts. Besides petty expenses, receipts from main cash are recorded. Petty Cash Book is prepared by Petty Cashier and acts as the Petty Cash Account. It is maintained as in a business besides large payments, number of small payments, such as for conveyance, stationary, cartage, etc., have to be made. If all these payments are recorded in the Cash Book, it will become unnecessarily large. Also, the main cashier will be overburdened with work.

Question 16. 

Solution 16:

Working Note:-

The imprest system of Petty Cash is explained below. Under this system, an estimate is made of amount required for petty expenses for a certain period (say for a week, a fortnight or a month). The amount so ascertained is given to the petty cashier in the beginning of a period and is reimbursed the amount paid by him during the period. Thus, he will again have the fixed amount in the beginning of the new period. This amount is called imprest money.

Question 17.   

Solution 17:

Point of Knowledge:-

Petty Cash Book is the book which is used for the purpose of recording expenses involving petty amounts. Besides petty expenses, receipts from main cash are recorded. Petty Cash Book is prepared by Petty Cashier and acts as the Petty Cash Account. It is maintained as in a business besides large payments, number of small payments, such as for conveyance, stationary, cartage, etc., have to be made. If all these payments are recorded in the Cash Book, it will become unnecessarily large. Also, the main cashier will be overburdened with work.

Question 18.   

Solution 18:

Working Note:-

1. For Jan.7 there is no entry in cash book for this transaction.

Question 19. 

Solution 19: 

Working Note:-

1. Cheque received on Jun.4 has been deposited in bank on Jan. 7. Hence it will not be recorded in cash book on Jan. 4.

2. On Jan. 7 : To Cheques in Hand A/c Rs. 200

On Jan. 7 : Contra entry will pass for Rs. 30

Question 20.  

Solution 20:

Question 21. 

Solution 21:

Working Note:-

Calculation of Cash Deposit into Bank:-

Cash deposit into bank = Balance of cash column of Debit side - Total of Cash Column of Credit side + Cash Balance

= 42,650 - 22,250 + 5,000

= 42,650 - 27,250

= 15,400

Question 22. 

Solution 22:

Calculation of Cash Deposit into Bank:-

Cash deposit into bank = Balance of cash column of Debit side - Total of Cash Column of Credit side + Cash Balance

= 42,650 - 22,250 + 5,000

= 42,650 - 27,250

= 15,400

Question 23.

Solution 23:

Point of Knowledge:-

When a cheque is received and deposited into the bank on the same day the amount of the cheque is entered in the bank column on debit side.

When a cheque is received and does not represent on the same day, the amount of the cheque is entered in the cash column.

Question 24.

Solution 24:

Question 25. 

Solution 25:

Calculation of Cash deposit into the Bank:-

Cash deposit into bank = Balance of cash column of Debit side - Total of Cash Column of Credit side + Cash Balance

= 50,000 - 29,000 + 450

= 50,000 - 29,450

= 20,550         

Question 26. 

Solution 26:

Question 27.

Solution 27:

Working Note:-

The imprest system of Petty Cash is explained below. Under this system, an estimate is made of amount required for petty expenses for a certain period (say for a week, a fortnight or a month). The amount so ascertained is given to the petty cashier in the beginning of a period and is reimbursed the amount paid by him during the period. Thus, he will again have the fixed amount in the beginning of the new period. This amount is called imprest money. This system of paying advance in the beginning and reimbursing the amount spent from time to time is called imprest system.

Question 28. 

Solution 28:

Working Note:-

The expiration of the method of posting a Petty Cash Book is explained below as: Petty cash given to the Petty Cashier for small payments is recorded on the credit side of the Cash Book as 'By Petty Cash Account' and is posted to the debit side of the Petty Cash Account in the Ledger. All payments are recorded in the particulars column as 'By Particular Petty Expenses Account' and the amount is posted in the total column along with individual Petty Expenses column.

Question 29. 

Solution 29:

Working Note:-

Petty Cash Book is the book which is used for the purpose of recording expenses involving petty amounts. Besides petty expenses, receipts from main cash are recorded. Petty Cash Book is prepared by Petty Cashier and acts as the Petty Cash Account. It is maintained as in a business besides large payments, number of small payments, such as for conveyance, stationary, cartage, etc., have to be made. If all these payments are recorded in the Cash Book, it will become unnecessarily large. Also, the main cashier will be overburdened with work