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At the time of preparation of invoice, trade discount is deducted.

This statement is False.

Correct Statement: Book Keeping records only monetary transactions. Reasons: According to the money measurement concept, in the books of accounts accountant records only those business transactions which are monetary or financial in nature and capable to be expressed in monetary terms. It means the qualitative and quantitative aspects which cannot be measured in terms of money are not recorded in the books of account personal or non-monetary transactions are not recorded, in the books of accounts e.g. giving lift from car to neighbour, drinking tea along with friends in the restaurant, etc. are not recorded in the books of account as these transactions are not monetary in nature.

Correct option is (a) day

English word ‘Journal’ is derived from Latin language. The meaning of it is a note or a diary.

Correct option is (b) Fundamental book

In rough book transactions are not recorded in systematic manner. Thus, rough book is not treated as a component of books of accounts.

Correct option is (a) Tanchan

Correct option is (b) Rough book

Journalisation means a process of recording two-fold effects of business transactions in the summarized form of debit and credit in the journal.

At the time of journalising Ledger Folio (L.E) no. column is not filled in.

Journal is the fundamental or original book on the basis of which all other books of accounts are written.

Narration of the transaction from journal Is as under:

(1) BeIng goods of 2,400 destroyed in accident, for which Insurance Company accepted a claim of 2,000 and remaining amount Is debited to Loss by Accident A/c.
(2) BeIng interest of 500 credited by bank.
(3) Being sold old bicycle for 1,600 for cash.
(4) Being dividend of 700 credited by bank.
(5) Being sold goods of 8,000 for cash at 10 % cash discount.
(6) Being cash 1,000 and goods of 1,500 given as donation from the business.

Points to be Remembered When Write the Journal with GST Transactions
★ SGST with CGST is applicable for the Intrastate Supply.
★ UTGST with CGST is applicable for the Union Territory Supply.
★ IGST is applicable for the Interstate Supply.

Sometimes when related transactions take place at the same time, one account may be debited or credited more than once in a number of transactions, then it will be convenient to pass only one (single) entry for these transactions. This kind of entry is known as combined journal entry.

Correct option is (d) journalising

From the view point of accounting a business entity or firm and the owner of business are considered as separate.

Trade discount is given so that retailers can sell goods at the printed price only and earn a reasonable profit deducting the expenses.

Transport charges = ₹ 10,000 @ 5% GST.

CGST = Transport charges × 2.5%.

= 10,000 × \(\frac{2.5}{100}\)

= 10,000 × \(\frac{25}{1000}\)

= ₹ 250

SGST = Transport charges × 2.5%.

= 10,000 × \(\frac{2.5}{100}\)

= 10,000 × \(\frac{25}{1000}\)

= ₹ 250

Net value = 10,000 + 250 + 250 = ₹ 10,500.

1. Drawings A/c

2. Sonali’s A/c 

3. Bad debts A/c 

4. Livestock A/c 

5. Capital A/c

Many times businessman pays less amount or receives less amount at the time of final settlement. Whatever short amount is paid or received is known as allowance (Kasar).

Correct option is (c) Expense of business

Correct option is (d) Bank overdraft decreases

Cost of the goods bought = ₹ 10,000 @ 5%

GST and 10% cash discount.

GST on Goods Purchased = Cost of goods × 5%.

= 10,000 × \(\frac{5}{100}\)

= ₹ 500.

Net value of Goods Purchased = 10,000 + 500

= ₹ 10,500

Cash discount = Net value × 10%.

= 10,500 × \(\frac{10}{100}\)

= ₹ 1,050.

Trade Discount = Catalogue price × Rate of trade discount

= 1,00,000 × \(\frac{10}{100}\)

= ₹ 10,000 

Net amount receivable = Catalogue price – Trade Discount 

= 1,00,000 – 10,000 

= ₹ 90,000 

50% of net amount received. 

∴ Amount receivable = 50% of 90,000 

= \(\frac{50}{100}\) × 90,000

= ₹ 45,000

Cash discount allowed = 10% on ₹ 45,000

= \(\frac{10}{100}\) × 45,000

= ₹ 4,500 

Amount of cheque received = 50% of total amount – Cash discount 

= 45,000 – 4,500 

= ₹ 40, 500 

Amount received by cheque = ₹ 40,500.

Trade discount is neither an expense for the manufacturer nor the wholesaler nor an income for the retailer. Therefore, trade discount is not recorded anywhere in the books of accounts.

i. Narration

ii. Cash

iii. Voucher

iv. Three

v. Crossed.

Correct option is (a) Trade discount

Cash discount is recorded in the books of accounts.

i. Cash discount

ii. Combined Entry

iii. Drawings

iv. Input Tax

v. Ledger Folio

This statement is True.

Reasons: Any allowance or reduction in payment allowed by the seller to the buyer or creditor to the debtor on payment of cash is called cash discount. It is the concession given to encourage prompt payment. The gash discount allowed is an expense or a loss to the receiver. Expenses or Losses are always to be debited. Cash discount allowed is an expense or loss and therefore it is debited to Discount A/c.

A cash discount is recorded in the books of accounts.

A cash discount is allowed for prompt payments.

Bank Account is credited when salary is paid by cheque.

i. This statement is False.

Correct statement: Narration is required for each and every entry. Reasons: Narration is a brief explanation of the Journal Entry. It is written in the bracket just below the accounting entry. By reading the narration, the reader understands the meaning and significance of accounting entry and the nature and type of business transactions. Narration should be as short as possible and it should be simple and easy to understand.

ii. This statement is True.

Reasons: A voucher is a document that supports a payment made by the businessmen. It is legal evidence that a certain sum of money has been paid to a specific person or party. A Journal voucher is an original or basic voucher on the basis of which business transactions are journalized in the journal. Journal voucher provides legal proof for the business transactions. Therefore a journal voucher is necessary for all transactions recorded in the journal.

Trade discount is calculated before cash discount while calculating discount on purchase or sales.

Drawings account and Bank account are affected when life insurance premium paid by cheque from the business.

Correct option is (c) Goods account

i. (b) Customer A/c

ii. (b) Machinery A/c

iii. (c) Commission A/c

iv. (d) Dena Bank Loan A/c

v. (a) Livestock A/c