Accounting Short Question Notes Part I

Principal of
Chapter No 1 Introduction Accounting I.com I
Answer the following short questions:

1. What is accounting?
Ans: “Accounting is the art of recording, classifying & summarizing in a significant manner and
in term of money”.
“Accounting is a systematic process of identifying, recording, classifying & summarizing

the financial information”.
2. What is book keeping?

Ans: “Bookkeeping is the recording, on a day-to-day basis, of the financial transactions and
information concerning to a business.”.
“Book keeping is the art of recording monetary transactions in the books of accounts in a
proper manner”.
3. What is business?
Ans: “A legal activity which is done for the purpose of earning profit is known as business”.
4. What is Goods or Merchandises?

Ans: “Any things which are purchased by a trader for resale purpose or any things are
manufactured for selling purpose”.
5. What is Purchases?
Ans: “When saleable goods are bought in a business it is said that purchases have been made”.
6. What is Cash Purchases?

Ans: “When saleable goods are bought on cash in a business it is said that cash purchases have
been made”.
7. What is Credit Purchases?

Ans: “When saleable goods are bought on credit in a business it is said that credit purchases have
been made”.
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M.com SB COMMERCE ACADEMY
8. What is Purchase return/return outwards?
Ans: “When the buyer of goods or merchandise or any other items send these goods back to the
seller it is known as purchase return”.
“When the goods purchases are found defective they are return to supplier are called
return outwards”.
9. What is Sales?
Ans: “When the goods are purchased for sale to the customers at a specific price”.
10. What is Cash Sale?

Ans: “When the goods are sold on cash basis to customer is called cash sale”.
11. What is Credit Sale?

Ans: “When the goods are sold on credit basis to customer is called credit sale”.
12. What is Sale return/return intwards?

Ans: “When the customer who finds that the goods are defective or below standard, he may
return these goods to the seller”.
“When the goods sold are found defective or below standard, they are return by the
customer to seller”.
13. What is Accounts Receivable/Debtors?

Ans: “The person to whom the goods are sold on credit basis are known as debtors”.
“Accounts receivable are amounts a company has a right to collect because it sold goods or
services on credit to a customer”.
14. What is Accounts Payable/Creditors?

Ans: “The person to whom the goods are purchased on credit basis are known as creditors”.
“Accounts payable are amounts a company owes because it purchased goods or services on
credit from a supplier or vendor”.
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15. What is trade discount?
Ans: “Discount allowed by manufacturer or wholesaler at the time of selling goods to retailer as
a deduction from original price”.
“A trade discount is a reduction to the published price of a product”.
16. What is cash discount?

Ans: “It is deduction given by a creditor to a debtor if the amount is paid by the debtor before the
due date”.
“A cash discount is a deduction allowed by the seller of goods or by the provider of

services in order to motivate the customer to pay within a specified time”.
17. What is cash discount?

Ans: “It is deduction given by a creditor to a debtor if the amount is paid by the debtor before the
due date”.
“A cash discount is a deduction allowed by the seller of goods or by the provider of

services in order to motivate the customer to pay within a specified time”.
18. What are Assets?

Ans: “Assets are the things having a certain value controlled by a business and receivable by a
business on a particular date e:g cash, furniture, land, building, stock, account receivable,
machinery, prepaid expenses etc. ”
19. What are Liabilities?

Ans: “Liabilities means the total amount which a business is legally bound to pay to the outsiders
e:g Creditor, Bills Payable, Account Payable Bank Loan, Outstanding rent or salary. ”
20. What is Capital?

Ans: “Capital can refer to funds raised to support a particular business or project.”
“It is the source of funds provided by the owner/owners of the business to start &
expand.”
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21. What is drawing?
Ans: “The amount of cash or goods taken away by the owner/owners from the business for his
personal use are known as drawing.”
“Drawings refers to the act of withdrawing cash or assets from the company by the
owner(s)for personal use are known as drawing.”
22. What are expenses?

Ans: “Expenses are the costs of the goods and services used up in the process of obtaining
revenue e:g salaries, insurance, rent etc .”
23. What are revenues?

Ans: “It is a price of goods sold or services provided by a business to its customers e:g sales, rent
received etc.”
“Revenues are the amounts that a business earns from selling goods or providing services to
its customers.”
24. What is stock/ Inventory?

Ans: “Unsold goods in the business ready for sale is known as stock or inventory.”
“Revenues are the amounts that a business earns from selling goods or providing services
to its customers.”
25. What is separate entity concept?

Ans: “Business is treated as a separate entity from its owners.”
26. What is going concern concept?

Ans: “It is assumed that the business will continue to operate for a long time period.”
27. What is money measurement concept?

Ans: “In this concept accounting records only those transactions or events, which can be
measured in term of money.”
28. What is dual aspect concept?

Ans: “For every debit balance, there is an equal credit balance.”
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Accounting Principal of
Chapter No 2 Equation Accounting I.com I
1. What is transaction?
Ans: “A business event which can be measured in term of money & recorded in the books of
account is known as transaction”.
“The financial position of a business concerns changes on the happening of an event which
is measureable in term of money, that regarded as transaction”.
2. What is cash transaction/monetary event?

Ans: “Events which are related with money & change the financial position of the business is
known as monetary event/cash transaction”.
“If the value of a transaction is met in cash immediately, it is called cash

transaction/monetary event”.
3. What is credit transaction/non-monetary event?

Ans: “Events which are not related with money & no change the financial position of the
business
is known as non-monetary event/credit transaction”.
“If the value of a transaction is not met in cash immediately, it is called credit
transaction/non-monetary event”.
4. What is external transaction?

Ans: “Transaction taking place with an outside person or organization is called external
transaction. e.g. furniture purchased from Nasir & son’s ”.
“An external transaction takes place between two entities or companies in which an
account is changed”.
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5. What is internal transaction?
Ans: “Transaction taking place within the organization is called internal transaction.
e.g. purchased goods from one department to another department in an
organization”.
“An external transaction takes place in same entity or company in which an account
is changed”.
6. What is quantitative change?

Ans: “Change the total value of assets & liabilities of business. e.g Machinery 10,000 is
damaged”.
7. What is qualitative change?

Ans: “Increase or decrease in the different elements of assets & liabilities, but the value remain
of
assets & liabilities remain same.”
8. Accounting Equation.
Ans: Accounting equation: Assets = Liabilities + Owner’s equity (Capital)
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Analysis of Principal of
Chapter No 3 business & double Accounting I.com I
entry system
Note: Change in financial position means a change in five basis elements of accounting.
“Every business transaction brings about at least a double change in the financial
position of the business”
1. What is double entry system?

Ans: “The system under which both the changes in a transaction are recorded. One change is
debited, another change is credited with an equal amount”.
Example: Mr. B open an account in bank Rs.10,000/-
Detail Type Amount Analysis

Bank a/c Dr. 10,000/- Increase
Cash a/c Cr. 10,000/- Decrease
2. What is single entry system?

Ans: “A system in which only one aspect of transaction is recorded is called single transaction”.
“In it only cash & personal account are maintained”
3. What is account?
Ans: “Individual record of an asset, liabilities, revenue, expenses, capital in summarized
method”.
4. What is personal account?

Ans: “Accounts which are linked with the persons or organizations are known as personal
account.”
5. What is nominal account?

Ans: “Accounts which are linked with the expenses, losses & gains are known as personal
account.” e:g Loss by fire, Loss by theft etc.
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6. What is real or property account?
Ans: “Accounts which are linked with the properties or things owned by a business are known as
personal account.”
Title of Account
Dr. Cr.
Left Side Right Side
OR OR
Debit Side Credit Side
Rules for Debiting & Crediting

Sr. No Title of Account Rules
Dr. Cr.
1 Assets Increase Decrease
2 Expenses Increase Decrease
3 Liabilities Decrease Increase
4 Capital Decrease Increase
5 Revenue Decrease Increase
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1. List of Assets in Business
Assets have normally debited balance
Sr. No Assets Rules

Dr. Cr.
1 Cash in hand Increase Decrease
2 Cash at bank / Bank Balance Increase Decrease
3 Marketable Securities Increase Decrease
4 Inventory Increase Decrease
5 Notes Receivable Increase Decrease
6 Building Increase Decrease
7 Furniture Increase Decrease
8 Land Increase Decrease
9 Machinery Increase Decrease
10 Stationery Increase Decrease
11 Equipment Increase Decrease
12 Stock Increase Decrease
13 Account Receivable/ Debtor Increase Decrease
14 Good will/ Brand Name Increase Decrease
15 Motor Vehicle Increase Decrease
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2. List of Expenses in Business
Expenses have normally debited balance
Sr. No Expenses Rules

Dr. Cr.
1 Salaries Exp Increase Decrease
2 Wages Exp Increase Decrease
3 Drawing Exp Increase Decrease
4 Rent Exp Increase Decrease
5 Depreciation Exp Increase Decrease
6 Fuel Exp Increase Decrease
7 Electricity Bill Exp Increase Decrease
8 Telephone Exp Increase Decrease
9 Advertising Exp Increase Decrease
10 Bed Debt Exp Increase Decrease
11 Interest Exp Increase Decrease
12 Utilities Exp Increase Decrease
13 Discount Allowed Increase Decrease
Expenses are decreases in economic benefit during the accounting period in

the form of a decrease in asset or an increase in liability
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3. List of Capital in Business
Capital have normally credited balance
Sr. No Capital / Owner Equity Rules

Dr. Cr.
1 Capital Decrease Increase
2 Common Stock Decrease Increase
3 Preferred Stock Decrease Increase
4 Paid in Capital Decrease Increase
5 Retained Earning Decrease Increase
6 Stockholder Decrease Increase
Capital is affected by the following:

 Initial and additional contributions of owner/s (investments)
 Withdrawals made by owner/s (dividends for corporations)
 Income
 Expenses
Owner contributions and income increase capital. Withdrawals and expenses
decrease it.
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4. List of Liabilities in Business
Liabilities have normally credited balance
Sr. No Liabilities Rules

Dr. Cr.
1 Account Payable/ Creditor Decrease Increase
2 Accrued Wages Decrease Increase
3 Accrued Salaries Decrease Increase
4 Commission Payable Decrease Increase
5 Interest Payable Decrease Increase
6 Tax Payable Decrease Increase
7 Notes Payable Decrease Increase
8 Unearned Revenue Decrease Increase
9 Discount Received Decrease Increase
Liabilities are economic obligations or payables of the business.

 Borrowings from lenders or creditors
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5. List of Revenues in Business
Revenue have normally credited balance
Sr. No Revenue Rules

Dr. Cr.
1 Sales Decrease Increase
2 Interest Received Decrease Increase
3 Commission Received Decrease Increase
4 Franchise Fee Decrease Increase
5 Other Fee Decrease Increase
Revenues refer to the amounts earned from the company’s ordinary course of
business such as professional fees or service revenue for service companies and
sales for merchandising and manufacturing concerns.
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Journal The Principal of
Chapter No 4 Original Book of Accounting I.com I
Entry
Note: According to double entry system transactions are recorded in the books of
accounts in two stages.
“Owner & Business is a separate entity, Don’t Blend / Mix it”
 First Stage _____________Journal

 Second Stage __________ Ledger
Accounting Cycle
Documenting
• Transaction with
vouchers
Reporting Recording
• Journal
• Profit & Loss A/c
• Balance Sheet
Asset =Liability + Classifying

Capital
• Ledger
Expenses &
Revenue
Summarising
• Trail Balance
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1. What is entry?
Ans: “Recording a transaction in the appropriate place of the concerned book of account known
as entry”.
 Journal Entry
 Ledger Entry
2. What is Journal?
Ans: “A journal is a record of financial transactions in order by date. A journal is often defined
as
the book of original entry, Prime or Primary entry.”
Note: “Recording of transaction in journal is called journalizing”
Format of the Journal Entry
Date Detail L/F Debit Credit

xxxxx Account to Debited/ Dr. 0,00,000
Account to Credited/ Cr. 0,00,000
(Narration)
3. What is simple entry?

Ans: “An accounts in which one account is debit & one account is credit is called simple entry.”
4. What is compound entry?
Ans: “An accounts in which more than one account is debit & more than one account is credit is
called simple entry.”
Simple Entry & Compound Entry
Example of Simple Entry:

Mr. A started business with cash Rs. 1,00,000/-
01-Jan Cash……. Dr. 1,00,000
2017 Capital…… Cr. 1,00,000
(Being Capital brought in)
Example of Compound Entry:

Mr. A paid salary & rent on same date Rs. 10,000/- & 2000/- respectively.
01-Jan Salary……. Dr. 10,000
2017 Rent...……. Dr. 2,000
Cash...…… Cr. 12,000
(Paid salary & rent in cash)
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5. What is narration?
Ans: “A short explanation of each transaction”.
Discount Term
Types of Terms
2/10, n/30
1/15, n/30
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Ledger The main
Principal of
Chapter No 5 book of Accounts I.com I
Accounting

Note: If there are two accounts involved in a journal entry, it will be posted to two
accounts
in ledger & if the journal entry consists of three accounts (compound entry) it will
be
posted to three different accounts in the ledger.
“Transactions Journal Ledger”
1. What is Ledger?
Ans: “A ledger account is an account or record used to sort/category balance sheet and income
statement transactions”.
“The book in which all the transactions of a business concern are finally recorded in the
concerned accounts in a summarized form is called ledger”.
Types or Forms of Ledger Accounts:

There are two forms of ledger accounts. These are:
 Standard form
 Self-balancing form
Standard Form of Ledger Account

Date Particulars J.R Amount Date Particulars J.R Amount
2005 2005
Dec. 17 Cash A/C 1,200 Dec. 17 Purchases A/C 2,000
Self-Balancing Form of Ledger Accounts

Date references J.R Debit Credit Balance
2005 Dr. Cr.
Jan. 1 Capital A/C 5 80,000 80,000
Jan. 3 Sales A/C 5 16,000 96,000
Jan. 8 S A/C 5 9,800 105,800
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2. What is posting?
Ans: “The process of transferring information, debits & credits, from journal to ledger is known
as posting”.
3. What is classification?
Ans: “Debit & Credit part of transactions are transferred from journal to concern ledger
account”.
4. What is balancing?
Ans: “Process of equalizing two sides of an accounts.”
5. What is debit & credit balance?

Ans: “If the debit side of an account is heavier than its balance is debit balance.”
“If the debit side of an account is heavier than its balance is debit balance.”
6. What is zero balance?
Ans: “If the two sides of an accounts are equal is known as zero balance”.
7. What is trail balance?

Ans: “A trial balance is a bookkeeping worksheet in which the balances of all ledgers are
compiled
into debit and credit columns.”
8. What is debtor ledger?

Ans: “A ledger that contains the account of all the customers to whom goods have been sold on
credit.”
9. What is creditor ledger?

Ans: “A ledger that contains the account of all the supplier to whom goods have been purchased
on credit.”
10. What is folioing?

Ans: “The process in which the page number of the ledger is recorded in the ledger folio column
of journal.”
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Note:
Total debit = More than total credit = Debit balance
Total credit = More than total debit = Credit balance
Total debit = Total credit = Nil balance
Format of Trail Balance

S. No. Account Name A/C No. Debit Credit
1 Cash Account 5 000,000
2 Furniture Account 7 00,000
3 Capital Account 9 -- 000,000
4 Purchases Account 11 00,000
5 Y Account 13 -- 00,000
6 Sales Account 15 -- 00,000
7 S Account 17 -- --
8 Discount Account 19 000 --
Total 000,000 0,00,000
Note: If an account shows zero balance, it is not necessary to record it in trial balance.
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Exercise Sol:
Question # 1
Mr. Saeed
Journal
For the month of Jan, 2015
Date Details L/F Amount Rs Amount Rs
Cash Account………….Dr. 65,000

2015 Building Account…….Dr. 120,000
Jan,1 Capital Account 185,000
2015 Purchase Account………..Dr. 30,000

Jan,2 Cash Account 30,000
2015 Cash Account……….Dr. 22,000

Jan,5 Sales Account 22,000
2015 Office Equipment Account…..Dr. 4,000

Jan,10 Cash Account 4,000
Total 2,41,000 2,41,000
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Ledger Accounts
Cash A/c (01)
Amount Amount
Date References J/R Rs. Date References J/R Rs
2015 2015
Jan. 1 Capital A/C 65,000 Jan.2 Purchases A/C 30,000
Jan. 5 Sales A/C 22,000 Jan. 10 Office Equipment A/C 4,000
Jan. 10 Balance c/d 53,000
87,000 87,000
Building A/c (02)

Amount Amount
2015 2015
Jan. 1 Capital A/C 120,000 Jan.10 Balance c/d 120,000
120,000 120,000
Capital A/c (03)

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Amount Amount
2015 2015
Jan.1 Cash A/C 65,000
Jan. 10 Balance c/d 185,000 Building A/C 120,000
185,000 185,000
Purchases A/c (04)

Amount Amount
2015 2015
Jan.10 Balance c/d 30,000
30,000 30,000
Sales A/c (05)
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Amount Amount
2015 2015
22,000 22,000
Sales A/c (06)

Amount Amount
2015 2015
4,000 4,000
Question # 2
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ABC…
Journal
For the month of May, 2015
2015 Cash Account…….Dr. 100,000

May,1 Capital Account 100,000
2015 Purchase Account………..Dr. 30,000

May,4 Cash Account 30,000
2015 Rahim Bros Account……….Dr. 10,000

May,7 Sales Account 10,000
2015 Salaries Account…..Dr. 5,000

2015 Cash Account…..Dr. 450

May,20 Commission Account 450
Cash Account…..Dr. 9,900

2015 Discount Allowed Account….Dr. 100
Total 1,55,450 1,55,450
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Ledger Accounts
Cash A/c (01)
Amount Amount
2015 2015
May. 1 Capital A/C 1,00,000 May. 4 Purchases A/C 30,000
May. 20 Commission A/C 450 May. 14 Salaries A/C 5,000
May. 25 Rahim Bros A/C 9,900 May. 31 Balance c/d 75,350
1,10,350 1,10,350
Capital A/c (02)

Amount Amount
2015 2015
May. 31 Balance c/d 1,00,000 May.10 Cash A/C 1,00,000
1,00,000 1,00,000
Purchases A/c (03)

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Amount Amount
2015 2015
May. 4 Cash A/C 30,000
May. 31 Balance c/d 30,000
30,000 30,000
Rahim Bros A/c (04)

Amount Amount
2015 2015
May.7 Sales A/C 10,000 May.25 Cash A/C 9,900
May.25 Discount Allowed A/C 100
10,000 10,000
Sales A/c (05)
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Amount Amount
2015 2015
May.7 Rahim Bros A/C 10,000
May .31 Balance c/d 10,000
10,000 10,000
Salaries A/c (06)

Amount Amount
2015 2015
May.14 Cash A/C 5,000
May.31 Balance c/d 5,000
5,000 5,000
Commission A/c (07)
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Amount Amount
2015 2015
May.20 Cash A/C 450
May .31 Balance c/d 450
450 450
Discount Allowed A/c (08)

Amount Amount
2015 2015
May.25 Rahim Bros A/C 100
May.31 Balance c/d 100
100 100
Trial Balance
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For the month 31-05-2015
Sr. No Account Names A/C No Dr. Cr.
2 Capital Account 2 1,00,000
4 Sales Account 5 10,000
5 Salaries Account 6 5,000
6 Commission Account 7 450
7 Discount Allowed Account 8 100
Total 1,10,450 1,10,450
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Question # 3
Mr. Ajmal
Journal
For the month of March, 2015
Cash Account………………...Dr. 80,000

Machinery Account………..Dr. 10,000
2015 Stock Account………………..Dr. 40,000
Mar,1 Capital Account 1,30,000
2015 Bank Account………….…..Dr. 45,000

Mar,4 Cash Account 45,000
2015 Purchases Account……..Dr. 20,000

Mar,9 Noor sons Account 20,000
2015 Imran Account………….Dr. 12,000

Mar,14 Sales Account 12,000
Noor Sons Account...Dr.

2015 Bank Account 20,000 19,800
Mar,25 Discount Received Account 200

2015 Discount Allowed Account….Dr. 250
Total 2,39,000 2,39,000
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Ledger Accounts
Cash A/c (01)
Amount Amount
2015 2015
Mar. 1 Capital A/C 80,000 Mar. 4 Bank A/C 45,000
Mar. 30 Imran A/C 11,750
Mar. 31 Balance c/d 46,750
91,750 91,750
Machine A/c (02)

Amount Amount
2015 2015
Mar. 1 Capital 10,000
Mar.31 Balance c/d 10,000
10,000 10,000
Stock A/c (03)

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Amount Amount
2015 2015
Mar. 1 Capital A/C 40,000
Mar. 31 Balance c/d 40,000
40,000 40,000
Capital A/c (04)

Amount Amount
2015 2015
Mar. 1 Cash A/C 80,000
Mar. 31 Balance c/d 1,30,000 Machinery A/C 10,000
Stock 40,000
1,30,000 1,30,000
Bank A/c (05)
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Amount Amount
2015 2015
Mar. 4 Cash A/C 45,000 Mar. 25 Rahim Bros A/C 19,800
Mar .31 Balance c/d 25,200
45,000 45,000
Purchases A/c (06)

Amount Amount
2015 2015
Mar. 9 Noor Sons A/C 20,000
20,000 20,000
Noor Sons A/c (07)
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Amount Amount
2015 2015
Mar. 25 Bank A/c 19,800 Mar. 9 Purchases A/C 20,000
Mar .31 Discount A/C 200
450 450
Imran A/c (08)

Amount Amount
2015 2015
Mar.14 Sales A/C 20,000 Mar. 30 Cash A/C 11,750
Mar.30 Discount Allowed A/C 250
20,000 20,000
Sales A/c (09)
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Amount Amount
2015 2015
12,000 12,000
Discount A/c (10)

Amount Amount
2015 2015
Mar.30 Imran A/C 250 Mar. 25 Noor Sons A/C 200
Mar.31 Balance c/d 50
250 250
Trial Balance
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2 Machinery Account 2 10,000
3 Stock Account 3 40,000
5 Bank Account 5 25,200
8 Discount Account 10 50
Total 1,42,000 1,42,000
Question # 4
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Mr. Ajmal
Journal
For the month of March, 2015
Cash Account………………...Dr. 80,000

Machinery Account………..Dr. 10,000
2015 Stock Account………………..Dr. 40,000
Mar,1 Capital Account 1,30,000
2015 Bank Account………….…..Dr. 45,000

2015 Purchases Account……..Dr. 20,000

Mar,3 Noor sons Account 20,000
2015 Imran Account………….Dr. 12,000

2015 Travelling Exp Account...Dr. 600

Mar,8 Cash Account 600
Noor Sons Account…..Dr. 20,000

2015 Bank Account 19,800
Mar,13 Discount Received Account 200

2015 Discount Allowed Account…Dr. 250
Mar,16 Imran Account 12,000
2015 Bank Charges Account………….…..Dr. 75

Mar,18 Bank Account 75
2015 Cash Account………….…..Dr. 6,000

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2015 Rent Account………….…..Dr. 300
Mar,24 Bank Account 300
2015 Cash Account………….…..Dr. 400

Mar,30 Interest Account 400
2015 Carriage Account………….…..Dr. 800

Mar,31 Cash Account 800
Total 2,47,175 2,47,175
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Ledger Accounts
Cash A/c (01)
Amount Amount
2015 2015
Mar. 1 Capital A/C 80,000 Mar. 2 Bank A/C 45,000
Mar. 16 Imran A/C 11,750 Mar. 8 Travelling A/C 600
Mar. 22 Sales A/C 6,000 Mar. 31 Carriage A/C 800
Mar. 30 Interest A/C 400 Mar. 31 Balance c/d 51,750
98,150 98,150
Machine A/c (02)

Amount Amount
2015 2015
Mar. 1 Capital 10,000
10,000 10,000
Stock A/c (03)

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Amount Amount
2015 2015
May. 1 Capital A/C 40,000
May. 31 Balance c/d 40,000
40,000 40,000
Capital A/c (04)

Amount Amount
2015 2015
Mar. 1 Cash A/C 80,000
Mar. 31 Balance c/d 1,30,000 Machinery A/C 10,000
Stock 40,000
1,30,000 1,30,000
Bank A/c (05)
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Amount Amount
2015 2015
Mar. 4 Cash A/C 45,000 Mar. 13 Noor Sons A/C 19,800
Mar .18 Bank Charges A/C 75
Mar .24 Rent A/C 300

45,000 45,000
Purchases A/c (06)

Amount Amount
2015 2015
Mar. 3 Noor Sons A/C 20,000
20,000 20,000
Noor Sons A/c (07)
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Amount Amount
2015 2015
Mar. 13 Bank A/c 19,800 Mar. 3 Purchases A/C 20,000
Mar. 13 Discount A/C 200
20,000 20,000
Imran A/c (08)

Amount Amount
2015 2015
Mar. 6 Sales A/C 20,000 Mar. 16 Cash A/C 11,750
Mar. 16 Discount Allowed A/C 250
20,000 20,000
Sales A/c (09)
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Amount Amount
2015 2015
Mar .31 Balance c/d 18,000 Mar. 22 Cash A/C 6,000
18,000 18,000
Travelling Expenses A/c (10)

Amount Amount
2015 2015
Mar.31 Cash A/C 600
Mar. 31 Balance c/d 600
600 600
Discount A/c (11)
Date References J/R Amount Date References J/R Amount

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Zeeshan Iqbal
Rs. Rs
2015 2015
Mar.16 Imran A/C 250 Mar. 13 Noor Sons A/C 200
250 250
Bank Charges A/c (12)

Amount Amount
2015 2015
Mar.18 Bank A/C 75
75 75
Rent A/c (13)
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Zeeshan Iqbal
Rs. Rs
2015 2015
Mar.24 Bank A/C 300
300 300
Interest A/c (12)

Amount Amount
2015 2015
Mar. 30 Cash A/C 400
Mar.31 Balance c/d 400
400 400
Interest A/c (13)
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Zeeshan Iqbal
Accounting for
Principal of
Chapter No 6 Bills of Exchange I.com I
Accounting
Rs. Rs
2015 2015
Mar. 31 Cash A/C 800
800 800
Trial Balance
2 Machinery Account 2 10,000
3 Stock Account 3 40,000
5 Bank Account 5 24,825
8 Travelling Expense Account 10 600
9 Discount Account 11 50
10 Bank Charges Account 12 75
11 Rent Account 13 300
12 Interest Account 14 400
13 Carriage Account 15 800
Total 1,48,400 1,48,400
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Zeeshan Iqbal
Note: A bill of exchange is a method of payment used between businessmen which has
certain advantages over other methods of payment.
“Bill of Exchange act is 1882”
Format of Bill of Exchange:
1. What is bill of exchange?

Ans: “A bill of exchange is an unconditional agreement in writing by one party to pay a fixed
amount of cash to another party on a set date or on demand.”
There are three persons/Parties that may be involved with a bill of exchange transaction.
They are:
 Drawer
 Drawee
 Payee
2. Who is Drawer?
Ans: “A person who draws a bill of exchange”.
3. Who is Drawee?
Ans: “A person to whom a bill of exchange is drawn”.
4. Who is payee?
Ans: “A person who receives the amount of bill.”
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Zeeshan Iqbal
1. What is trade bill?
Ans: “Trade bill are drawn & accepted against the sale and purchase of goods on credit.”
5. What is accommodation bills?

Ans: “Accommodation bills are drawn & accepted without any sale and purchase of goods”.
6. Who is Drawee?
Ans: “A person to whom a bill of exchange is drawn”.
7. Who is payee?
Ans: “A person who receives the amount of bill.”
2. What is trade bill?

Ans: “Trade bill are drawn & accepted against the sale and purchase of goods on credit.”
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Zeeshan Iqbal

Accounting Short Question Notes Part I

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Accounting Short Question Notes Part I

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Principal of

Chapter No 1 Introduction Accounting I.com I

Answer the following short questions:

“Accounting is a systematic process of identifying, recording, classifying & summarizing

2. What is book keeping?

4. What is Goods or Merchandises?

6. What is Cash Purchases?

7. What is Credit Purchases?

10. What is Cash Sale?

11. What is Credit Sale?

12. What is Sale return/return intwards?

13. What is Accounts Receivable/Debtors?

14. What is Accounts Payable/Creditors?

“A trade discount is a reduction to the published price of a product”.

16. What is cash discount?

“A cash discount is a deduction allowed by the seller of goods or by the provider of

17. What is cash discount?

“A cash discount is a deduction allowed by the seller of goods or by the provider of

18. What are Assets?

19. What are Liabilities?

20. What is Capital?

22. What are expenses?

23. What are revenues?

24. What is stock/ Inventory?

25. What is separate entity concept?

26. What is going concern concept?

27. What is money measurement concept?

28. What is dual aspect concept?

Answer the following short questions:

2. What is cash transaction/monetary event?

“If the value of a transaction is met in cash immediately, it is called cash

3. What is credit transaction/non-monetary event?

4. What is external transaction?

6. What is quantitative change?

7. What is qualitative change?

Answer the following short questions:

1. What is double entry system?

Detail Type Amount Analysis

2. What is single entry system?

4. What is personal account?

5. What is nominal account?

Rules for Debiting & Crediting

1 Assets Increase Decrease

2 Expenses Increase Decrease

3 Liabilities Decrease Increase

4 Capital Decrease Increase

5 Revenue Decrease Increase

Assets have normally debited balance

Sr. No Assets Rules

1 Cash in hand Increase Decrease

2 Cash at bank / Bank Balance Increase Decrease

3 Marketable Securities Increase Decrease

4 Inventory Increase Decrease

5 Notes Receivable Increase Decrease

6 Building Increase Decrease

7 Furniture Increase Decrease

8 Land Increase Decrease

9 Machinery Increase Decrease

10 Stationery Increase Decrease

11 Equipment Increase Decrease

12 Stock Increase Decrease

13 Account Receivable/ Debtor Increase Decrease

14 Good will/ Brand Name Increase Decrease