Chapter : 3
Recording of Transactions-I
Questions for Practice
Short Answers
1. State the three fundamental steps in the accounting process.
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2. Why is the evidence provided by source documents important to accounting?
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3. Should a transaction be first recorded in a journal or ledger? Why?
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4. Are debits or credits listed first in journal entries? Are debits or credits indented?
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5. Why are some accounting systems called double accounting systems?
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6. Give a specimen of an account.
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7. Why are the rules of debit and credit same for both liability and capital?
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8. 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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9. 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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10. 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?
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Long Answers
1. Describe the events recorded in accounting systems and the importance of source documents in those systems?
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2. Describe how debits and credits are used to analyse transactions.
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3. Describe how accounts are used to record information about the effects of transactions?
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4. What is a journal? Give a specimen of journal showing at least five entries.
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5. Differentiate between source documents and vouchers
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6. Accounting equation remains intact under all circumstances. Justify the statement with the help of an example.
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