Very Short Question Answer (Accounting Process)
Define source of document with suitable example.
The source documents are the piece of papers, which are required to keep record of any transaction with full evidence. All accounting records have to be based on facts and carefully supported by documentary proof. These documents provide the authenticity of happening of transaction and event are known as source of documents. Cash memo, invoice, cash receipt, a bank cheque, a debit note, a credit note and a payment voucher are some examples of source documents.
What is subsidiary book? Mention its types.
The day to day transactions of common nature recorded in separate books are called subsidiary book. They are also called sub-division of journals. A separate subsidiary book is prepared for the transactions which have similar and recurring in nature. Purchase book, sales book, purchase book, sales book, purchase return book, sales return book, cash book, bills receivable book and bills payable book, etc. are the various types of subsidiary books.
Write short notes on debit note and credit note.
Debit note is a note sent by a buyer to the seller along with the returned goods and a note that is sent by the seller to the buyer in response of the debit note is called credit note.
Write any two differences between trade discount and cash discount.
Trade discount is the amount of rebate allowed to encourage more trade (bulk purchase) and cash discount is the amount of rebate allowed for prompt payment of cash. Trade document is deducted from the list price, hence no accounting treatment is required. Cash discount is given at the time of payment and is shown in book of account.
Mention the objectives of trial balance.
The following are the main objectives of preparing a trial balance:
- To check the arithmetic accuracy of entries made: In double entry, every debit has an equivalent credit. Thus, if the debits and credits tally in trial balance, it indicates that the books of account are arithmetically accurate.
- To act as basis for financial statements: Trial balance is a bridge between ledger and final statements. Trial balance facilitates in the preparation of income statement, balance sheet and cash flow statement.
Long Question Answer
Define the source of documents. Also, write down the types of source of documents.
The source documents are the piece of papers, which are required to keep record of any transaction with full evidence. All accounting, records have to be based on facts and carefully supported by documentary proof. These documents provide the authenticity of happening of transaction and event are known as source documents. Cash memo, invoice, cash receipt, bank cheque, debit note, credit note and payment voucher are some examples of source of documents.
There are different types of source documents, which are mentioned below:
- Invoice: An invoice or bill is a document issued by a seller to the buyer which includes the different aspects of products like quantities, agreed prices, other expenses, the mode of payment or transportation, etc.
- Cheque: A piece of paper provided by the bank to its customers to let them to make withdrawals from their account.
- Bank statement: A statement periodically provided by banks or financial institutions to their customers which contains detail about the deposits and withdrawals made by customers, interest provided by bank along with tax deduction, etc. during the period.
- Debit note: A document sent by customer to a supplier informing that the suppliers account has been debited by the sum of returned goods or over payment.
- Credit note: It is a document sent by supplier to customer informing that the customers’ account has been credited in the books by the sum of returned goods or over payment or discounts/allowances provided.
- Cash register tape: It is used by a retailer to recognize a cash sale. It is an electronic device which is used to calculate financial transactions in paper role from.
- Time card: It is prepared by payroll department and sent to the accounting section.
- Promissory note: It is written promise by a person/party to pay a certain amount in certain period of time.
- Bank deposit slip: This slip is used for depositing amount into the bank.
- Cash receipt: It is a receipt which is issued against receiving instant cash with any of the reasons.
- Share/stock certificate: The certificate issued by a company to the shareholders that entitles their ownership.
- Salary/ payroll sheet: It is prepared to record wages, salaries and other benefit provided to workers and employees.
Following transactions are provided:
- Started business with cash Rs. 2,00,000.
- Purchased goods on credit for Rs. 50,000.
- Sold goods costing Rs. 20.000 for Rs. 22,000.
- Goods costing Rs. 4,000 distributed as sample.
Required: Accounting equation.
Following transactions are provided:
- Started business with cash Rs. 1,00,000 and bank balance of Rs.1,50,000.
- Purchased goods worth Rs. 50,000.
- Goods costing Rs. 20,000 sold on credit at a profit of 10%.d. Cash received from debtor Rs. 20,000 in full settlement of his debt.
Required: Accounting equation
Also Read: Accounting Processes
accounting processes accounting processes accounting processes accounting processes accounting processes accounting processes accounting processes