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Test Your Understanding · Q1
Q.

Test Your Understanding – II

1. Fill in the correct words:

#Statement
(a)Cash book is a ______ journal.
(b)In Journal proper, only ______ discount is recorded.
(c)Return of goods purchased on credit to the suppliers will be entered in ______ Journal.
(d)Assets sold on credit are entered in ______.
(e)Double column cash book records transaction relating to ______ and ______.
(f)Total of the debit side of cash book is ______ than the credit side.
(g)Cash book does not record the ______ transactions.
(h)In double column cash book ______ transactions are also recorded.
(i)Credit balance shown by a bank column in cash book is ______.
(j)The amount paid to the petty cashier at the beginning of a period is known as ______ amount.
(k)In purchase book goods purchased on ______ are recorded.

2. State whether the following statements are True or False:

#Statement
(a)Journal is a book of secondary entry.
(b)One debit account and more than one credit account in an entry is called compound entry.
(c)Assets sold on credit are entered in sales journal.
(d)Cash and credit purchases are entered in purchase journal.
(e)Cash sales are entered in sales journal.
(f)Cash book records transactions relating to receipts and payments.
(g)Ledger is a subsidiary book.
(h)Petty cash book is a book having record of big payments.
(i)Cash received is entered on the debit side of cash book.
(j)Transaction recorded both on debit and credit side of cash book is known as contra entry.
(k)Balancing of account means total of debit and credit side.
(l)Credit purchase of machine is entered in purchase journal.
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Fill-ins: (a) subsidiary, (b) cash, (c) purchases return, (d) journal proper, (e) cash and bank, (f) more, (g) credit, (h) bank, (i) overdraft, (j) imprest, (k) credit. True/False: (a) F, (b) T, (c) F, (d) F, (e) F, (f) T, (g) F, (h) F, (i) T, (j) T, (k) F, (l) F.

Part 1 — Fill in the correct words:

  • (a) subsidiary — the cash book is a subsidiary (special purpose) journal for money transactions.
  • (b) cash — the discount recorded through the journal proper is the cancellation of cash discount (e.g. on dishonour of a cheque); trade discount is never recorded.
  • (c) purchases return — goods returned to suppliers go in the Purchases Return (Return Outward) journal.
  • (d) journal proper — the credit sale of an asset (not trading goods) is recorded in the journal proper.
  • (e) cash and bank — a double column cash book records both cash and bank transactions.
  • (f) more — receipts cannot be less than payments, so the debit (receipts) side total is more than the credit side.
  • (g) credit — the cash book records only money transactions, so purely credit transactions are excluded.
  • (h) bank — the double column cash book also records bank transactions.
  • (i) overdraft — a credit balance in the bank column means a bank overdraft.
  • (j) imprest — the fixed advance given to the petty cashier is the imprest amount.
  • (k) credit — the purchases book records only credit purchases of goods.

Part 2 — True or False:

  • (a) False — the journal is a book of original (primary) entry; the ledger is the book of secondary entry.
  • (b) True — one debit and more than one credit (or vice versa) is a compound entry.
  • (c) False — an asset sold on credit is entered in the journal proper, not the sales journal.
  • (d) False — the purchase journal records only credit purchases of goods; cash purchases go in the cash book.
  • (e) False — cash sales are entered in the cash book, not the sales journal. …

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