Download App

Recording of Transactions - 1 — Account STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceAccountRecording of Transactions - 14 Marks
Question
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?
✓

Answer

If a transaction has a decreasing effect on an asset, then this decrease is recorded as credit. This is because, as all assets have debit balance and if assets decrease, then it is credited. For example, sale of furniture results in decrease in furniture (asset); so, the sale of furniture will be credited.
If a transaction has a decreasing effect on a liability, then this decrease is recorded as debit. This is because all liabilities have credit balance. If the liability increases, then it is credited and if the liability decreases, then it is debited. For example, payment to the creditors results in a decrease in the creditors (liability); so, the creditors account will be debited.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "4 Marks Question" from Recording of Transactions - 1→Recording of Transactions - 1 — all question types→Account STD 11 Commerce question papers→CBSE Board STD 11 Commerce question papers→CBSE Board question paper generator→

Similar questions

Rectify the following errors:
  1. Credit sales to Mridula ₹ 5,000 were recorded as ₹ 5,400.
  2. Credit purchases from Nayna ₹ 8,000 were recorded as ₹ 8,800.
  3. Goods returned to Priya ₹ 12,000 were recorded as ₹ 12,200.
  4. Goods returned from Rashi ₹ 10,000 were recorded as ₹ 11,000.
→
Journalise the following transactions:
 
 
₹
(a)
Shyam became insolvent. A first and final compensation of 75 paise in a rupee was received from his official receiver. He owed a debt of
50,000
(b)
Received cash for a bad debt written off last year
25,000
(c)
Rent due to landlord
40,000
(d)
Depreciation on office furniture
5,000
(e)
Salaries due to staff
50,000
(f)
Paid income tax
1,50,000
(g)
Received commission ₹ 25,000, half of which is in advance.
 
→
Write a note on the following:
  1. Dishonour of Bill.
  2. Endorsement of Bill.
→
A Trial Balance disclosed a difference of ₹ 417 placed on the credit side of the Suspense Account. Later on the following errors were located:
  1. Goods worth ₹ 200 purchased from Sohan had been posted to his account as ₹ 250.
  2. A purchase of furniture for ₹ 500 was recorded in the Purchases Book.
  3. Instead of crediting Gian’s Account with ₹ 512, it was debited with ₹ 215.
  4. Goods worth ₹ 130 returned by Gian were entered in the Sales Book and posted therefrom to the credit of Gian’s Personal Account.
Pass the rectifying entries and prepare a Suspense Account.
→
  1. Mohan started a business on $1^{\text {st }}$ April, $2018$ with a capital of $₹ 10,000$ and borrowed $₹\ 3,000$ from a friend. He earned a profit of $₹\ 5,000$ during the year ended $31^{\text {st }}$ March, 2019 and withdrew cash $₹\ 4,000$ for personal use. What is his capital on $31^{\text {st }}$ March, $2019?$
  2. Mahesh started a business with a capital of $₹\ 15,000$ on $1^{\text {st }}$ April, $2018.$ During the year, he made a profit of $₹$ 3,000. He owes $₹\ 2,500$ to suppliers of goods. What is the total of assets in his business on $31^{\text {st }}$ March, $2019?$
→
Distinguish between Provision and Reserve on the following basis:
  1. Basic Nature.
  2. Purpose.
  3. Effect on Taxable Profits.
  4. Presentation in Balance Sheet.
  5. Element of Compulsion.
  6. Use for payment of dividend.
→
Name the books of original entry where the following transactions will be recorded with reasons thereof:
a Goods Purchased from Ram Lal ₹ 5,000 on credit.
b Provision for doubtful debts created @ 5% on debtors with book value of ₹ 10,000.
c Defective goods sold to Babita on credit worth ₹ 4,000 were returned by her.
d Purchased furniture on credit from Mr. Ratan Singh for ₹ 15,000 for use in the business.
→
What are Reserves?
→
Kumar find that the bank balance shown by his cash book on December 31, 2017 is ₹ 90,600 (Credit) but the passbook shows a difference due to the following reason:
A cheque (post dated) for ₹ 1,000 has been debited in the bank column of the cash book but not presented for payment. Also, a cheque for ₹ 8,000 drawn in favour of Manohar has not yet been presented for payment. Cheques totaling ₹ 1,500 deposited in the bank have not yet been collected and cheque for ₹ 5,000 has been dishonoured.
→
Give four advantages of Straight Line Method of providing depreciation.
→