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1 1 t h cla s s ACCOUNTING C A /C M A S A N T O S H K U M A R

Chapter – 4- Ledger Accounting

Meaning of ledger: Transactions are recorded in the journal and thereafter, they are transferred, i.e., posted to the relevant
account in the ledger. All the accounts put together make a Ledger.
A ledger is also called the Book of Final Entry, since all transactions recorded in Book of Original Entry (i.e., Journal) are
transferred (posted) in the ledger.
Features of Ledger:
(i) Ledger is a master record of all the accounts of the business.
(ii) It is prepared from journal.
(iii) Ledger Accounts show the current balance in all accounts.
(iv) Trial Balance and Final Accounts are prepared from Ledger Accounts.
(v) Ledger Accounts summarise the effect of transactions upon assets, Liabilities, capital, incomes and expenditures.

Utilities of Ledger:
1. Provides Complete Information of a Particular Account.
2. Information of Incomes and Expenses.
3. Preparation of Trial Balance.
4. Helpful in Preparing Final Accounts.
Format of Ledger Account
Date Particular J.F Amount(₹) Date Particular J.F Amount (₹)
Date of Name of the other Amount of Date of Name of the other Amount of the
the account. the the account transaction
transaction transaction transaction
* J.F means Journal Folio.
Posting the Entries: The process of transferring the transaction written in the Journal to a Ledger is called posting. In the other
words, the process of transferring of debits and credits from the Journal to the Ledger accounts is called posting.

Posting of Simple Entry Journal

Date Particulars L.F. Dr.(₹) Cr.(₹)
2020 Rent A/C… ……………………….Dr. 25,000
1 April To. Bank A/c 25,000
(Being the Rent paid)
An amount of ₹ 25,000 will be debited to the Rent Account and credited to Bank Account. The manner will be: in the Rent
Account on the debit side in the particulars column we will write “ To Bank Account”. In the Bank Account on the credit side in
the particular column: “By Rent Account” will be written. The two accounts will thus, appear as follows.
Ledger
Rent Account
Date Particular J.F Amount(₹) Date Particular J.F Amount (₹)
2020
1 April To Bank A/c 25,000
Bank Account
Date Particular J.F Amount(₹) Date Particular J.F Amount (₹)
2020
1 April By Rent A/c 25,000
Posting of Compound Entry
Journal
Date Particulars L.F. Dr.(₹) Cr.(₹)
2021 Mohan 10,000
1 May A/C………………………………………….Dr. 9,600
To. Bank A/c 400
To. Discount Received A/c
(Being the Rent paid)

(i) In the above entry, Mohan is debited with Bank Account and Discount Received Account. Thus in the
Ledger, Mohan’s Account will be debited with ₹ 9,600 as ‘ To Bank A/c’ and with ₹ 400 as ‘ To Discount Received A/c’.
(ii) Bank Account has been credited with Mohan. Thus in the ledger, Bank Account will be credited with ₹ 9,600 as ‘ By Mohan’.

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(iii) Discount Received Account has been credited with Mohan Account. Thus in the ledger, Discount Received Account will be
credited ₹ 400 as ‘ By Mohan’.
Solution: Ledger
Mohan Account
Date Particular J.F Amount(₹) Date Particular J.F Amount (₹)
2021
1 May To Bank A/c 9,600
1 May To. Discount Rec A/c 400

Bank Account
Date Particular J.F Amount(₹) Date Particular J.F Amount (₹)
2021
1 May By Mohan A/c 9,600

Discount Received Account

Date Particular J.F Amount(₹) Date Particular J.F Amount (₹)
2021
1 May By Mohan A/c 400

Balancing of ledger Accounts: After posting the transactions, accounts are balanced after a certain period but certainly at
the end of the year. Balancing an account means that the two sides of an account are totalled and the difference in total of the
two sides written on the side whose total is smaller.
For example, if the total of the credit side is more than the total of debit side of any account, the difference of amount will be
recorded as Balance c/d on the debit side and vice versa on the credit side.

PROCESS OF BALANCING LEDGER ACCOUNTS

Total both the sides of a ledger Account.

Find out the Difference

If the Debit Side Total is more than If the Credit Side Total is more than
the credit side total write the the Debit side total write the
difference on the credit side as ‘ By difference on the Debit side as ‘ To
Balance c/d’ Balance c/d’

Make the total of the Debit Side equal to the total of the Credit Side

Draw a double line after both the totals

Bring forward the balance on the next date

If Debit Balance, write on the Debit If Credit Balance, write on the Credit
Side as ‘ To Balance b/d’ Side as ‘ By Balance b/d’

Types of Accounts that are Balanced: Personal Accounts and Real Accounts (as per Traditional Approach of classification of
accounts) and Asset, Liability and Capital Accounts (as per Modern Approach of classifications of accounts) are balanced. These
balances are shown in the Balance Sheet. Nominal Accounts (under Traditional Modern Approach of classification of accounts)
and Revenue and Expense Accounts (as per Modern Approach of classification of accounts) are closed by transferring them to
Trading Account or Profit and Loss Account.

Difference between Journal and Ledger

Basis Journal Ledger
1. Nature of It is a book of original or primary entry. It is a book of final entry.
Book
2. Basis for Source documents are the basis for recording Journal is the basis for recording transactions in
Preparation transactions in the journal. the ledger.

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3. Stage of Recording in the Journal is the first stage. Recording in the ledger is the second stage.
Recording
4. Object It is prepared to record all transactions in a It is prepared to see the net effect of various
chronological order. transactions affecting a particular account.
5. Format Journal has five columns: Ledger has four Identical columns on both
1. Date 2. Particulars 3. L.F Debit and credit sides. 1. Date 2. Particular
4. Debit Amount 5. Credit Amount. 3. J.F. 4. Amount

Practical Questions:
Question.1 Journalise the following transaction and post them in the Ledger:

2022 ₹
1 June Ravi started business with cash ………………………………………………………………...................... 10,000
2 June Deposited in bank………………………………………………………………........................................... 7,000
3 June Bough goods for cash……………………………………………………………………………......................... 500
4 June Drew cash from bank for office…………………………………………………………….......................... 100
13 June Sold goods to Kartik……………………………………………………………………………............................ 150
20 June Bough goods from Sahil…………………………………………………………………………......................... 225
24 June Received from Kartik …………………………………………………………………………............................ 150
28 June Paid cash to Sahil…………………………………………………………………………………........................... 215
Discount allowed by him …………………………………………………………………………....................... 10
30 June Cash sales for the month …………………………………………………………………………...................... 800
30 June Paid Rent………………………………………………………………………………………................................. 50
30 June Paid salary to Raj…………………………………………………………………………………………………………… 300

Solution: In the Book of Ravi - Journal Entry

Date Particulars L.F Dr.(₹) Cr.(₹)
2022
1 June Cash A/c Dr. 10,000
To Capital A/c 10,000
(Being the amount invested by Ravi in the business as capital)
2 June Bank A/c Dr. 7,000
To Cash A/c 7,000
(Being the amount deposited in the bank)
3 June Purchases A/c Dr. 500
To Bank A/c 500
(Being the goods purchased for cash)
4 June Cash A/c Dr. 100
To Bank A/C 100
(Being the cash withdrawn from the bank)
13 June Kartik Dr. 150
To Sales A/c 150
(Being the goods sold to Kartik)
20 June Purchased A/c Dr. 225
To Sahil 225
(Being the goods bought from Sahil)
24 June Cash A/c Dr. 150
To Kartik 150
(Being the cash received from Kartik)
28 June Sahil Dr. 225
To Cash A/c 215
To Discount Received A/c (Note1) 10
(Being the discount allowed by Sahil on payment)
30 June Cash A/c Dr. 800
To Sales A/c 800
(Being the goods sold for cash)
30 June Rent A/c Dr. 50
Salaries A/c Dr. 300
To Cash A/C 350
(Being the amount paid for rent and salary )(Note2)
_______________________________________________________ ______ ______
Total 19,500 19,500
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Ledger accounts
Dr. Cash Account Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 June 2022
1 June 4 To Capital A/c 10,000 June 2 By Bank A/c 7,000
June 24 To Bank A/c 100 June 3 By Purchases A/c 500
June 30 To Kartik 150 June 28 By Sahil 215
To Sales A/c 800 June 30 By Rent A/c 50
June 30 By Salaries A/c 300
June 30 By Balance c/d 2,985
________ __________
11,050 11,050
July 1
To Balance b/d 2,985
Dr. Capital Account Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 30 To Bank c/d 10,000 June 1 By Cash A/c 10,000

Dr. Bank Account Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 2 To Cash A/c 7,000 June 4 By Cash A/c 100
June 30 By Balance c/d 6,900
7,000 7,000
July 1 To Balance b/d
6,900
Dr. Purchases Account * Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022
June 3 To Cash A/c 500 30 June By Balance c/d 725
June 20 To Sahil 225
725 725
Dr. Sales Account* Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022
30 June To Balance c/d 950 June 13 By Kartik 150
June 30 By Cash A/c 800
950 950
Dr. Kartik Account Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 15 To Sales A/c 150 June 24 By Cash A/c 150
150 150

Dr. Sahil Account Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 28 To Cash A/c 215 June 20 By Purchases A/c 225
June 28 To Received A/c 10
225 225

Dr. Discount Received Account ** Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022
30 June To Balance c/d 10 June 28 By Sahil 10
10 10

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Dr. Rent Account** Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022
June 30 To Cash A/c 50 30 June By balance c/d 50
50 50
Dr. Salaries Account Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022
June 30 To Cash A/c 300 30 June By balance c/d 300
300 300
Note: At the end of an accounting period accounts marked with (*) will be closed by transferring to the Trading Account and
accounts marked with (**) will be closed by transferring to the Profit and Loss Account since these are Nominal Accounts.

Question.2 Amit of Delhi started business on 1st June,2022 with Machinery of Rs 40,00,000 and Furniture of Rs.
10,00,000. He purchased these assets from Delhi and paid by cheque from his Savings Account. He introduced capital of
Rs 10,00,000 in cash. Journalise the following transactions prepare the Ledger Account and balance them:
2022 ₹
June 1 Purchased goods for cash from Ramesh 5,50,000
June 4 Purchased goods from Naveen 4,00,000
June 6 Sold goods for cash 7,00,000
June 12 Cash deposited in bank 8,00,000
June 14 Purchased machinery 1,00,000
June 15 Sold goods to Garg Bros. 3,00,000
June 16 Returned goods to Naveen 20,000
June 28 Paid salaries to staff for the month of June 1,00,000
June 30 Received bank interest 4,000
June 30 Paid for courier changes 10,000

Solution: In the Books of Amit, Delhi

Journal
Date Particulars L.F. Dr.(₹) Cr.(₹)
2022
June 1 Machinery A/c Dr. 40,00,000
Furniture A/c Dr. 10,00,000
To Capital A/c 50,00,000
(Being the business started with machinery and furniture)

June 1 Cash A/c Dr. 10,00,000

To Capital A/c 10,00,000
(Being the capital introduced in cash)
June 1 Purchases A/c ..Dr. 5,50,000
To Cash A/c 5,50,000
(Being the purchase of goods for cash)
June 4 Purchases A/c …Dr. 4,00,000
To Naresh 4,00,000
((Being the purchase of goods from Naresh)

June 6 Cash A/c Dr. 7,00,000

To Sales A/c 7,00,000
(Being the sales of goods for cash)
June 12 Bank A/c Dr. 8,00,000
To Cash A/c 8,00,000
(Being the cash deposited in bank)
June 14 Machinery A/c Dr. 1,00,000
To Cash A/c 1,00,000
(Being the machinery purchased for cash)
June 15 Garg Bros. Dr. 3,00,000
To Sales A/c 3,00,000
(Being the sales of goods to Garg Bros.)
June 16 Naveen Dr. 20,000

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To Returns Outward A/c 20,000

( Being the goods returns to Naveen)

June 28 Salaries A/c Dr. 1,00,000

To Cash A/c 1,00,000
(Being the salaries to staff )
June 30 Bank A/c Dr. 4,000
To Interest Received A/C 4,000
(Being the bank interest received)
June 30 Postage and Courier Expenses A/c Dr. 10,000
To Cash A/c 10,000
(Being the courier changes paid)
Ledger accounts:
Dr. Machinery Account Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 1 To Capital A/c 40,00,000 June 30 By Balance c/d 41,00,000
June 14 To Cash A/c 1,00,000
41,00,000 41,00,000

July 1 To Balance b/d

41,00,000
Dr. Furniture Account Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 1 To Capital A/c 10,00,000 June 30 By Balance b/d 10,00,000
10,00,000 10,00,000

July 1 To Balance b/d

10,00,000
Dr. Cash Account Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 1 To Capital A/c 10,00,000 June 1 By Purchases A/c 5,50,000
June 6 To Sales A/c 7,00,000 June 12 By Bank A/c 8,00,000
June 14 By Machinery A/c 1,00,000
June 28 By Salaries A/c 1,00,000
June 30 By Postage And Courier
Expenses A/c 10,000
June 30 By Balance c/d 1,40,000
17,00,000 17,00,000

July 1 To Balance b/d

14,000

Dr. Capital Account Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 30 By Balance c/d 60,00,000 June 1 By Machinery A/c 40,00,000
June 1 By Furniture A/c 10,00,000
June 1 By Cash A/c 10,00,000
60,00,000 60,00,000

60,00,000
July 1 By Balance b/d
Dr. Purchases Account Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 1 To Cash A/c 5,50,000 June 30 By Balance c/d 9,50,000
June 4 To Naveen 4,00,000
9,50,000 9,50,000

July 1 To Balance b/d

9,50,000
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Dr. Naveen Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 16 To Returns Outward A/c 20,000 June 4 By Purchases A/c 4,00,000
June 16 To Balance c/d 3,80,000
4,00,000 4,00,000

July 1 By Balance b/d

3,80,000
Dr. Sales Account Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 30 To Balance c/d 10,00,000 June 6 By Cash A/c 7,00,000
June 15 By Gargs Bros. 3,00,000

10,00,000 10,00,000

July 1 By Balance b/d

10,00,000
Dr. Bank Account Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 12 To Cash A /c 8,00,000 June 30 By Balance c/d 8,04,000
June 30 To Interest Received A/c 4,000
8,04,000 8,04,000

Dr. Garg Bros. Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 15 To Sales A /c 3,00,000 June 30 By Balance c/d 3,00,000
3,00,000 3,00,000

Dr. Returns Outward Account Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 30 To Balance c/d 20,000 June 16 By Naveen 20,000
20,000 20,000

Dr. Salaries Account Cr.

Date Particulars J.F. ₹ Date J.F. ₹
2022 2022
June 28 To Cash A/c 1,00,000 June 30 By Balance c/d 1,00,000
1,00,000 1,00,000

July 1 To Balance b/d

1,00,000
Dr. Interest Received Account Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 30 To Balance c/d 4,000 June 30 By Bank A/c 4,000
4,000 4,000

Dr. Postage And Courier Expenses Account Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 30 To Cash A/c 10,000 June 30 By Balance c/d 10,000
10,000 10,000

July 1 To Balance b/d

10,000

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Question.3 Ayush started a business on 1 st June, 2022 with Machinery of Rs. 1,00,000, Furniture of Rs. 25,000 and cash Rs.
25,000. Prepare the Ledger Accounts and balance them:

2022 ₹
June 1 Purchased goods for cash from Rahul 13,750
June 4 Purchased goods from Naveen 10,000
June 6 Sold goods to Gupta & Co. for cash 17,500
June 12 Cash deposited in bank 20,000
June 14 Purchased Machinery by cheque 2,500
June 15 Sold goods to Garg Bros. 7,500
June 16 Returned goods to Naveen (not being as per specifications) 500
June 18 Paid to Naveen by cheque 5,000
June 20 Withdrawn from bank for personal use 2,500
June 25 Received cheque from Garg Bros. and deposited in bank 5,000
June 28 Paid salaries to staff for the month of June 2,500
June 28 Bank advises cheque of Garg Bros. returned unpaid
June 30 Received bank interest 100
June 30 Purchased stationery for cash 250
June 30 Rebate allowed to Garg Bros. for defects in goods supplied to them 150

Solution: In the book of Ayush- Journal Entry

Date Particular L.F Dr.(₹) Cr.(₹)
1 June Cash A/c Dr. 25,000
Machinery A/c Dr. 1,00,000
Furniture A/c Dr. 25,000
To. Capital A/c 1,50,000
1 June Purchase A/c Dr. 13,750
To Cash A/c 13,750
4 June Purchase A/c Dr. 10,000
To Naveen 10,000
6 June Cash A/c Dr. 17,500
To. Sales A/c 17,500
12 June Bank A/c Dr. 20,000
To Cash A/c 20,000
14 June Machinery A/c Dr. 2,500
To. Bank A/c 2,500
15 June Garg Bros Dr. 7,500
To. Sales A/c 7,500
16 June Naveen Dr. 500
To. Purchase Return A/c 500
18 June Naveen Dr. 5,000
To. Bank A/c 5,000
20 June Drawing A/c Dr. 2,500
To. Bank A/c 2,500
25 June Bank A/c Dr. 5,000
To. Garg Bros 5,000
28 June Salary A/c Dr. 2,500
To. Cash Ac 2,500
28 June Garg Bros Dr. 5,000
To. Bank A/c 5,000
30 June Bank A/c Dr. 100
To. Bank interest A/c 100
30 June Stationery A/c Dr. 250
To. Cash A/c 250
30 June Rebate allowed A/c Dr. 150
To. Garg Bros 150
Dr. Machinery Account Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 1 To Capital A/c 1,00,000 June 30 By Balance c/d 1,02,500
June 14 To Bank A/c 25,00
1,02,500 1,02,500

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July 1 To Balance b/d

1,02,500

Dr. Furniture Account Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 1 To Capital A/c 25,000 June 30 By Balance c/d 25,000
25,000 25,000

July 1 To Balance b/d 25,000

Dr. Cash Account Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 1 To Capital A/c 25,000 June 1 By Purchased A/c 13,750
June 6 To Sales A/c 17,500 June 12 By Bank A/c 20,000
June 28 By Salaries A/c 2,500
June 30 By Stationery A/c 250
June 30 By Balance c/d 6,000

42,500 42,500

July 1 To Balance b/d

6,000
Dr. Capital Account Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 30 To Balance c/d 1,50,000 June 1 By Machinery A/c 1,00,000
June 1 By Furniture A/c 25,000
June 1 By Cash A/c 25,000
1,50,000 1,50,000

July 1 By Balance c/d

1,50,000

Dr. Purchases Account Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 1 To Cash A/c 13,750 June 30 By Balance c/d 23,750
June 4 To Naveen 10,000

23,750 23,750

Dr. Naveen Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 16 To Returns Outward A/c 500 June 4 By Purchased A/c 10,000
June 18 To Bank A/c 5,000
June 30 To Balance c/d 4,.500
10,000 10,000

Dr. Sales Account Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 30 To Balance c/d 25,000 June 6 By Cash A/c 17,500
June 15 By Garg Bros. 7,500

25,000 25,000

July 1 By Balance b/d

25,000

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Dr. Bank Account Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 12 To Cash A/c 20,000 June 14 By Machinery A/c 2,500
June 25 To Garg Bros. 5,000 June 18 By Naveen 5,000
June 30 To Interest Receive A/c 100 June 20 By Drawings A/c 2,500
June 28 By Garg Bros. 5,000
June 30 By Balance c/d 10,100
25,100 25,100

July 1 To Balance b/d

10,100

Dr. Garg Bros. Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 15 To Sales A/c 7,500 June 25 By Bank A/c 5,000
June 28 To Bank A/c 5,000 June 30 By Rebate Allowed A/c 150
June 30 By Balance c/d 7,350
12,500 12,500

July 1 To Balance b/d

7,350

Dr. Rebate Allowed Account Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 30 To Garg Bros. 150 June 30 By Balance c/d 150

150 150

July 1 To Balance b/d 150

Dr. Returns Outward Account Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 30 To Balance c/d 500 June 16 By Naveen 500
500 500

July 1 By Balance b/d 500

Dr. Drawings Account Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 20 To Bank A/c 2,500 June 30 By Balance c/d 2,500
2,500 2,500

July 1 To Balance b/d 2,500

Dr. Salaries Account Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 28 To Cash A/c 2,500 June 30 By Balance c/d 2,500
2,500 2,500

July 1 To Balance b/d

2,500

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Dr. Interest Received Account Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 30 To Balance c/d 100 June 30 By Bank A/c 100
100 100

July 1 By Balance b/d

100
Dr. Stationery Account Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2022 2022
June 30 To Cash A/c 250 June 30 By Balance c/d 250
250 250

July 1 To Balance b/d

250

Question 4 Multiple Choice Questions (MCQs)

(i) Posting of transaction means
(a) Entering transactions in Journal.
(b) Entering transactions in Ledger.
(c) Entering transactions in Trial Balance.
(d) Entering transactions in Financial Statements.

(ii) Ledger Account is prepared from

(a) Vouchers. (b) Trial Balance.
(c) Journal. (d) Financial Statements.

(iii) Ledger is a book in which

(a) Real and Nominal Accounts are maintained.
(b) Real and Personal Accounts are maintained.
(c) Real, Personal and Nominal Accounts are maintained.
(d) Personal and Nominal Accounts are maintained.

(iv) The process of transferring the transactions from the Journal to the ledger is called
(a) Journalizing. (b) Posting
(c) Balancing (d) Costing.

(v) What type of Ledger Accounts is not carried forward to next year?
(a) Personal Accounts (b) Real Accounts
(c) Nominal Accounts (d) All of these

(vi) What type of following accounts will have debit balance only?
(a) Personal Accounts (b) Real Accounts
(c) Nominal Accounts (d) All of these

(vii) How many accounts are affected in a transaction?

(a) Only one (b) Only Two
(c) At least two (d) Two or Three

(viii) When goods are lost by fire then Loss of Goods by Fire Account is debited with
(a) Cost of goods sold.
(b) Cost of goods sold plus Gross Profit.
(c) Cost of goods sold less Gross Profit

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1 1 t h cla s s ACCOUNTING C A /C M A S A N T O S H K U M A R

(d) Cost of goods purchased.

(ix) Which of the following expense is not a revenue expense?

(a) Salary (b) Electricity
(c) Water (d) Repair of second-hand machinery purchased

[Ans.: (i) (b); (ii) (c); (iii) (c); (iv) (b); (v) (c); (vi) (b); (vii) (c); (viii) (d); (ix) (d).]
Question 5. State whether the following statements are True or False:
(i) Ledger is called a book of original entry,
(ii) Transactions are posted in the ledger in chronological order..
(iii) Salary paid to an employee is posted to the debit of Employee's Account.
(iv) Purchase of goods from Komal for cash is posted to the credit of Komal's Account.
(v) Bharat has purchased 200 pieces of Shirts @ ₹ 1,000 each and allowed Trade Discount of ₹ 2,000. Discount is posted to
the debit of Discount Allowed Account.
(vi) Balance of Debtors is calculated from ledger whenever required.
(vii) Journal Folio column is maintained in the ledger to show the page at which transaction was recorded in the Journal.
(viii) A post-dated cheque received from Sohan is posted to the debit of Bank Account.
(ix) Sold goods to Irfan on credit is posted to the debit of Irfan's Account and the credit of Sales Account.
(x) When total of debit side of an account is more than the total of its credit side, the account is said to have Credit Balance.
[Ans.: (1) False; (ii) True; (iii) False; (iv) False; (v) False; (vi) True; (vii) True; (viii) False; (ix) True; (x) False.]

Question 6. Fill-in-the blanks with appropriate words:

(i) A ledger is known as a book of________________ entry
(ii) Goods distributed as samples is posted to the credit to___________Account.
(iii) Anamika has paid the amount due towards goods purchased within prescribed time and was allowed discount of
2,000. This discount is debited to____________________ Account.
(iv) Carriage paid for purchase of furniture is posted to the debit of___________________Account.
(v) Wages paid for repair of scooter shed is debited to account.
(vi) Trade Discount of ₹ 3,000 allowed on sales of ₹ 40,000. Sales Account is credited with____________.
(vii) Repair expense paid on purchase of old Machine purchased is posted to the debit of________Account.
(viii) When total of debit side of an account is more than the total of its credit side, the account is said to
have_____________ Balance.
(ix) Amount received from a debtor whose account was written off as bad debt is posted to the credit of____________.
(x) Sold goods to Ajay of the list price ₹ 40,000 allowing 10% Trade Discount and 2% Cash Discount. Ajay paid 40%
immediately. Cash Discount allowed to Ajay will be______________.

[Ans.: (i) Secondary or Final; (ii) Purchases; (iii) Discount Allowed: (iv) Furniture; (v) Repairs; (vi) ₹ 37,000, (vii)
Machinery (viii) Debit: (ix) Bad Debts Recovered Account; (x) ₹ 288]

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