Very Short Questions
Question 1. What is the double-entry system of book-keeping?
Solution 1: Double Entry System of Book-keeping refers to a system of accounting. Under this system two aspects of accounting debit or credit of every transaction are involved. The individual record of person or thing or an item of income or an expense is called an account. Every debit has equal amount of credit. So the total of all debits must be equal to the total of all credits.
Question 2. State two type of accounts
Solution 2: The two types of accounts are.
(i) Personal account
(ii) Real account
(iii) Nominal account
Question 3. What are the personal account?
Solution 3: Personal Account:- This account is related to a company, firm, a partnership firm and an individual person. for Example:- Ram account, Kunal and Co. etc.
Question 4. What are the real account?
Solution 4: Real Account:- The real account refers to those accounts whose value is in term of money and the properties of the business. Examples:- Machinery account, cash account, etc.
Question 5. What are the nominal account?
Solution 5: Nominal Account:- Nominal Account refers to those accounts which are only mentioned but does not exist is known as nominal account. Example:- Expense and income account.
Question 6. What are a natural personal account? Give an example.
Solution 6: Account which are refers to human being are known as natural personal account. Example:- Priya’s account.
Question 7. What are artificial personal accounts? Give an example.
Solution 7: Accounts which do not have a physical existence, but considered as a personal account known as artificial personal account. Example:- Raman & company’s account.
Question 8. What are representative personal accounts? Give an example.
Solution 8: When an account represents an individual or a group of individual, is known as a representative personal account. Such as outstanding rent account.
Question 9. What is the rule of recording transactions in a personal account?
Solution 9: The rule of recording personal account transaction is “debit the receiver and credit the giver”.
Question 10. What is the rule of recording transactions in a real account?
Solution 10: The rule of recording real account transaction is “debit what comes in and credit what goes out”.
Question 11. What is the rule of recording transactions in a nominal account?
Solution 11: The rule of recording nominal account transaction is “debit all losses and expenses and credit all gains and income.
Practical Questions
Question 1. Classify the following accounts under personal, real or nominal accounts:
Solution 1:
Question 2. Classify the following into real, personal, or Nominal account.
(1.) Capital (2.) Drawings (3.) Cash paid (4.) Cash Received (5.) Commission Paid (6.) Commission Received (7.) Purchases A/c (8.) Sales A/c (9.) Furniture (10.) Cash A/c (11.) Bank A/c (12.) Bank Overdraft (13.) Debtors A/c (14.) Creditors A/c (15.) Travelling Expenses (16.) Goodwill (17.) Patents (18.) Salary A/c (19.) Salary Outstanding A/c (20.) Insurance A/c (21.) Insurance Prepaid A/c (22.) Bad Debts are written off (23.) Bad Debts Recovered.
Sulution 2:
