MP Board Class 11th Accountancy Important Questions Chapter 5 Subsidiary Books-I

Subsidiary Books-I Important Questions

Subsidiary Books-I Objective Type Questions

Question 1.
Choose the correct answer:

Question 1.
Which of the following is entered in cash – book –
(a) Only cash transactions
(b) Only credit transactions
(c) Both cash and credit transactions
(d) None of these.
Answer:
(a) Only cash transactions

Question 2.
Cash – book always show –
(a) Debit balance
(b) Credit balance
(c) Debit or Credit balance
(d) None of these.
Answer:
(a) Debit balance

Question 3.
The cash – book meant for recording petty expenses is called –
(a) Simple cash – book
(b) Petty cash – book
(c) Triple column
(d) None of these.
Answer:
(b) Petty cash – book

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Question 4.
The entry which affects cash and bank column of a triple column cash – book is known as –
(a) Compound entry
(b) Contra entry
(c) Journal entry
(d) None of these.
Answer:
(b) Contra entry

Question 2.
Fill in the blanks:

  1. Only …………… transactions are recorded in cash – book.
  2. Cash – book is a main book as well as …………… book.
  3. ………….. entry is passed in triple column cash – book for depositing cash in bank.
  4. Advancing money to petty cashier is called ……………
  5. Contra entry is made in …………… book.

Answer:

  1. Cash
  2. Subsidiary
  3. Contra
  4. Float
  5. Cash.

Question 3.
Match the following:
MP Board Class 11th Accountancy Important Questions Chapter 5 Subsidiary Books-I
Answer:

1.(c)
2. (d)
3. (b)
4. (a).

Question 4.
Answer in one word/sentence:

  1. The book used for recording cash and bank related transactions is.
  2. Which book is maintained to record day – to – day expenses?
  3. Mention any transaction for which contra entry will be done.
  4. Which side of cash – book records all cash payments?

Answer:

  1. Double column cash – book
  2. Petty cash – book
  3. Cash deposited in bank
  4. Credit side.

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Question 5.
State True or False:

  1. Cash – book is only a subsidiary book.
  2. When a cheque is received, it is recorded in both sides of cash – book?
  3. Cash – book always shows debit balance.
  4. The cash balance as per cash-book is tallied daily with the physical cash balance.

Answer:

  1. False
  2. False
  3. True
  4. True.

Subsidiary Books-I Short Answer Type Questions

Question 1.
“A cash-book never shows a credit balance.” Explain.
Or
A cash – book always shows debit balance. Why?
Answer:
In cash – book, only cash transactions are recorded. All the cash receipts are entered in debit side and all the cash payments are entered in credit side. The payments can be done only out of the total receipts, i. e., it is not possible to make payment more than the cash receipts. Hence, a cash – book has never been a credit balance.

Question 2.
What is petty cash – book?
Answer:
Petty cash – book is a book where small expenses like postage, tax, refreshments, etc. are entered. It is maintained by a petty cashier. It is also known as retail cash – book or small cash – book.

Question 3.
Write the difference between petty cash – book and main cash – book.
Answer:
The following are the differences between cash – book and petty cash – book. They are:

Cash – book:

  1. All cash transactions are entered here.
  2. It is prepared by the main cashier.
  3. Cash balance is transferred to Balance and then to balance Sheet.

Petty Cash – book:

  1. Only small type of expenses are entered here.
  2. It is prepared by the petty cashier.
  3. Balance is transferred to cash – book.

Question 4.
Explain the advantages of maintaining petty cash – book. Five points.
Answer:
The following are the advantages of petty cash – book:

  1. In big business concerns, it is essentially to make numerous expenses of small amounts. When these expenses are done through the petty cash – book, the main cashier should get free from such disturbances.
  2. When the petty expenses are entered separately, then they can be checked occasionally and be controlled.
  3. By making petty cash its ledger account can be maintained easily and correctly.
  4. Though the petty cash – book is maintained by petty cashier, it is checked by the main cashier. So, errors can be maintained and rectified.
  5. It can be maintained even by an ordinary person.

MP Board Solutions

Question 5.
Differentiate between cash account and cash – book.
Answer:
Following are the differences between cash account and cash – book:

Cash Account:

  1. It is an account prepared in ledger book.
  2. Posting in cash account is done from journal.
  3. Only one aspect of the transaction i.e., cash is recorded in account.
  4. Account has no types.

Cash – book:

  1. It is a separate book maintained for entering cash transactions.
  2. It is a book of prime entry cash transactions are directly recorded in cash – book.
  3. In this book both aspects of the transactions are recorded (triple column cash – book).
  4. Cash – book are of four types
    • Simple
    • Double column
    • Triple column
    • Petty cash – book.

Question 6.
“Cash – book is not only a subsidiary book but also a principal book of accounts”. Explain.
Answer:
There is difference of opinion that whether cash – book is a subsidiary book or a principal book of accounts. The following points argues that cash – book is a subsidiary book:

  1. In this book, only cash transactions are entered.
  2. It is the main journal and with the help of it, ledger accounts can be maintained.

The following points argue that cash – book is a ledger account:

  1. By keeping this, cash account and bank account can be easily maintained,
  2. By maintaining this, the cash position of the business can be known easily at any time.

Hence, we can say that cash-book is not only a subsidiary book but also a principal book of accounts.

Question 7.
What do you mean by three column cash – book?
Answer:
It is a cash – book, where transactions relating to cash, bank and discount are entered at a time, i.e., In a three column cash – book there are separate columns for entering cash, bank and discount columns on both the sides.

Question 8.
What are contra entries? When they are made?
Answer:
Contra entries:
The transactions which take place between bank and office are entered on both the sides of cash – book in separate columns. If the transaction is written in the debit in cash column, it would be written in the credit in bank column. Those entries which are entered in the opposite side on one are called ‘Contra entries’.

In the following circumstances, contra entries are entered:

  1. When cash is deposited
  2. When cash is withdrawn from bank for business purpose
  3. When the cheque is sent to the bank for collection, which was entered in the cashbook.

MP Board Solutions

Question 9.
What is proper Journal and what are its uses?
Answer:
There are certain transactions which are not recorded in subsidiary books. To keep a record of such transactions, it is necessary to maintain a separate book which is known as Journal proper or proper Journal. The uses of proper Journal are as follows:

  1. Opening entries – Opening entries means balances of personal and real A/c of the previous year and it will recorded in the beginning of new financial year. This type of entry is enter in proper Journal
  2. Adjustment entries – The transaction of adjustment entry are also recorded in it.
  3. Transfer entry – Transfer of one A/c to another A/c is done by means of transfer entries.
  4. Rectification entry – The entry passed for rectifying the error are also enter in it.
  5. Other entry – Whatever entries are left out to record in subsidiary books are entered in it.

Subsidiary Books-I Long Answer Type Questions

Question 1.
Write any five advantages of cash – book.
Answer:
The following are the advantages of maintaining cash – book:

  1. Knowledge of cash in hand – The balance of cash can easily and readily be known from the cash – book.
  2. Saving of time – Only the cash transactions are recorded in the cash – book. Thus, cash – book saves time.
  3. Less burden of accounts – Cash – book reduces the burden of ledger and there remains no need to maintain a separate cash account.
  4. Other advantages – All the advantages which a trader may get from subsidiary books are also available from cash – book.
  5. Knowledge of bank balance and discount – When three column cash – book is maintaining in the business, it helps the businessmen to get the bank balance and the amount of discount allowances and receipts at a time.

MP Board Solutions

Question 2.
“Cash – book is a principle book as well as subsidiary book”. Explain.
Answer:
There is difference of opinion that whether cash – book is a subsidiary book or a principal book of accounts. The following points argues that cash – book is a subsidiary book:

  1. In this book, only cash transactions are entered
  2. It is the main journal and with the help of it, ledger accounts can be maintained.

The following points argue that cash – book is a ledger account:

  1. By keeping this, cash account and bank account can be easily maintained,
  2. By maintaining this, the cash position of the business can be known easily at any time.

Hence, we can say that cash – book is not only a subsidiary book but also a principal book of accounts.

Question 3.
Explain the Imprest system of petty cash – book.
Answer:
Under this system, the head cashier gives an advance amount for a fixed period to the petty cashier for the payment of petty expenses. The amount what he spends is reimbursed, i. e., he never allows to keep more than the imprest amount. It is also known as Float system of petty cash – book.

MP Board Solutions

Question 4.
What is three column cash – book? How it is prepared?
Answer:
It is a cash – book, where transactions relating to cash, bank and discount are entered at a time.

The following are the rules of its preparation:

1. It is starting with a cash balance as ‘To balance b/d’ in the debit side. But if the business is in commencing stage, then it will be entered as ‘To capital account’. The bank account has either a debit balance or a credit balance.

2. When the cash is receiving and discount is allowing, it is entering in the debit side in the cash column and discount column respectively. When the cash is paying and discount is receiving, it is entering in credit side in the cash column and discount column respectively.

3. When a cheque or draft receives and directly deposits in the bank, it enters in the bank column in debit side. If such a cheque or draft is not immediately deposits in the bank, then it enters in the cash column. When there is a cheque or draft payment, then it enters in credit side of bank column. When the interest receives from the bank, it enters in the debit side and when bank charges as interest then it is credited, in the bank column.

4. Contra entries:
These entries are made when cash is deposited in the bank or cash is withdrawn from the bank for business purpose. In this condition, the entries are made on both the sides. It is represented as ‘C’ in the L.F. column.

MP Board Class 11 Accountancy Important Questions