Class 11 Accountancy - Chapter Recording of Transactions - 1 NCERT Solutions | Why are the rules of debit and credit sa
Why are the rules of debit and credit same for both liability and capital?
Every business acquires funds from internal as well as from external sources. According to the business entity concept, the amount borrowed from the external sources together with the internal sources like, capital invested by the proprietor, is termed as liability to the business. Business entity concept treats business and business owner separately. Capital of the owner is treated as liability to the business because the business has to repay the amount of capital to the owner, in case of closure of the business. As liability incurred is credited, in the same way, fresh capital introduced and net profit increases the owner’s capital, and so, capital is credited. On the other hand, if liability is paid, it reduces liability, and so, it is debited. Similarly, drawings from capital and net loss reduce the capital, and so, capital is debited. Thus the rules of debit and credit are same for both liability and capital.
More Questions From Class 11 Accountancy - Chapter Recording of Transactions - 1
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Differentiate between source documents and vouchers.
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What is a journal? Give a specimen of journal showing at least five entries.
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Voucher is prepared from:
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(ii) Journal entry
(iii) Ledger account
(iv) All of the above - Q:-
The journal entry to record the sale of services on credit should include:
(a) Debit to debtors and credit to capital.
(b) Debit to cash and Credit to debtors.
(c) Debit to fees income and Credit to debtors.
(d) Debit to debtors and Credit to fees income. - Q:-
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(iii) Purchase account
(iv) None of these - Q:-
Select Right Answer:
Voucher is prepared for:
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(ii) Cash/Credit sales
(iii) Cash/Credit purchase
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Should a transaction be first recorded in a journal or ledger? Why?
- Q:-
Cash withdrawn by the Proprietor should be credited to:
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(ii) Capital account
(iii) Profit and loss account
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What entry (debit or credit) would you make to:
(a) increase revenue
(b) decrease in expense,
(c) record drawings
(d) record the fresh capital introduced by the owner. - Q:-
Choose the Correct Answer :
The ledger folio column of journal is used to:
(a) Record the date on which amount posted to a ledger account.
(b) Record the number of ledger account to which information is posted.
(c) Record the number of amounts posted to the ledger account.
(d) Record the page number of the ledger account.
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