Books of Original Entry
The Journal
Master journal entry writing โ format, 4-step method, compound entries, opening entry, and 12 special cases with full numerical worked examples. The most practical and highest-scoring chapter in Class 11 Accountancy.
12Special Cases
15+Worked Entries
20MCQs
20Quiz Qs
FreeAlways
๐ Why This Chapter Is Critical
Where Theory Meets Practice
Every concept from Ch 5 (Accounting Equation) and Ch 6 (Rules of Debit and Credit) is applied here to write actual journal entries with real amounts. CBSE board exams typically carry 15โ20 marks from journal entry questions. Master this chapter and every chapter from 8 onwards becomes significantly easier.
1. Meaning and Definition of Journal
The word Journal comes from the French word Jour meaning "day." A Journal is a book of original entry (also called book of prime entry) in which all business transactions are recorded chronologically (date-wise) for the first time, before being posted to the Ledger.
Definition: "Journal is a book of original entry in which transactions are recorded in a chronological order and from which the entries are subsequently posted to the ledger accounts."
2. Advantages of Journal
1
Chronological Record
All transactions recorded date-wise โ easy to trace when each transaction occurred.
2
Complete Record
Both Debit and Credit parts shown together โ complete effect visible in one place.
3
Narration Explains Entry
A brief explanation below each entry makes it easy to understand the transaction.
4
Reduces Ledger Errors
Journal entries are verified before posting โ mistakes are easier to find and fix.
5
Legal Evidence
A properly maintained journal is accepted as legal evidence in court disputes.
6
Audit Trail
Auditors use the journal as the primary document to verify all transactions.
3. Format of a Journal โ 5 Columns Explained
| Date | Particulars | L.F. | Dr. Amount (โน) | Cr. Amount (โน) |
|---|---|---|---|---|
| YYYY Mon DD | Account Debited Dr. | โ | XX,XXX | |
| To Account Credited | โ | XX,XXX | ||
| (Narration โ brief explanation of why the transaction occurred) | ||||
| Column | What It Contains | Key Rule |
|---|---|---|
| Date | Year on top, then month and day | Written only when date changes |
| Particulars | Dr. account name + "Dr." tag, then "To" + Cr. account (indented), then narration in brackets | Cr. account always has "To" prefix and is indented |
| L.F. | Ledger Folio โ page number in Ledger where posted | Left blank until posting is done |
| Dr. Amount | Amount being debited | Must equal Cr. Amount โ every entry must balance |
| Cr. Amount | Amount being credited | Must equal Dr. Amount โ accounting equation stays balanced |
4. How to Journalise โ The 4-Step Method
1
Identify Accounts
Read the transaction. Which accounts are affected? Minimum 2 accounts in every transaction.
2
Classify Each Account
Is each account Personal, Real, or Nominal? Apply the correct type to each.
3
Apply the Golden Rule
Personal โ Receiver Dr, Giver Cr. Real โ In Dr, Out Cr. Nominal โ Expense Dr, Income Cr.
4
Record in Format
Dr. account first, then "To" + Cr. account indented, then narration in brackets on next line.
5. Comprehensive Journal โ M/s Rajesh Traders, April 2026
Business: M/s Rajesh Traders, Delhi โ Journal for April 2026
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| 2026 Apr 1 | Cash A/c Dr. | 8,00,000 | ||
| To Capital A/c | 8,00,000 | |||
| (Business started with cash โน8,00,000 โ Real A/c Dr as cash comes in; Capital A/c Cr as owner is the giver) | ||||
| Apr 3 | Furniture A/c Dr. | 60,000 | ||
| To Cash A/c | 60,000 | |||
| (Furniture purchased for cash โ furniture comes in Dr; cash goes out Cr) | ||||
| Apr 5 | Purchases A/c Dr. | 2,40,000 | ||
| To Ramesh A/c | 2,40,000 | |||
| (Goods purchased on credit from Ramesh โ goods come in Dr; Ramesh is giver Cr) | ||||
| Apr 8 | Cash A/c Dr. | 3,00,000 | ||
| To Sales A/c | 3,00,000 | |||
| (Goods sold for cash โน3,00,000 โ cash comes in Dr; sales income Cr) | ||||
| Apr 10 | Shyam A/c Dr. | 1,80,000 | ||
| To Sales A/c | 1,80,000 | |||
| (Goods sold to Shyam on credit โ Shyam is receiver Dr; sales income Cr) | ||||
| Apr 12 | Ramesh A/c Dr. | 2,40,000 | ||
| To Cash A/c | 2,40,000 | |||
| (Paid Ramesh โ creditor โ in full: โน2,40,000 cash โ Ramesh receives Dr; cash goes out Cr) | ||||
| Apr 14 | Cash A/c Dr. | 1,80,000 | ||
| To Shyam A/c | 1,80,000 | |||
| (Received full payment from Shyam โ cash comes in Dr; Shyam is giver Cr) | ||||
| Apr 16 | Salary A/c Dr. | 45,000 | ||
| To Cash A/c | 45,000 | |||
| (Salary paid for April โ nominal expense Dr; cash goes out Cr) | ||||
| Apr 18 | Drawings A/c Dr. | 30,000 | ||
| To Cash A/c | 30,000 | |||
| (Owner withdrew cash โน30,000 for personal use โ drawings Dr; cash Cr) | ||||
| Apr 20 | Bank A/c Dr. | 2,00,000 | ||
| To Cash A/c | 2,00,000 | |||
| (Cash deposited into bank โ bank comes in Dr; cash goes out Cr) | ||||
| Total | 21,75,000 | 21,75,000 | ||
Verification: Total Dr. โน21,75,000 = Total Cr. โน21,75,000 โ โ Every journal must balance. If totals differ, there is an error somewhere.
6. Compound Journal Entries
When two or more transactions occur on the same date involving a common account, they are combined into one entry. The total Dr. must still equal total Cr.
Type A โ Multiple Dr., One Cr.
Example: Priya started business with Cash โน5,00,000 and Furniture โน80,000 on 1 April.
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Apr 1 | Cash A/c Dr. | 5,00,000 | ||
| Furniture A/c Dr. | 80,000 | |||
| To Capital A/c | 5,80,000 | |||
| (Business started with cash โน5,00,000 and furniture โน80,000 โ compound entry. Dr โน5,80,000 = Cr โน5,80,000 โ) | ||||
Type B โ One Dr., Multiple Cr.
Example: Purchased goods โน1,20,000 from Ram. Paid โน80,000 cash immediately and โน40,000 on credit.
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Apr 5 | Purchases A/c Dr. | 1,20,000 | ||
| To Cash A/c | 80,000 | |||
| To Ram A/c | 40,000 | |||
| (Goods purchased from Ram โน1,20,000 โ โน80,000 paid cash, โน40,000 on credit. Dr โน1,20,000 = Cr โน1,20,000 โ) | ||||
7. Opening Entry
At the start of a new accounting year, all assets and liabilities from the previous year's Balance Sheet are brought into new books through a single Opening Entry. Rule: All assets Dr., all liabilities Cr., Capital is the balancing figure (Cr.).
Balance Sheet of M/s Arjun as on 31 March 2025: Cash โน2,00,000 | Stock โน1,50,000 | Debtors โน80,000 | Furniture โน1,20,000 | Creditors โน60,000 | Bank Loan โน90,000 | Capital โน4,00,000
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| 2025 Apr 1 | Cash A/c Dr. | 2,00,000 | ||
| Stock A/c Dr. | 1,50,000 | |||
| Debtors A/c Dr. | 80,000 | |||
| Furniture A/c Dr. | 1,20,000 | |||
| To Creditors A/c | 60,000 | |||
| To Bank Loan A/c | 90,000 | |||
| To Capital A/c | 4,00,000 | |||
| (Opening entry โ assets and liabilities brought forward from Balance Sheet as on 31 March 2025. Dr โน5,50,000 = Cr โน5,50,000 โ) | ||||
8. Special Cases โ Detailed Worked Examples
These are the most frequently examined journal entries in CBSE. Every entry includes the transaction, the journal, account types used, and the key rule applied.
๐ Special Case 1 โ Salary
1A: Salary Paid in Cash
Nominal: Salary Dr | Real: Cash Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Apr 30 | Salary A/c Dr. | 50,000 | ||
| To Cash A/c | 50,000 | |||
| (Salary paid for April โน50,000 in cash) | ||||
Salary A/c = Nominal (expense โ Dr). Cash A/c = Real (goes out โ Cr). This is the standard entry for any expense paid in cash.
1B: Salary Outstanding (Due but Not Yet Paid)
Nominal: Salary Dr | Representative Personal: Outstanding Salary Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Mar 31 | Salary A/c Dr. | 50,000 | ||
| To Outstanding Salary A/c | 50,000 | |||
| (Salary for March due but not paid โ outstanding salary created as a liability) | ||||
Outstanding Salary A/c = Liability (appears on Balance Sheet Cr. side). When paid next month: Outstanding Salary A/c Dr, Cash A/c Cr.
๐ Special Case 2 โ Rent
2A: Rent Paid in Cash
Nominal: Rent Dr | Real: Cash Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Apr 1 | Rent A/c Dr. | 18,000 | ||
| To Cash A/c | 18,000 | |||
| (Rent paid for April โน18,000 cash) | ||||
Rent paid = business expense (Nominal โ Dr). Cash goes out (Real โ Cr).
2B: Rent Received (Business has a tenant paying rent to it)
Real: Cash Dr | Nominal: Rent Received Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Apr 1 | Cash A/c Dr. | 12,000 | ||
| To Rent Received A/c | 12,000 | |||
| (Rent received from tenant โน12,000 cash) | ||||
Rent Received = income (Nominal โ Cr). Cash comes in (Real โ Dr). Common exam trap: Rent Paid โ Dr | Rent Received โ Cr. Never confuse the two.
๐ Special Case 3 โ Depreciation
3: Depreciation Charged on Fixed Asset
Nominal: Depreciation Dr | Real: Asset A/c Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Mar 31 | Depreciation A/c Dr. | 20,000 | ||
| To Machinery A/c | 20,000 | |||
| (Depreciation on machinery @ 10% p.a. on โน2,00,000 โ โน2,00,000 ร 10% = โน20,000) | ||||
Key points: (1) No cash outflow โ depreciation is a non-cash expense. (2) Depreciation A/c Dr (Nominal โ loss). (3) Machinery A/c Cr (Real โ asset value reduces). (4) Show calculation in narration. At year end: Depreciation A/c is closed to P&L A/c.
๐ Special Case 4 โ Bad Debts
4A: Bad Debts Written Off (Debt irrecoverable)
Nominal: Bad Debts Dr | Personal: Debtor A/c Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Mar 31 | Bad Debts A/c Dr. | 15,000 | ||
| To Mohan A/c | 15,000 | |||
| (Debt of โน15,000 due from Mohan written off as irrecoverable bad debt) | ||||
Bad Debts = loss (Nominal โ Dr). Mohan's A/c Cr (Personal โ giver, he gives up the obligation). No cash received. Amount is permanently lost. Mohan's account is now closed to zero.
4B: Bad Debts Recovered (Previously written-off amount received)
Real: Cash Dr | Nominal: Bad Debts Recovered Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Jun 10 | Cash A/c Dr. | 15,000 | ||
| To Bad Debts Recovered A/c | 15,000 | |||
| (Amount previously written off from Mohan now recovered in cash) | ||||
Once written off, Mohan's account is closed โ do NOT credit Mohan again. Recovery = new income. Cash A/c Dr (comes in), Bad Debts Recovered A/c Cr (Nominal โ income).
๐ Special Case 5 โ Drawings
5A: Cash Withdrawn by Owner for Personal Use
Personal: Drawings Dr | Real: Cash Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Apr 15 | Drawings A/c Dr. | 25,000 | ||
| To Cash A/c | 25,000 | |||
| (Owner withdrew โน25,000 cash for personal use) | ||||
Drawings A/c Dr (owner is receiver โ Representative Personal A/c). Cash A/c Cr (Real โ goes out). Drawings are NOT a business expense โ they reduce Capital directly.
5B: Goods Withdrawn by Owner for Personal Use
Personal: Drawings Dr | Real: Purchases Cr โ always at COST PRICE
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Apr 20 | Drawings A/c Dr. | 8,000 | ||
| To Purchases A/c | 8,000 | |||
| (Goods withdrawn by owner for personal use โ recorded at cost price โน8,000) | ||||
Critical CBSE rule: Goods taken by owner are ALWAYS at COST PRICE (not selling price). Credit Purchases A/c (NOT Sales A/c โ because goods are not sold, they are taken by owner).
๐ Special Case 6 โ Discount
6A: Discount Allowed to Debtor (Customer pays less than owed)
Compound: Cash Dr + Discount Allowed Dr | Debtor Cr (full amount)
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Apr 22 | Cash A/c Dr. | 49,000 | ||
| Discount Allowed A/c Dr. | 1,000 | |||
| To Suresh A/c | 50,000 | |||
| (Suresh paid โน49,000 against dues of โน50,000 โ discount allowed โน1,000. Dr โน50,000 = Cr โน50,000 โ) | ||||
Suresh owed โน50,000 โ Suresh A/c Cr โน50,000 (full amount, closes the debt). We received only โน49,000 โ Cash A/c Dr โน49,000. Discount Allowed โน1,000 = our LOSS โ Dr (Nominal). Total Dr = โน50,000 = Total Cr โน50,000 โ
6B: Discount Received from Creditor (We pay less than we owe)
Compound: Creditor Dr (full) | Cash Cr + Discount Received Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Apr 25 | Ramesh A/c Dr. | 80,000 | ||
| To Cash A/c | 78,000 | |||
| To Discount Received A/c | 2,000 | |||
| (Paid โน78,000 to Ramesh in full settlement of โน80,000 โ discount received โน2,000. Dr โน80,000 = Cr โน80,000 โ) | ||||
We owed Ramesh โน80,000 โ Ramesh A/c Dr โน80,000 (full amount, closes the liability). We paid only โน78,000 โ Cash A/c Cr โน78,000. Discount Received โน2,000 = our GAIN โ Cr (Nominal). Total Dr โน80,000 = Cr โน80,000 โ
๐ Special Case 7 โ Purchase Return and Sales Return
7A: Purchase Return / Returns Outward (Goods sent back to supplier)
Personal: Creditor Dr | Real: Purchase Returns Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Apr 28 | Ramesh A/c Dr. | 10,000 | ||
| To Purchase Returns A/c | 10,000 | |||
| (Defective goods returned to Ramesh โ purchase return โน10,000) | ||||
Ramesh A/c Dr โ he receives back the goods (Personal โ receiver). Purchase Returns A/c Cr โ it reduces our purchases. Our liability to Ramesh decreases by โน10,000. Also called Returns Outward A/c.
7B: Sales Return / Returns Inward (Customer sends goods back to us)
Real: Sales Returns Dr | Personal: Debtor Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Apr 29 | Sales Returns A/c Dr. | 7,000 | ||
| To Shyam A/c | 7,000 | |||
| (Goods returned by Shyam accepted โ sales return โน7,000) | ||||
Sales Returns A/c Dr โ reduces our sales (also called Returns Inward A/c). Shyam A/c Cr โ his debt to us reduces since we accept the return. Our receivable from Shyam decreases by โน7,000.
๐ Special Case 8 โ Free Samples and Charity
8: Goods Distributed as Free Samples / Given as Charity
Nominal: Advertisement or Charity Dr | Real: Purchases Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Apr 10 | Advertisement A/c Dr. | 5,000 | ||
| To Purchases A/c | 5,000 | |||
| (Goods distributed as free samples for promotion โน5,000 at cost price) | ||||
Free samples โ Advertisement A/c Dr. Charity โ Charity A/c Dr. In both cases: Purchases A/c Cr at COST PRICE. Never Sales A/c โ no income is earned. Goods simply leave stock.
๐ Special Case 9 โ Interest on Capital and Drawings
9A: Interest on Capital (Allowed to owner by the business)
Nominal: Interest on Capital Dr | Personal: Capital A/c Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Mar 31 | Interest on Capital A/c Dr. | 30,000 | ||
| To Capital A/c | 30,000 | |||
| (Interest on capital โน6,00,000 @ 5% p.a. โ โน6,00,000 ร 5% = โน30,000) | ||||
Interest on Capital = expense for the business (Nominal โ Dr). Capital A/c Cr โ owner's capital increases. Always show the calculation in narration. Deducted from profit in P&L A/c.
9B: Interest on Drawings (Charged to owner for withdrawals)
Personal: Capital A/c Dr | Nominal: Interest on Drawings Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Mar 31 | Capital A/c Dr. | 3,000 | ||
| To Interest on Drawings A/c | 3,000 | |||
| (Interest on drawings โน60,000 @ 5% p.a. โ โน60,000 ร 5% = โน3,000) | ||||
Interest on Drawings = income for the business (Nominal โ Cr). Capital A/c Dr โ owner's capital reduces (penalty for withdrawing funds). Exact reverse of Interest on Capital.
๐ Special Case 10 โ Bank Transactions
10A: Cash Deposited into Bank
Real: Bank Dr | Real: Cash Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Apr 5 | Bank A/c Dr. | 1,00,000 | ||
| To Cash A/c | 1,00,000 | |||
| (Cash โน1,00,000 deposited into bank) | ||||
Both are Real Accounts. Bank comes in โ Bank A/c Dr. Cash goes out โ Cash A/c Cr. Pure internal transfer โ no income, no expense, no Capital change.
10B: Cash Withdrawn from Bank โ Office Use vs Personal Use
Office use: Cash Dr, Bank Cr | Personal use: Drawings Dr, Bank Cr
| Date | Particulars | L.F. | Dr. (โน) | Cr. (โน) |
|---|---|---|---|---|
| Apr 12 | Cash A/c Dr. | 40,000 | ||
| To Bank A/c | 40,000 | |||
| (Cash withdrawn from bank for office use โน40,000) | ||||
| Apr 15 | Drawings A/c Dr. | 15,000 | ||
| To Bank A/c | 15,000 | |||
| (Cash withdrawn from bank by owner for personal use โน15,000) | ||||
CBSE Exam Trap: "Withdrawn for office use" โ Cash A/c Dr (Real). "Withdrawn for personal use" โ Drawings A/c Dr (Personal). The PURPOSE determines the debit account.
โก Quick Recall โ Chapter 7 Key Points
Journal = Book of Original Entry. Transactions recorded chronologically before posting to Ledger.
5 columns: Date | Particulars | L.F. | Dr. Amount | Cr. Amount. Dr. total MUST equal Cr. total always.
4-step method: Identify accounts โ Classify (P/R/N) โ Apply Golden Rule โ Record with "To" and narration.
Compound Entry: Multiple Dr. or multiple Cr. clubbed when they share a common account. Total Dr = Total Cr always.
Opening Entry: All assets Dr, all liabilities Cr, Capital = balancing figure on Cr. side.
Goods taken by owner = Drawings A/c Dr, Purchases A/c Cr โ at COST PRICE. Never Sales A/c.
Discount Allowed = our expense Dr | Discount Received = our income Cr. Compound entry with debtor/creditor always nets to zero.
Depreciation: Non-cash. Depreciation A/c Dr (Nominal), Asset A/c Cr (Real). Reduces asset value with no cash flow.
Bad Debts Written Off: Bad Debts A/c Dr, Debtor A/c Cr. Bad Debts Recovered: Cash A/c Dr, Bad Debts Recovered A/c Cr โ do NOT credit debtor again.
Interest on Capital โ business expense Dr. Interest on Drawings โ business income Cr. Capital A/c is always the other side.
Free Samples โ Advertisement A/c Dr, Purchases A/c Cr. Charity โ Charity A/c Dr, Purchases A/c Cr. Always at cost price.
Bank withdrawal for office โ Cash A/c Dr. Bank withdrawal for personal โ Drawings A/c Dr. Both credit Bank A/c.
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20 MCQs โ Books of Original Entry (Journal)
Mixed difficulty โ conceptual, journal entry application, and numerical. Heavily focused on special cases tested in CBSE board exams.
๐ Questions 1 to 20 โ Mixed Difficulty
1
A Journal is called a "Book of Original Entry" because:
AIt is the only book in the accounting system
BEvery transaction is first recorded here before being posted to the Ledger
CIt contains the original signatures of the owner
DIt records only original (non-adjusted) transactions
Answer: B. The Journal is the starting point of the entire accounting cycle. Every transaction is first recorded here โ hence "original entry." No transaction enters the Ledger directly without going through the Journal first.
2
In the journal format, the Credit account entry is written:
ABefore the Debit account, with "By" prefix
BOn the same line as the Debit account
CAfter the Debit account, with "To" prefix and indented
DAfter the narration, with "To" prefix
Answer: C. The Dr. account is written first. The Cr. account is written on the next line, preceded by "To" and indented (shifted right). The narration follows below both accounts in brackets.
3
Business started with Cash โน7,00,000 and Furniture โน50,000. The correct compound journal entry is:
ACapital A/c Dr โน7,50,000; To Cash A/c โน7,00,000; To Furniture A/c โน50,000
BCash A/c Dr โน7,00,000; Furniture A/c Dr โน50,000; To Capital A/c โน7,50,000
CCash A/c Dr โน7,50,000; To Capital A/c โน7,50,000
DFurniture A/c Dr โน50,000; To Cash A/c โน50,000
Answer: B. Cash comes in โ Cash A/c Dr โน7,00,000 (Real). Furniture comes in โ Furniture A/c Dr โน50,000 (Real). Owner is the giver of both โ Capital A/c Cr โน7,50,000 (Personal). Total Dr โน7,50,000 = Cr โน7,50,000 โ
4
Goods purchased from Ramesh โน1,50,000 โ โน1,00,000 paid by cheque and balance on credit. Which entry is correct?
APurchases A/c Dr โน1,00,000; To Bank โน1,00,000
BPurchases A/c Dr โน1,50,000; To Cash A/c โน1,50,000
CPurchases A/c Dr โน1,50,000; To Bank A/c โน1,00,000; To Ramesh A/c โน50,000
DPurchases A/c Dr โน50,000; To Ramesh A/c โน50,000
Answer: C โ Compound Entry. Total goods purchased = โน1,50,000 โ Purchases A/c Dr โน1,50,000. Payment split: โน1,00,000 via cheque โ Bank A/c Cr โน1,00,000; remaining โน50,000 on credit โ Ramesh A/c Cr โน50,000. Total Dr โน1,50,000 = Total Cr โน1,50,000 โ
5
Salary paid โน40,000 and rent paid โน12,000 โ both in cash on the same date. Which compound entry is correct?
AExpenses A/c Dr โน52,000; To Cash A/c โน52,000
BSalary A/c Dr โน40,000; Rent A/c Dr โน12,000; To Cash A/c โน52,000
CCash A/c Dr โน52,000; To Salary A/c โน40,000; To Rent A/c โน12,000
DTwo separate entries must be passed โ compound not allowed
Answer: B. Both are expenses (Nominal โ Dr) paid from the same account (Cash) on the same date โ they can be combined. Salary A/c Dr โน40,000 + Rent A/c Dr โน12,000 = Cash A/c Cr โน52,000. Total Dr โน52,000 = Cr โน52,000 โ
6
Owner withdrew goods worth โน6,000 (cost) for personal use. The correct journal entry is:
ADrawings A/c Dr โน6,000; To Sales A/c โน6,000
BDrawings A/c Dr โน6,000; To Cash A/c โน6,000
CDrawings A/c Dr โน6,000; To Purchases A/c โน6,000
DCapital A/c Dr โน6,000; To Sales A/c โน6,000
Answer: C. Goods taken by owner = Drawings (not a sale). Drawings A/c Dr โน6,000 (Personal โ owner receives). Purchases A/c Cr โน6,000 (Real โ goods go out at cost). NEVER Sales A/c โ no income is earned. ALWAYS at cost price.
7
Depreciation of โน25,000 charged on machinery. The journal entry is:
ACash A/c Dr โน25,000; To Machinery A/c โน25,000
BMachinery A/c Dr โน25,000; To Depreciation A/c โน25,000
CDepreciation A/c Dr โน25,000; To Machinery A/c โน25,000
DP&L A/c Dr โน25,000; To Cash A/c โน25,000
Answer: C. Depreciation is a non-cash expense โ Depreciation A/c Dr (Nominal โ loss). The asset value reduces โ Machinery A/c Cr (Real โ value goes out). No cash is paid. This entry reduces the book value of machinery directly.
8
Received โน47,000 from Suresh in full settlement of โน50,000. Discount allowed = โน3,000. Which entry is correct?
ACash A/c Dr โน47,000; To Suresh A/c โน47,000
BCash A/c Dr โน50,000; Discount Allowed A/c Dr โน3,000; To Suresh A/c โน47,000
CCash A/c Dr โน47,000; Discount Allowed A/c Dr โน3,000; To Suresh A/c โน50,000
DCash A/c Dr โน47,000; To Suresh A/c โน47,000; To Discount Received A/c โน3,000
Answer: C. Suresh owed โน50,000 โ Suresh A/c Cr โน50,000 (full amount โ closes the debt). Cash received โน47,000 โ Cash A/c Dr โน47,000. Discount Allowed โน3,000 = our loss โ Dr (Nominal). Total Dr โน50,000 = Cr โน50,000 โ. Option D is wrong โ Discount Received is our income (when we pay less), not when we receive less.
9
Paid โน58,000 to Ramesh (creditor) in full settlement of โน60,000 โ discount received โน2,000. Which entry is correct?
ARamesh A/c Dr โน58,000; To Cash A/c โน58,000
BRamesh A/c Dr โน60,000; Discount Allowed A/c Dr โน2,000; To Cash A/c โน58,000
CRamesh A/c Dr โน60,000; To Cash A/c โน58,000; To Discount Received A/c โน2,000
DCash A/c Dr โน2,000; Ramesh A/c Dr โน58,000; To Capital A/c โน60,000
Answer: C. We owed Ramesh โน60,000 โ Ramesh A/c Dr โน60,000 (full amount โ closes the liability). Cash paid โน58,000 โ Cash A/c Cr โน58,000. Discount Received โน2,000 = our income โ Discount Received A/c Cr (Nominal). Total Dr โน60,000 = Cr โน60,000 โ
10
Debt of โน20,000 due from Rohit written off as bad debt. Later, โน20,000 is recovered in cash. Which TWO entries are required?
AWrite-off: Bad Debts Dr, Rohit Cr. Recovery: Rohit Dr, Cash Cr
BWrite-off: Bad Debts A/c Dr โน20,000, Rohit A/c Cr โน20,000. Recovery: Cash A/c Dr โน20,000, Bad Debts Recovered A/c Cr โน20,000
CWrite-off: Rohit A/c Dr, Bad Debts Cr. Recovery: Cash Dr, Rohit Cr
DOnly one entry needed when debt is recovered โ reverse the write-off
Answer: B. Write-off: Bad Debts A/c Dr โน20,000 (loss), Rohit A/c Cr โน20,000 (account closed). Recovery: Cash A/c Dr โน20,000 (Real โ comes in), Bad Debts Recovered A/c Cr โน20,000 (income). Do NOT credit Rohit again โ his account was closed at write-off.
11
Goods worth โน4,000 (cost price) distributed as free samples. The correct entry is:
AAdvertisement A/c Dr โน4,000; To Sales A/c โน4,000
BAdvertisement A/c Dr โน4,000; To Purchases A/c โน4,000
CDrawings A/c Dr โน4,000; To Sales A/c โน4,000
DSales A/c Dr โน4,000; To Purchases A/c โน4,000
Answer: B. Free samples = promotional expense โ Advertisement A/c Dr (Nominal). Goods leave stock at cost โ Purchases A/c Cr (Real). NEVER Sales A/c โ no revenue is earned from free samples. Always at cost price, not selling price.
12
Interest on capital โน5,00,000 @ 6% per annum. The journal entry and amount are:
ACapital A/c Dr โน30,000; To Interest A/c โน30,000
BInterest on Capital A/c Dr โน30,000; To Capital A/c โน30,000
CCash A/c Dr โน30,000; To Capital A/c โน30,000
DCapital A/c Dr โน30,000; To Cash A/c โน30,000
Answer: B โ Amount โน30,000. Calculation: โน5,00,000 ร 6% = โน30,000. Interest on Capital = business expense โ Interest on Capital A/c Dr โน30,000 (Nominal). Capital A/c Cr โน30,000 โ owner's capital increases. No cash involved in this adjustment entry.
13
Interest on drawings โน80,000 @ 5% per annum. The journal entry and amount are:
AInterest on Drawings A/c Dr โน4,000; To Capital A/c โน4,000
BCash A/c Dr โน4,000; To Interest on Drawings A/c โน4,000
CCapital A/c Dr โน4,000; To Interest on Drawings A/c โน4,000
DDrawings A/c Dr โน4,000; To Cash A/c โน4,000
Answer: C โ Amount โน4,000. Calculation: โน80,000 ร 5% = โน4,000. Interest on Drawings = income for business โ Interest on Drawings A/c Cr โน4,000 (Nominal). Capital A/c Dr โน4,000 โ owner's capital reduces (charged as penalty). Exact reverse of Interest on Capital.
14
Salary outstanding โน15,000 at year end. When this outstanding salary is PAID next month, the entry is:
ASalary A/c Dr โน15,000; To Cash A/c โน15,000
BOutstanding Salary A/c Dr โน15,000; To Cash A/c โน15,000
CCash A/c Dr โน15,000; To Salary A/c โน15,000
DSalary A/c Dr โน15,000; To Outstanding Salary A/c โน15,000
Answer: B. The salary expense was already recorded at year end (Salary A/c Dr, Outstanding Salary A/c Cr). When PAID next period: Outstanding Salary A/c Dr โน15,000 (clearing the liability), To Cash A/c โน15,000 (cash goes out). Do NOT debit Salary A/c again โ that would double-count the expense.
15
Defective goods returned to supplier Sunil โน8,000. Which entry is passed for PURCHASE RETURN?
APurchases A/c Dr โน8,000; To Sunil A/c โน8,000
BSales Returns A/c Dr โน8,000; To Sunil A/c โน8,000
CSunil A/c Dr โน8,000; To Purchase Returns A/c โน8,000
DSunil A/c Dr โน8,000; To Sales A/c โน8,000
Answer: C. We are returning goods to Sunil (our creditor). Sunil A/c Dr โน8,000 โ he receives goods back (Personal โ receiver). Purchase Returns A/c Cr โน8,000 โ our purchases reduce (also called Returns Outward A/c). Our liability to Sunil decreases.
16
Cash withdrawn from bank by owner for PERSONAL use โน10,000. The correct entry is:
ACash A/c Dr โน10,000; To Bank A/c โน10,000
BCash A/c Dr โน10,000; To Capital A/c โน10,000
CDrawings A/c Dr โน10,000; To Bank A/c โน10,000
DBank A/c Dr โน10,000; To Cash A/c โน10,000
Answer: C. "Personal use" = Drawings โ Drawings A/c Dr โน10,000. Bank A/c Cr โน10,000 (Real โ bank goes out). If it were "office use" the entry would be Cash A/c Dr, Bank A/c Cr. The PURPOSE determines the Debit account.
17
In the Opening Entry, which accounts are DEBITED?
AAll Liabilities and Capital
BOnly Cash and Bank
CAll Assets
DAll Assets and Liabilities both
Answer: C โ All Assets are Debited. In the Opening Entry: All assets Dr (they come into the new books). All liabilities Cr (they are owed by the business). Capital is the balancing figure and is also Cr. Assets = Liabilities + Capital always holds.
18
CUET: Machinery worth โน3,00,000 purchased. โน2,00,000 paid by cheque and balance by taking a bank loan. Which compound entry is correct?
AMachinery Dr โน2,00,000; To Bank โน2,00,000
BMachinery Dr โน3,00,000; To Cash โน3,00,000
CMachinery A/c Dr โน3,00,000; To Bank A/c โน2,00,000; To Bank Loan A/c โน1,00,000
DMachinery Dr โน2,00,000; Bank Loan Dr โน1,00,000; To Bank โน3,00,000
Answer: C. Machinery comes in โ Machinery A/c Dr โน3,00,000 (Real). Payment split: Bank A/c Cr โน2,00,000 (cheque paid) + Bank Loan A/c Cr โน1,00,000 (loan taken for balance). Total Dr โน3,00,000 = Total Cr โน3,00,000 โ
19
CUET: Assertion (A): When goods are given as free samples, Sales A/c is credited. Reason (R): Goods are going out of the business, so the outgoing account must be credited.
ABoth A and R are true, and R correctly explains A
BBoth A and R are true, but R does not explain A
CA is false; R is true but does not apply here
DBoth A and R are false
Answer: C โ A is false; R is partially true but misapplied. Assertion A is wrong: Sales A/c is NOT credited for free samples. Purchases A/c is credited (at cost price). Sales A/c would imply income is earned โ but free samples earn no revenue. The Reason (R) is true in principle (outgoing = Cr) but it is Purchases A/c (not Sales A/c) that is credited.
20
CUET: Opening Balance Sheet shows โ Cash โน1,50,000; Debtors โน60,000; Stock โน90,000; Furniture โน1,00,000; Creditors โน40,000; Loan โน60,000. What is the Capital, and which accounts are Credited in the Opening Entry?
ACapital โน3,00,000; Assets credited
BCapital โน2,00,000; Creditors, Loan, Capital all credited
CCapital โน3,00,000; Creditors โน40,000, Loan โน60,000, Capital โน3,00,000 all credited
DCapital โน2,60,000; Creditors and Loan credited only
Answer: C. Total Assets = โน1,50,000 + โน60,000 + โน90,000 + โน1,00,000 = โน4,00,000. Total Liabilities = โน40,000 + โน60,000 = โน1,00,000. Capital = Assets โ Liabilities = โน4,00,000 โ โน1,00,000 = โน3,00,000. In Opening Entry: All assets Dr (total โน4,00,000). Creditors Cr โน40,000 + Loan Cr โน60,000 + Capital Cr โน3,00,000 = โน4,00,000 โ
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