Class-9 : Book Keeping & Accountancy - Unit-III : Source Documents and Accounting Equations

Unit III

Source Documents and Accounting Equations

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VERY SHORT ANSWER TYPE QUESTION

1. What you mean by source documents in accountancy ?

Ans : A document which supports the transaction for recording is called source documents. These documents are real, meaningful, visible records certifying the actual happening of the transactions of financial nature. These documents are required for audit and tax assessments. They also serve as the legal evidence in case of a legal dispute.

2. Mention any two source documents.

Ans : Two source documents are :

     I. Cash Memo
    II. Invoice or Bill

3. What is meant by an invoice ?

Ans : An invoice or bill is prepared by the seller of goods when he sells good on credit. It contains the name of the party to whom goods are sold, the rate, quantity & total amount of sale. The original copy of the sale invoice is sent to the purchaser & its duplicate copy kept by the seller for making records in books of accounts.

4. What do you mean by Cheque ?

Ans : A cheque is a document in writing, which contains an order from customer to a banker authorising him to pay a specified sum to the bearer or the person named in it. A cheque must be properly dated & signed by the drawer.

5. Give an example of Voucher ?

Ans : Debit Voucher.

6. What is a transfer Voucher ?

Ans : Transfer Vouchers are the documentary evidence of all non-cash transactions of the business. These non-cash transactions include credit sale or purchase of goods, return of goods by customers, return of goods to suppliers, etc.

7. Name the two types of vouchers.

Ans : Two types of vouchers are :

        I. Cash Voucher
       II. Non-Cash Voucher

8. What is credit voucher ?

Ans : Credit vouchers are the documentary evidences of the cash receipts and are prepared to record transactions involving cash receipts against sale of goods, sale of assets, withdrawal from bank, etc.

9. What do you mean by an accounting equation ?

Ans : An accounting equation is a mathematical expression which shows that the assets of a business are always equal to the total of capital & liabilities.

The basic accounting equation is :

Assets = Liabilities + Capital

10. Explain two rules of accounting equation.

Ans : Following are the two rules of accounting equation :

      I. Assets - If an asset is added to the business, there's an increase (debit) and if an asset is sold or disposed off, there is a decrease (credit).

     II. Liabilities - If a liability is acquired, there's an increase (credit) and if a liability is settled or paid off there is a decrease (debit).

11. What is pay-in-slip ?

Ans : Pay-in-slip is a form available from a bank and is used to deposit cash or cheques in the bank. It is also known as deposit slip. The main body of the pay-in-slip is retained by the bank and the counterfoil is returned to the depositor duly stamped & signed by the cashier of the bank.

12. Give fundamental accounting equation.

Ans : The fundamental accounting equation is -

Assets = Liabilities + Capital

13. What is a debit note ?

Ans : A debit note is a document prepared by the customer in case there are certain goods that need to be returned to the vendor. It indicates that supplier's account is being debited.

SHORT ANSWER TYPE QUESTION

1. What is a source document ? Explain its features.

Ans : A document which supports the transaction for recording is called source documents. These documents are real, meaningful, visible records certifying the actual happening of the transactions of financial nature. These documents are required for audit and tax assessments. They also serve as the legal evidence in case of a legal dispute. Some common source documents are : cash memo, bill, cash receipt, vouchers, cheques, pay-in-slip, etc.

Following are the features of source document -

     I. It is prepared when a transaction takes place.

    II. It is written proof of happening of transaction in the business.

   III. It shows the complete description of the transaction.

   IV. It is the basis for the preparation of vouchers.

    V. It helps in auditing and tax assessments.

2. Explain any three source documents.

Ans : Following are the three source documents -

    I. Cash memo - Cash memo is a document showing the amount, date & details of cash purchase and cash sales. Cash memos are received from suppliers when cash purchases are made and issued to customers when cash sales are made. Cash transactions are recorded in the books of accounts on the basis of these cash memos.

    II. Invoice or bill - An invoice or bill is prepared by the seller of goods when he sells good on credit. It contains the name of the party to whom goods are sold, the rate, quantity & total amount of sale. The original copy of the sale invoice is sent to the purchaser & its duplicate copy kept by the seller for making records in books of accounts.

   Ill. Cheque - A cheque is a document in writing, which contains an order from customer to a banker authorising him to pay a specified sum to the bearer or the person named in it. The amount to be paid is written both in words or figure. A cheque must be properly dated & signed by the drawer.The counterfoil remains with the account holder for future reference.

3. Write short notes on :

a) Pay-in-slip - It is a form available from a bank and is used to deposit cash or cheques in the bank. It is also known as deposit slip. The main body of the pay-in-slip is retained by the bank and the counterfoil is returned to the depositor duly stamped & signed by the cashier of the bank.

b) Invoice or bill -  An invoice or bill is prepared by the seller of goods when he sells good on credit. It contains the name of the party to whom goods are sold, the rate, quantity & total amount of sale. The original copy of the sale invoice is sent to the purchaser & its duplicate copy kept by the seller for making records in books of accounts.

c) Cheques -  A cheque is a document in writing, which contains an order from customer to a banker authorising him to pay a specified sum to the bearer or the person named in it. The amount to be paid is written both in words or figure. A cheque must be properly dated & signed by the drawer.The counterfoil remains with the account holder for future reference.

d) Vouchers - The document prepared for the purpose of recording business transactions in the books of accounts are known as vouchers. On the basis of source documents entries are, first of all, recorded on vouchers and then on the basis of vouchers recording is made in the journal or books of original entry. Vouchers include receipts, cash memos, salary bills, invoices, etc.

4. What do you mean by vouchers ? Explain its features.

Ans : The document prepared for the purpose of recording business transactions in the books of accounts are known as vouchers. On the basis of source documents entries are, first of all, recorded on vouchers and then on the basis of vouchers recording is made in the journal or books of original entry. Vouchers are prepared by an accountant and countersigned by an authorized person of an enterprise. Vouchers include receipts, cash memos, salary bills, invoices, etc.

Following are the of vouchers :

    I. Vouchers are serially numbered.

   II. It is a written document.

  III. It is prepared by analysing the source documents.

  IV. It serves as a documentary evidence in future.

   V. It is prepared for each & every transaction and determines which account is to be credited or debited.

  VI. It is prepared & signed by the accountant and countersigned by the manager or any other authorized person.

5). Explain the term vouchers. Mention & explain types of vouchers in brief.

Ans : According to J. R. Batliboi, "a voucher may be defined as documentary evidence in support of an entry appearing in the books of accounts. "

The document prepared for the purpose of recording business transactions in the books of accounts are known as vouchers. On the basis of source documents entries are, first of all, recorded on vouchers and then on the basis of vouchers recording is made in the journal or books of original entry. Vouchers are prepared by an accountant and countersigned by an authorized person of an enterprise. Vouchers include receipts, cash memos, salary bills, invoices, etc.

Following are the different types of vouchers :

 I. Cash Vouchers - Cash vouchers are the documentary evidences of the cash receipt and cash payments. It forms the base for preparation of cash book. Cash vouchers are of two types : Debit Vouchers & Credit Vouchers.

II. Non-cash Vouchers - Non-cash vouchers are the documentary evidence of all non-cash transactions of the business. These non-cash transactions include credit sale or purchase of goods, return of goods by customers, return of goods to suppliers, etc. Non-cash vouchers are also known as transfer vouchers.

LONG ANSWER TYPE QUESTION

1. Why source documents are important in accounting as evidence ?

Ans : The evidence provided by the source document is important in the following manners:

   I. It provides evidence that a transaction has actually occurred.

  II. It provides important and relevant information about date, amount, parties involved and other details of a particular transaction.

  III. It acts as a proof in the court of law.

  IV. It helps in verifying transactions during the auditing process.

2. What is a source document ? What are its features ? Enumerate various source documents.

Ans : Same as (S.A - Q.No. 1 & Q. No. 2)

Following are the various source documents -

    I. Cash Memo - Same as (S.A - Q.No. 2)

   II. Invoice or bill - Same as (S.A - Q.No. 2)

  III. Cheque - Same as (S.A - Q.No. 2)

  IV. Pay-in-slip - Same as [S.A - Q.No. 3 (a)]

   V. Debit note - Same as (V.S.A - Q.No. 13)

  VI. Credit note - A credit note is a document issued by the seller / vendor in response to the debit note received from the customer to show that the latter's account has been credited in the books.

 VII. Receipt - Receipt is an evidence of cash or cheque received by a trader on account of any transaction involving cash other than those concerned with cash sales or cash purchases.

3. Explain :

I. Cash Memo - Same as (S.A - Q.No. 2)

II. Cheque - Same as (S.A - Q.No. 2)

III. Invoice or bill - Same as (S.A - Q.No. 2)

IV. Pay-in-slip - Same as [S.A - Q.No. 3 (a)]

V. Receipt - Same as [L.S.A - Q.No. 3 (point no. VII)]

VI. Voucher - Same as [S.A - Q.No. 3(d)]

4. What do you mean by transfer voucher ? Why are they prepared? Give the content of this voucher.

Ans : Transfer Vouchers are the documentary evidence of all non-cash transactions of the business. These non-cash transactions include credit sale or purchase of goods, return of goods by customers, return of goods to suppliers, etc.

These vouchers are prepared for non-cash transactions such as -

    a) For credit purchase or credit sale of goods.

    b) For credit purchase or credit sales of investments.

    c) For credit purchase or credit sales of fixed assets.

    d) For return of goods purchased or sale on credit.

    e) For providing depreciation.

    f) For written off the bad debts.

Usually the following information is contained in a non-cash voucher -

    a) Name and address of the organization.

    b) Date of preparing voucher.

    c) Accounting voucher number.

    d) Tittle of the account debited / credited.

    e) Net transaction amount.

    f) Narration.

    g) Signature of the person preparing it.

    h) Signature of the authorized signatory.

    i) Supporting voucher number.

5. Explain two categories which affect accounting equation.

Ans : Following are the two categories which affect accounting equation :

a) Transactions affecting two items - These are those transactions which affect two items of the accounting equation or balance sheet.

• Transactions affecting opposite sides are :

   I) Increase in asset, Increase in liability.

  II) Decrease in asset, Decrease in liability.

 III) Increase in asset, Increase in owner's equity.

 IV) Decrease in asset, Decrease in owner's equity.

• Transactions affecting same sides but in opposite direction are :

   I) Increase in asset, Decrease in another asset. 

  II) Decrease in liability, Increase in another liability.

b) Transactions affecting more than two items - These are those transactions which affect more than two items of the accounting equation or balance sheet.

6. Explain any six rules for accounting equation. 

Ans : Following are the six rules of accounting equation :

      I. Assets - If an asset is added to the business, there's an increase (debit) and if an asset is sold or disposed off, there is a decrease (credit).

     II. Liabilities - If a liability is acquired, there's an increase (credit) and if a liability is settled or paid off there is a decrease (debit).

    III. Capital - When funds are added to the proprietor, the capital is increased (credited). When a part of capital is withdrawn i.e, drawings are made, the capital is decreased (debited).

   IV. Outsider's claim (equity) - When funds from outside, i.e, other than those provided by the owner are acquired, the liabilities get increased (credited). When liabilities are settled or paid off, they get decreased (debited).

   V. Miscellaneous rules for assets / liabilities - An increase in asset may lead to an increase in a liability and also a decrease in asset leads to decrease in liability.

  VI. Miscellaneous rules for capital and assets / liabilities - An increase in asset may lead to an increase in capital & also, an increase in liability may lead to decrease in capital.

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NBSE notes for Class 9 Book-keeping & Accountancy for all Chapters by NBSE Guide Online are provided here. Just click on the chapter wise links given below 

• Unit I Introduction to Book-keeping and Accountancy

• Unit II Basic Accounting Concepts 

• Unit III Source Documents and Accounting Equation 

• Unit IV Rules of Debit and Credit - Journal

The above list comprises all the chapter-wise answers to the questions present in the NBSE book for Class 9 (Book-Keeping and Accountancy) in a very precise and lucid manner, maintaining the objective of textbooks.

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