Chapter 3 Recording of Transactions – I Case Study Questions

Please refer to the Chapter 3 Recording of Transactions – I Case Study Questions with answers provided below. We have provided Case Study Questions for Class 11 Accountancy for all chapters as per CBSE, NCERT and KVS examination guidelines. These case based questions are expected to come in your exams this year. Please practise these case study based Class 11 Accountancy Questions and answers to get more marks in examinations.

Case Study Questions Chapter 3 Recording of Transactions – I

Case Based Questions

Read the following case study and answer questions 

Joe and Jimmy started a bat manufacturing company. They set up a factory in Meerut (UP) on a land purchased for ₹  40,00,000. They purchased raw material from a trader in  Jalandhar (Punjab) for ₹  5,00,000 at credit. However, they did not like the quality of some of the goods that were sent and therefore decided to return the same. The company were producing premium bats. Even some of the domestic players of Indian cricket team purchased bats from the company and endorsed the same as well. This led to mass orders rolling in frequently. After a year, they also started to get bulk orders from academies, institutes and corporates. On one instance, they were given an order by NPS Public School, one of the largest school chains in the country for bat worth ₹  2,50,000. The company took a week to fulfil and received half the payment while the other half was due for 6 months later. The company successfully delivered the bats to the head  ffice of NPS Public School in Delhi. 

Question. As a result of transaction of ordering raw material, the liabilities of company increased.
(a) True
(b) False
(c) Partially true
(d) Can’t say 

Question. The company must have received ……… from the seller of raw materials as a source document.
(a) cash memo
(b) invoice
(c) credit note
(d) receipt 

Question. What is issued by the company along with the goods returned?
(a) Credit note
(b) Debit note
(c) Bill
(d) Receipt 

Question. What was the accounting equation for the transaction of land purchased? (The options are in the format of Assets = Liabilities + Capital)
(a) 40,00,000 = 0 + 40,00,000
(b) 40,00,000 + (40,00,000) = 0 + 0
(c) 0 = 40,00,000 + (40,00,000)
(d) 40,00,000 = 40,00,000 + 0 

Question. As a result of transaction with NPS school, the company’s net assets ………, liabilities ……… and capital  ……… . (ignore profit/loss). 
(a) decreased, decreased, unchanged
(b) increased, increased, unchanged
(c) unchanged, unchanged, unchanged
(d) increased, unchanged, unchanged 

Read the following case study and answer questions 

KLR Ltd. is publicly listed company trading in EV batteries. The company is known to have an advanced version of EV battery which can be used in almost all types of EV cars. As a result of onset of EV trend in India, company is getting lot of pre-orders. Recently, one of the largest cab aggregators of India collaborated with the company to get batteries. Against this order, company received an advance of ₹  10,00,000. When the EV batteries were delivered, company received the rest of the payment of ₹  5,00,000. The company sent a source document for these goods sold. Consequently , the company deposited the money received in the bank account. To produce and fulfil the further orders, the company decided to purchase a new 3D moulder. It was worth ₹  1,00,000 and  company issued a document in writing drawn upon a specified banker and payable on demand. The company also employed an experienced manager to streamline the operations. As a result, company continued to prosper and its stock prices also shot up.

Question. Which document is highlighted in the line, “The company sent a source document for these goods sold”?
(a) Debit note
(b) Credit note
(c) Cash memo
(d) Bill 

Question. What is the accounting equation for advance received against order? [Use format Asset = Liabilities + Capital]
(a) 15,00,000 + (15,00,000) = 0 + 0
(b) 10,00,000 + (10,00,000) = 0 + 0
(c) 10,00,000 = 10,00,000 + 0
(d) None of the above 

Question. Which document must be used to deposit money in the bank?
(a) Cheque
(b) Pay-in-slip
(c) Bill
(d) Receipt 

Question. Which of following would be unchanged as a result of transaction of purchasing 3D moulder of ` 1,00,000?
(a) Capital
(b) Assets
(c) Liabilities
(d) All of these 

Question. Which document is highlighted in the line, “It was worth `1,00,000 and company issued a document in writing drawn upon a specified banker and payable on demand”? 
(a) Cheque
(b) Pay-in-slip
(c) Credit note
(d) Debit note 

Read the following case study and answer questions 

Pradhan Opticals is a spectacles shop in Lucknow. The shop procures the frames from a local frame manufacturing firm. The shop arranges the lenses from Delhi as and when orders come in according to specifications by the customer. After the pandemic, to boast the business further, it decided to enter into collaborations with hospital chains to provide the black spectacles required after the cataract surgery. It shipped 20,000 units of ₹  5 each of such spectacles to the local hospital. This transaction was on credit basis. However, the hospital returned 10,000 units as those units were found to be defective. After 6 months, the hospital chain went bankrupt and the shop lost its money as bad debt. It decided to stop  the credit policy altogether so that it prevents losses in the future. At the end of the year, the company was left with ₹  1,00,000 worth of goods and no debtors. The company also had a creditor of raw materials of ₹  20,000 and a creditor of a small machinery (not written off) ` 10,000. 

Question. What was the affect of the return by the hospitals on the accounting equation? [Use format Assets = Liabilities + Capital]
(a) (50,000) = (50,000) + 0
(b) 50,000 = 50,000 + 0
(c) (50,000) + 50,000 = 0 + 0
(d) None of the above

Question. After the units were returned by the hospital, the shop prepared a source document and sent it to the hospital. What could it be?
(a) Debit Note
(b) Bill
(c) Credit Note
(d) Pay-in-slip

Question. Bad debts by the hospital had impact on the capital and liabilities of the firm.
(a) True
(b) False
(c) Partially true
(d) Can’t say 

Question. Which document must have been prepared by Pradhan Opticals in the line, “It shipped 20,000 units of ` 5 each of such spectacles to the local hospital. This transaction was on credit basis”?
 (a) Cash memo
(b) Invoice
(c) Debit note
(d) None of these 

Question. What was the capital of the firm at the end of the year?
(a) ₹ 1,00,000
(b) ₹ 90,000
(c) ₹ 80,000
(d) ₹ 70,000 

Read the following case study and answer questions 

Rajesh started a business with cash ₹ 1,00,000 and a building valued at ₹ 5,00,000. He purchased goods amounting to ₹ 2,00,000 out of which goods of ₹ 1,80,000 were purchased on credit from Smith. He sold goods to Anil of ₹ 44,000. Anil returned goods worth ₹ 4,000. He purchased goods of ₹ 63,000 from Karan but returned goods of ₹ 3,000 on finding them defective. He purchased goods of ₹ 2,000 for cash. He paid for cartage of ₹ 100 and interest on loan amounting to ₹ 1,000.

Question. What is the amount of capital introduced by Rajesh?
(a) ₹ 1,00,000
(b) ₹ 5,00,000
(c) ₹ 6,00,000
(d) Zero 

Question. Which is the first book of account that Rajesh will prepare?
(a) Purchase book
(b) Sale book
(c) Journal
(d) Ledger 

Question. For recording the payment of Cartage of ₹ 100.
(a) Cartage account will be debited and Cash account will be credited.
(b) Cash account will be debited and Cartage account will be credited.
(c) Cartage account will be debited and Purchases account will be credited.
(d) None of the above

Question. Which account will be credited when goods are returned to Karan?
(a) Karan
(b) Purchases Return
(c) Purchases
(d) None of the above 

Read the following case study and answer questions  

Dev is the owner of a trading firm with a capital of ₹ 25,000. During the year 2021, he bought goods at the list price of ₹ 1,00,000 from Rani less 20% trade discount and 2 % cash discount and paid 40% by cheque. He sold goods to Preeti at the list price of  ₹ 2,00,000 less 20% trade discount and 2% cash discount and she paid 50 % by cheque. He also sold goods to Tanu for ₹ 40,000 allowing her a trade discount of 5% and cash discount of 10 %. She paid 1 / 4th of the amount  in cash at the time of purchase. He received cash from Jaya for a bad debt written-off last year amounting to ₹ 400. 

Question. How is a trade discount different from cash discount?
(i) Trade discount is allowed when goods are purchased in a specified quantity whereas cash discount is allowed when payment is made on or before a specified date.
(ii) Trade discount is not recorded separately in the books of account whereas cash discount is separately recorded in the books of account.
(a) Only (i)
(b) Only (ii)
(c) Both (i) and (ii)
(d) Neither (i) nor (ii)

Question. What is the amount paid to Rani by cheque?
(a) ₹ 40,000
(b) ₹ 32,000
(c) ₹ 31,360
(d) None of the above 

Question. Why does Dev give cash discount to his customers?
(a) Because he sells goods to them at a very high price.
(b) To encourage quick payment.
(c) To make some profit even if goods are sold at catalogue price.
(d) None of the above 

Question. What is the amount received in bank (via cheque) from Preeti on sale of goods to her?
(a) ₹ 1,00,000
(b) ₹ 78,400
(c) ₹ 80,000
(d) None of these

Question. What would be the journal entry passed for bad debts of ₹ 400 recovered from Jaya?
(a) Cash A/c          Dr 400
       To Bad Debts                    400
(b) Cash A/c          Dr 400
       To Bad Debts Recovered    400
(c) Cash A/c          Dr 400
         To Jaya                          400
(d) None of the above

Read the following case study and answer questions 

Insha is a student of Class 11 Commerce. She is studying the subject of accountancy for the first time. After studying the basics of accounting , their teacher recently taught them about the books of original entry. The teacher also taught them posting entries to a ledger. The teacher again reiterated that the books of original entry and ledger are fundamental for maintaining records in any business. After teaching them the chapter thoroughly, an objective question test is being held for the students. You are required to answer the following questions in the test on Insha’s behalf.

Question. Ledger is the book for ……… record.
(a) chronological
(b) analytical
(c) evidence
(d) None of these

Question. 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.

Question. If a transaction is properly analysed and recorded
(a) only two accounts will be used to record the transaction.
(b) one accountwill be used to record transaction.
(c) one account balance will increase and another will decrease.
(d) total amount debited will equals total amount credited.

Question. When an entry is made in journal
(a) assets are listed first.
(b) accounts to be debited listed first.
(c) accounts to be credited listed first.
(d) accounts may be listed in any order.

Question. In a journal, transactions are recorded in ………… order.
(a) chronological
(b) anachronistic
(c) random
(d) None of these

Read the following case study and answer questions 

Shobhit has a trading business in Delhi. All his transactions occur within the limits of Delhi. Shobhit bought goods of ₹ 1,00,000 on credit. He sold them for ₹ 1,35,000 in the same state on credit. He paid for railway transport ₹ 8,000. He bought computer printer for ₹ 10,000. He paid postal charges ₹ 2,000. Assuming CGST @ 5% and SGST @ 5%, you
are required to answer the following questions. 

Question. ‘‘He sold them for ₹ 1,35,000 in the same state on credit.’’ By what amount will debtors be debited while passing journal entry?
(a) ₹ 1,35,000
(b) ₹ 1,41,500
(c) ₹ 1,48,500
(d) None of these

Question. What will be the total amount paid on account of transport charges?
(a) ₹ 8,000
(b) ₹ 8,400
(c) ₹ 8,800
(d) None of the above

Question. What journal entry would have been passed by Shobhit in case he had resorted to inter-state purchase of goods on which GST is levied?
(a) Purchases A/c       Dr
    Input CGST A/c      Dr
    Input SGST A/c      Dr
               To Cash
(b) Purchases A/c       Dr
    Input IGST A/c       Dr
               To Cash
(c) Purchases A/c       Dr
    Input SGST A/c      Dr
               To Cash
(d) None of the above 

Question. By what amount will creditors account be credited for the purchases of ₹ 1,00,000?
(a) ₹ 1,00,000
(b) ₹ 1,05,000
(c) ₹ 1,10,000
(d) None of these

Question. What is the journal entry passed for return of intra-state purchase of goods on which GST is levied assuming that Shobhit returned the goods?
(a) Creditors A/c                 Dr
          To Purchases Return A/c
          To Input CGST A/c
          To Input SGST A/c 
(d) Purchases Return A/c     Dr
     Input IGST A/c               Dr
               To Cash
(c) Purchases Return A/c     Dr
    Input SGST A/c               Dr
              To Cash
(d) None of the above

Read the following case study and answer questions 

Adhiraj started business with cash of ₹ 2,00,000 on 1st April. The following transactions took place in the month of April, 2021. 

Date	Particulars	Amt ( ₹ )
Apr 2	Bought goods for cash	60,000
Apr 3	Opened bank account with cash	1,00,000
Apr 4	Sold goods for cash	80,000
Apr 7	Bought goods from Amrit, Kanpur on credit	60,000
Apr 10	Solds goods to Aryan, Delhi on credit	50,000
Apr 15	Purchased machinery costing ` 20,000 from Bhalla Bros, Patiala (Punjab) and payment is made by cheque
Apr 19	Paid to Amrit in cash on account	40,000
Apr 23	Goods returned to Amrit	10,000
Apr 27	Paid to Amrit by cheque in full settlement	15,000
Apr 29	Received cash from Aryan	20,000

Question. Process of recording in the journal is called ……… ; the process of recording in the ledger is known as ……… .
(a) Journalising; Posting
(b) Posting; Journalising
(c) Posting; Recording
(d) Recording;Writing

Question. The journal entry to record the sale of goods on credit should include
(a) debit to debtors and credit to capital.
(b) debit to cash and credit to debtors.
(c) debit to sales and credit to debtors.
(d) debit to debtors and credit to sales.

Question. What is the balance in the bank account of Adhiraj as on 30th April?
(a) ₹ 1,00,000
(b) ₹ 40,000
(c) ₹ 40,200
(d) ₹ 15,000 

Question. What will be the amount that will be reflected in capital account of Adhiraj?
(a) ₹ 2,00,000
(b) ₹ 3,00,000
(c) ₹ 5,00,000
(d) None of these

Question. What is the balance carried down of purchases account as on 30th April?
(a) ₹ 60,000
(b) ₹ 1,20,000
(c) ₹ 1,00,000
(d) None of these