NIOS Class 10 Accountancy Chapter 5 Double Entry System

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NIOS Class 10 Accountancy Chapter 5 Double Entry System

Also, you can read the NIOS book online in these sections Solutions by Expert Teachers as per National Institute of Open Schooling (NIOS) Book guidelines. These solutions are part of NIOS All Subject Solutions. Here we have given NIOS Class 10 Accountancy Chapter 5 Double Entry System, NIOS Secondary Course Accountancy Solutions for All Chapters, You can practice these here.

Double Entry System

Chapter: 5

Intext Questions 5.1

Complete the sentences: 

(i) The Double entry theory of book-keeping is a system of recording transactions having _________. 

Ans: Dual aspect.

(ii) One who receives is a ___________ and who gives is a _____________. 

Ans: Debtors & Creditors.

(iii) The Double entry system prevents frauds by not rendering ___________. 

Ans: Any alteration in an account.

(iv) There is ____________ of absolute accuracy of the books of accounts in spite of agreement of trial balance.

Ans: No guarantee.

Intext Questions 5.2

I. Fill in the blanks: 

(i) On the basis of traditional classification accounts can be classified as – 

(a) ___________. 

(b) ___________. 

(c) __________.

Ans: (a) Personal. 

(b) Real. and 

(c) Nominal.

(ii) On the basis of Modern classification accounts can be classified as: 

(a) ___________. 

(b) ___________. 

(c) __________. 

(d) _____________. 

(e) ___________. 

Ans: (a) Capital. 

(b) Liabilities. 

(c) Expense. 

(d) Revenue. and 

(e) Assets.

(iii) _________________ is immediate inflow while ____________ is immediate outflow. 

Ans: Assets and Liabilities.

(iv) Increase in assets is _______________ and decrease in Asset is ____________. 

Ans: Debited and Credited.

(v) Left hand side of an account is called __________ and right hand side of the account is called _____________.

Ans: Debit and Credit.

II. A list of the accounts is given below. Tick the category to which each of the account belongs:

Types of Account

Name of Account	Assets	Liability	Capital	Revenue	Expense
(i) Wages
(ii) Building
(iii) Cash
(iv) Gupta (Supplier)
(v) Sharma (Owner)
(vi) Sugam (Customer)
(vii) Interest received
(viii) Commission Earned
(ix) Discount allowed
(x) Rent paid

Ans: 

Name of Account	Assets	Liability	Capital	Revenue	Expense
(i) Wages					Expense
(ii) Building	Asset
(iii) Cash	Asset
(iv) Gupta (Supplier)		Liability
(v) Sharma (Owner)			Capital
(vi) Sugam (Customer)	Asset
(vii) Interest received				Revenue
(viii) Commission Earned				Revenue
(ix) Discount allowed					Expense
(x) Rent paid					Expense

Intext Question 5.3

I. Which of the following statements is true and which is false? 

(i) For every transaction there will be two entries. 

Ans: False.

(ii) ‘One who gives is a debtor and one who receives is a creditor’. 

Ans: False.

(iii) A system is called ‘double entry system’ because the two fold aspect of each transaction are recorded. 

Ans: True.

(iv) The totals of debit entries on any day need not be equal to credit entries related to various accounts. 

Ans: False.

II. Put a mark against each transaction in the column of correct type of voucher.

	Debit Vouchers	Credit Vouchers	Transfer Vouchers
1. Purchase furniture for cash.
2. Sale of goods for cash.
3. Sale of goods to Vikram.
4. Depreciation charged on building.
5. Withdrew cash from bank for office use.

Ans: 

	Debit Vouchers	Credit Vouchers	Transfer Vouchers
1. Purchase furniture for cash.	Debit
2. Sale of goods for cash.		Credit
3. Sale of goods to Vikram.			Transfer
4. Depreciation charged on building.			Transfer
5. Withdrew cash from bank for office use.		Credit

III. 

Multiple Choice Questions

(i) Which English alphabet is similar to the shape of an account? 

(a) I 

(b) T 

(c) H 

(d) D

Ans: (b) T

(ii) How many sides does an account have? 

(a) One. 

(b) Two. 

(c) Three. 

(d) Four. 

Ans: (b) Two.

(iii) Where are all the transactions of a particular account recorded? 

(a) Under the particular account. 

(b) Under any account. 

(c) Under more than two accounts. 

(d) Under many accounts. 

Ans: (a) Under the particular account.

(iv) Under how many heads accounts can be grouped under Modern System of accounting: 

(a) Two. 

(b) Three. 

(c) Four. 

(d) Five. 

Ans: (d) Five.

(v) Treatment of assets accounts is similar to……….

(a) Expenses. 

(b) Revenue. 

(c) Capital. 

(d) Liabilities.

Ans: (a) Expenses.

Terminal Exercise

1. Define a double entry system.

Ans: The double entry system of bookkeeping can be defined as the system of recording transactions having two fundamental aspects – one involving the receiving of a benefit and the other giving the benefit – in the same set of books. In this theory, as the two fold aspects of each transaction are recorded, therefore it is called ‘double entry system’. 

2. State various advantages of the double entry system.

Ans: The main advantages of double entry system of book keeping are as follows: 

(i) The nominal aspects of transactions being recorded make it possible to prepare Trading and Profit and Loss Account from which the Gross Profit and Net Profit earned by the business during a particular period can be easily ascertained. 

(ii) As all personal accounts of debtors and creditors as well as real accounts are kept, it is possible to prepare Balance Sheet. 

(iii) The transactions being recorded in the most scientific and systematic way give the most reliable information of business. 

(iv) It prevents frauds because doing alterations in any account becomes difficult. 

(v) It enables the trader to compare the different items, such as sales, purchases, opening stock and closing stock of one period with similar items of preceding period and the trader may thus, know whether his business is progressing or not. 

(vi) Trial balance can be prepared on any day to prove the arithmetical accuracy of accounting records.

3. State the limitations of the double entry system.

Ans: The main limitations of double entry system of book keeping are as follows: 

(i) This system requires the maintenance of a number of books of accounts which is not practical in small concerns. 

(ii) This system is costly because a number of records are to be maintained. 

(iii) There is no guarantee of absolute accuracy of the books of accounts in spite of agreement of the trial balance.

4. What is meant by an account?

Ans: An accounting system records, retains and reproduces financial information relating to financial transaction flows and financial position. Financial transaction flows encompass primarily inflows on account of incomes and outflows on account of expenses. Elements of financial position, including property, money received, or money spent, are assigned to one of the primary groups i.e. assets, liabilities, and equity.

5. Explain the modern classification of different types of Accounts.

Ans: The basis of modern classification accounts are divided into five categories as given below:

(i) Capital: The capital means the assets and cash in a business. Capital may either be cash, machinery, receivable accounts, property, or houses.  

(ii) Assets: An asset is any resource with financial value that is controlled by a company, country, or individual.

(iii) Liabilities: Liability is a term in accounting that is used to describe any kind of financial obligation that a business has to pay at the end of an accounting period to a person or a business.

(iv) Expenses: An expense is a cost that businesses incur in running their operations. Expenses include wages, salaries, maintenance, rent, and depreciation. 

(v) Income: Income is the money that an individual or organisation receives in return for their services or goods.

6. State the fundamental rules, followed to record the changes (increase / decrease) in various accounts.

Ans: Rules of Accounting to record the changes in various accounts are: 

All accounts are divided into five categories for the purpose of recording the business transactions: 

(i) Assets.

(ii) Liability. 

(iii) Capital. 

(iv) Expenses/Losses. and 

(v) Revenues/Gains. 

Two Fundamental Rules are followed to record the changes in these accounts: 

Rule 1. For recording changes in Assets/Expenses/Losses. 

“Increase in Asset is debited, and decrease in Asset is credited.” “Increase in Expenses/Losses is debited, and decrease in Expenses/ Losses is credited.” 

Rule 2. For recording changes in Liabilities, Capital and Revenue/Gains.

“Increase in Liabilities is credited and decrease in Liabilities is debited.” “Increase in Capital is credited and decrease in Capital is debited.”

7. What is an accounting voucher? Explain in brief different types of accounting vouchers.

Ans: Accounting vouchers are the written documents containing the analysis of business transactions for accounting and recording purposes prepared by the accountants on the basis of supporting vouchers and signed by another authorised person.

Accounting vouchers may be classified as 

(i) cash vouchers. and 

(ii) non-cash vouchers. 

(i) cash vouchers: A cash voucher is a document that serves as proof of a cash transaction. It is typically used in accounting and bookkeeping to record and validate cash payments made for various expenses, such as office supplies, utility bills, or other miscellaneous expenses.

There are two types of cash vouchers which are discussed below:

(a) Debit vouchers: Debit Vouchers are prepared for recording of transactions involving cash payments only. Cash payments in the business are made on account of Payment to creditors, Purchases of goods, Purchases of assets, Repayment of loans, Depositing cash into Bank, Drawings & advances and expenses etc.

(b) credit vouchers: These vouchers are prepared for recording of transactions involving only cash receipts. Cash receipts in the business take place on account of Cash sales of goods, Cash receipts from debtors, Cash sales of assets, Cash withdrawn from bank for office use, Revenue income like interest, rent etc. received in cash, Loan taken and Receipts of advances etc.

(ii) The non-cash vouchers or transfer vouchers: Non cash vouchers refer to vouchers prepared for transactions not involving cash. They are also called transfer vouchers. The transfer vouchers are prepared to record non-cash transactions of the business involving Credit sales, Credit purchases, Depreciation on assets, Return of goods purchased on credit, Bad debts, Return of goods sold on credit etc.