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Categories of Cash Flow Statement

Transactions ...

Question

Transactions affecting cash balance only are recorded in the books of accounts.

A

True

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B

False

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Solution

The correct option is B False
False. In the books of accounts, transactions whether cash or on credit both are recorded in the books of accounts. Accrual basis of accounting records transactions by recognizing economic events regardless whether cash is received or not.

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Q. ____________ is an accounting concept states that only monetary transactions are recorded in the books of accounts.

Q. Mr. Lal operates two bank accounts both of which are maintained in the columnar cash book itself. You are required to prepare a proforma of the cash book, record the following transactions therein and draw the closing balances as on 30th June, 2016:

2016		(₹)
June 20	Opening Balance of Cash	1,180
	Progressive Bank	19,040
	Goodwill Bank (Overdraft)	6,460
20	Received cheque for ₹ 1,800 from a debtor Mr. X and deposited in Goodwill Bank. The Bank credited the amount on 23rd June and debited ₹ 4 as its collection charges.
21	Purchased goods for ₹ 18,210 and a cheque issued on Progressive Bank.
22	Paid office expenses ₹ 410 and ₹ 80 for stationery in cash.
23	Deposited a cheque for ₹ 21,090 being sale proceeds of goods in Progressive Bank. The Bank credited the amount on the same day and debited ₹ 21 as cheque discounting charges.
23	A cheque for ₹ 8,000 drawn by Mr. Lal himself on Progressive Bank was deposited in his account with Goodwill Bank.
25	Cash drawn from the account with Progressive Bank ₹ 600 for office use.
25	A cheque for ₹ 1,100 received from Mr. A and earlier deposited in Goodwill Bank (on 14th June) was returned unpaid and Bank debited ₹ 10 towards its charges. Mr. Lal received the amount of returned cheque and Bank charges in cash from Mr. A.
28	Deposited cash ₹ 1,500 in the account with Goodwill Bank.
29	Purchased postal stamps for ₹ 200 and paid in cash.

Q. Record the following transactions in Double Columns Cash Book and balance the book on 31st March, 2019:

2019			₹
March 1	Cash in Hand		12,750
	Cash at Bank		72,400
March 4	Received from Asha cash ₹ 1,200 and a cheque for ₹ 3,200, allowed discount ₹ 400
March 7	Paid salary to staff by cheque		25,600
March 9	Withdrawn cash from bank for office use		21,900
March 12	Interest paid by bank on bank balance		1,200
March 16	Purchased furniture in cash		16,500
March 21	Paid Mohan & Co. by cheque, discount received ₹ 100		10,900
March 24	Proprietor withdrew from office cash for his personal use		11,600
March 29	Sold goods to Manoj for cash		14,800
March 31	Deposited office cash into bank		21,200

Q. Credit transactions are never recorded in cash book.

Q. Personal transactions of proprietor are recorded in the books of account of business.

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