Class 11 DK Goel Solutions Chapter 8 - Origin of Transactions: Source Documents of Accountancy
FAQs on DK Goel Class 11 Accountancy Solutions: Chapter 8 Overview
1. What is a source document in accounting as per the Class 11 syllabus?
A source document is the original, written proof that a business transaction has occurred. It contains all the essential details of a transaction, such as the date, amount, parties involved, and the nature of the transaction. Examples include cash memos, invoices, and receipts. It serves as the primary evidence for recording entries in the books of accounts and supports the principle of objectivity.
2. What is the fundamental difference between a source document and a voucher?
The fundamental difference lies in their origin and purpose. A source document is the primary evidence of a transaction (e.g., an invoice from a supplier). A voucher, on the other hand, is an internal document prepared by the business itself based on the source document. The voucher authorises the transaction to be recorded in the books and specifies which accounts are to be debited and credited.
3. What are the main types of source documents used in business transactions?
Businesses use several types of source documents to evidence their transactions. The most common examples include:
- Cash Memo: Issued for cash sales or purchases.
- Invoice or Bill: Issued by a seller to a buyer for credit sales, detailing the goods sold.
- Receipt: Issued as an acknowledgement when cash is received from a customer.
- Pay-in Slip: Used to deposit cash or cheques into a bank account.
- Cheque: A document instructing a bank to pay a specific amount to a person or entity.
- Debit Note and Credit Note: Used for sales returns, purchase returns, or other adjustments.
4. What are the primary types of accounting vouchers?
Accounting vouchers are broadly classified based on the nature of the transaction:
- Cash Vouchers: These are prepared for all cash-based transactions. They are further divided into Debit Vouchers (for cash payments like salaries, rent) and Credit Vouchers (for cash receipts like cash sales, commission received).
- Non-Cash Vouchers (Transfer Vouchers): These are prepared for non-cash transactions, such as credit sales, credit purchases, depreciation, or the rectification of errors.
5. When is a Debit Note issued, and what is its main purpose?
A Debit Note is prepared and sent by a buyer to a seller to inform them that their account is being debited by the buyer. This typically happens in the case of purchase returns (when goods are returned to the supplier). Its purpose is to formally request a credit from the seller for the value of the goods returned, effectively reducing the amount the buyer owes.
6. Why is a source document considered objective evidence for an accounting transaction?
A source document is considered objective evidence because it is a verifiable and unbiased proof of a transaction, created at the time the transaction occurred. It is not based on personal opinion or estimation. For example, an invoice from an external party provides independent verification of a purchase. This objectivity is crucial for the Verifiable Objective Principle of accounting, ensuring that financial statements are reliable and auditable.
7. How does the process of preparing a voucher help in maintaining internal control within a company?
Preparing a voucher strengthens a company's internal control system in several ways. Firstly, it ensures that every transaction is duly authorised by a responsible official before being recorded. Secondly, it standardises the recording process by clearly indicating which accounts to debit and credit, reducing errors. Finally, by attaching the original source document to the voucher, it creates a clear audit trail, making it easy to verify and audit transactions.
8. Can a single transaction have more than one source document? Provide a real-world example.
Yes, a single business transaction can be supported by multiple source documents, especially in a detailed process. For example, consider the purchase of goods on credit:
- A purchase order is created to request the goods.
- A delivery challan from the supplier accompanies the goods upon arrival.
- An invoice (bill) is received from the supplier detailing the amount due.
- Later, a cheque copy or bank statement entry serves as proof of payment.
9. What is the key distinction in accounting between a Credit Note and a Debit Note?
The key distinction lies in who issues them and for what purpose, reflecting opposite sides of a transaction adjustment:
- A Debit Note is usually issued by a buyer when returning goods to a seller (purchase return). It serves as an intimation that the seller's account has been debited in the buyer's books.
- A Credit Note is issued by a seller to a buyer when goods are returned by that customer (sales return). It confirms that the buyer's account has been credited, reducing the amount they owe.
10. In what situations would a Transfer Voucher be prepared instead of a cash voucher?
A Transfer Voucher (or Non-Cash Voucher) is prepared for any transaction that does not involve an immediate inflow or outflow of cash. These are essential for recording accrual-based accounting entries. Key situations include:
- Credit Sales or Purchases: When goods are sold or bought on credit.
- Depreciation: Recording the non-cash expense of an asset's declining value.
- Bad Debts: Writing off an amount that is no longer recoverable from a debtor.
- Rectification of Errors: Correcting a mistake from a previous accounting entry that does not involve cash.
