Bihar Board Class 10 Commerce Question Paper 2026 PDF with Solutions - Available

We are asked to identify the type of trade between India and Russia.


Step 1: Understand the different types of trade based on geographical boundaries.


Trade can be classified into two main categories:


Home Trade (Internal Trade): Trade conducted within the geographical boundaries of a country.

Further classified into:

Local trade (within a city or local area)
Inter-state trade (between different states of the same country)



Foreign Trade (External Trade / International Trade): Trade conducted between two different countries.

Further classified into:

Import (buying goods from another country)
Export (selling goods to another country)
Entrepot (importing goods for re-export)




Step 2: Apply to the given situation.


India and Russia are two different countries:

India is in South Asia
Russia is in Eastern Europe and Northern Asia
Trade between them crosses international boundaries


Therefore, trade between India and Russia is Foreign Trade (also called International Trade or External Trade).

Step 3: Analyze each option.



(A) Home trade:

Incorrect. Home trade occurs within the boundaries of a single country.
Example: Trade between Mumbai and Delhi is home trade (inter-state trade).


(B) Foreign trade:

✓ Correct. Trade between two different countries (India and Russia) is foreign trade.


(C) Local trade:

Incorrect. Local trade is within a small geographical area like a city or town.
Example: Trade between two shops in the same market.


(D) Inter-state trade:

Incorrect. Inter-state trade is between different states of the same country.
Example: Trade between Maharashtra and Karnataka.




Final Answer: (B) Foreign trade Quick Tip: Remember the classification: Same country → Home Trade (Internal Trade) Different countries → Foreign Trade (International Trade) Same city → Local Trade Different states of same country → Inter-state Trade Any trade crossing national borders is foreign trade.

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Book-keeping is the systematic recording of financial transactions and business activities in appropriate books of accounts. It involves identifying, measuring, and recording all monetary transactions of a business in chronological order.
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Analysis of options:
[0.2cm] \(\bullet\) (A) Keeping Books - This is too vague and literal. Simply keeping books (physical notebooks) does not constitute book-keeping.
[0.2cm] \(\bullet\) (B) Writing Commercial letters - This is related to business correspondence, not book-keeping.
[0.2cm] \(\bullet\) (C) Recording of business transactions in the books - This is the correct definition. Book-keeping specifically refers to the art of recording business transactions in the books of accounts in a systematic manner.
[0.2cm] \(\bullet\) (D) All of these - Incorrect, as options A and B do not define book-keeping.
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Therefore, the correct answer is option (C). Quick Tip: Book-keeping = Recording + Classifying financial transactions. It is the first step in the accounting process and forms the foundation for preparing financial statements.

We are asked to identify the type of trade between India and Russia.


Step 1: Understand the different types of trade based on geographical boundaries.


Trade can be classified into two main categories:


Home Trade (Internal Trade): Trade conducted within the geographical boundaries of a country.

Further classified into:

Local trade (within a city or local area)
Inter-state trade (between different states of the same country)



Foreign Trade (External Trade / International Trade): Trade conducted between two different countries.

Further classified into:

Import (buying goods from another country)
Export (selling goods to another country)
Entrepot (importing goods for re-export)




Step 2: Apply to the given situation.


India and Russia are two different countries:

India is in South Asia
Russia is in Eastern Europe and Northern Asia
Trade between them crosses international boundaries


Therefore, trade between India and Russia is Foreign Trade (also called International Trade or External Trade).

Step 3: Analyze each option.



(A) Home trade:

Incorrect. Home trade occurs within the boundaries of a single country.
Example: Trade between Mumbai and Delhi is home trade (inter-state trade).


(B) Foreign trade:

✓ Correct. Trade between two different countries (India and Russia) is foreign trade.


(C) Local trade:

Incorrect. Local trade is within a small geographical area like a city or town.
Example: Trade between two shops in the same market.


(D) Inter-state trade:

Incorrect. Inter-state trade is between different states of the same country.
Example: Trade between Maharashtra and Karnataka.




Final Answer: (B) Foreign trade Quick Tip: Remember the classification: Same country → Home Trade (Internal Trade) Different countries → Foreign Trade (International Trade) Same city → Local Trade Different states of same country → Inter-state Trade Any trade crossing national borders is foreign trade.

We are asked to identify the functions of a commercial bank.


Step 1: Understand what a commercial bank is.


A commercial bank is a financial institution that accepts deposits from the public and provides loans and other financial services to earn profit. Commercial banks play a vital role in the economy by mobilizing savings and channeling them into productive investments.


Step 2: Classify the functions of a commercial bank.


The functions of commercial banks are broadly classified into two categories:


Primary Functions:

Accepting deposits (savings, current, fixed, recurring deposits)
Granting loans and advances (overdraft, cash credit, term loans, bill discounting)


Secondary Functions (Agency and General Utility Services):

Agency Functions: Collection of cheques, payment of bills, transfer of funds, etc.
General Utility Functions: Locker facility, issuing letters of credit, foreign exchange services, merchant banking, etc.



Step 3: Analyze each option.



(A) Accepting deposits:

This is a primary function of commercial banks.
Banks accept various types of deposits from the public.
Hence, it is a function.


(B) Granting of loans:

This is also a primary function of commercial banks.
Banks provide loans and advances to individuals and businesses.
Hence, it is a function.


(C) Locker facility:

This is a secondary/general utility function.
Banks provide safe deposit lockers to customers for keeping valuables.
Hence, it is a function.



Step 4: Conclusion.


All three options (Accepting deposits, Granting of loans, and Locker facility) are functions performed by commercial banks. Therefore, the correct answer is "All of these."


Final Answer: (D) All of these Quick Tip: Commercial bank functions can be remembered as: Primary: Accept deposits + Give loans (core banking functions) Secondary: Agency services (collection, payment) + General utility (locker, foreign exchange, etc.) All options given are valid functions of a commercial bank.

We are asked to define what Book-Keeping means.


Step 1: Understand the term Book-Keeping.


Book-keeping is a specific term used in commerce and accounting. It refers to the systematic recording of financial transactions and business activities in appropriate books of accounts.


Step 2: Analyze each option.



(A) Keeping Books:

This is too literal and vague. "Keeping books" could mean physically maintaining books, but doesn't capture the essence of recording financial transactions.


(B) Writing Commercial letters:

This is related to business correspondence, not book-keeping. Writing commercial letters is part of office management or communication, not accounting.


(C) Recording of business transactions in the books:

✓ Correct. Book-keeping is precisely the process of recording all business transactions systematically in the books of accounts (journal, ledger, etc.).


(D) All of these:

Incorrect because options (A) and (B) do not correctly define book-keeping.



Step 3: Confirm the definition.


According to standard commerce terminology:

Book-keeping is the art of recording business transactions in a systematic manner.
It is the first stage of accounting.
It involves identifying, measuring, and recording financial transactions.



Final Answer: (C) Recording of business transactions in the books Quick Tip: Book-keeping is the foundation of accounting. It involves: Recording transactions in journal Posting to ledger accounts Preparing trial balance Remember: Book-keeping = Recording; Accounting = Recording + Classifying + Summarizing + Interpreting.

We are asked to identify the relationship between Book-Keeping and Accounting, specifically where Accounting work starts.


Step 1: Understand the difference between Book-Keeping and Accounting.



Book-Keeping:

It is the process of recording business transactions systematically in the books of original entry (journal) and then posting them to ledger accounts.
It is the first stage of the accounting process.
It is routine and mechanical in nature.
Objective: To maintain permanent records of each transaction.


Accounting:

It starts where Book-Keeping ends.
It includes summarizing, classifying, analyzing, and interpreting the recorded data.
It involves preparation of financial statements (Trading Account, Profit \& Loss Account, Balance Sheet).
It is analytical and interpretive in nature.
Objective: To ascertain financial results and position of the business.



Step 2: Analyze the sequence.


The complete accounting process: \[ \textbf{Book-Keeping} \xrightarrow{ends here} \textbf{Accounting} \xrightarrow{starts here} \]

Book-keeping provides the raw data (recorded transactions). Accounting takes this data and processes it to generate meaningful financial information.

Step 3: Evaluate each option.



(A) Where Book-Keeping works begins:

Incorrect. Accounting starts after recording is done, not at the beginning of recording.


(B) Where Book-Keeping works ends:

✓ Correct. Accounting takes over from where Book-Keeping leaves off.


(C) Where Books are not maintained at all:

Incorrect. Accounting cannot be done without proper books of accounts.


(D) None of these:

Incorrect because option (B) is correct.




Final Answer: (B) Where Book-Keeping works ends. Quick Tip: Remember the relationship: Book-Keeping = Recording phase Accounting = Processing + Analyzing + Interpreting phase Accounting begins where Book-Keeping ends. Book-Keeping is the foundation; Accounting is the superstructure built upon it.

We are asked to identify which of the given options is an internal user of accounting information.


Step 1: Understand the difference between internal and external users.


Internal users are those who are part of the organization and directly manage or operate the business. They need accounting information for decision-making, planning, and controlling day-to-day operations.


External users are those who are outside the organization but have an interest in the business. They need accounting information to make decisions about their relationship with the business.


Step 2: Classify each option.



(A) Creditor:

Creditors are suppliers who have extended credit to the business.
They are external users as they are not part of the organization.
They need accounting information to assess the business's ability to pay debts.


(B) Manager:

✓ Managers are part of the organization and run the business operations.
They are internal users as they work within the business.
They need accounting information for planning, controlling, and decision-making.


(C) Lenders:

Lenders (banks, financial institutions) provide loans to the business.
They are external users as they are outside the organization.
They need accounting information to evaluate the business's ability to repay loans.


(D) Public:

The general public includes customers, researchers, and community members.
They are external users as they are not part of the organization.
They may need accounting information for various reasons like employment prospects or social responsibility.



Step 3: List of internal and external users.


Internal Users:

Owners/Partners
Managers
Employees
Directors


External Users:

Creditors
Lenders (Banks, Financial Institutions)
Investors
Government (Tax authorities)
Customers
Public
Researchers



Final Answer: (B) Manager Quick Tip: Remember: Internal users = Inside the organization (Managers, Employees, Owners). External users = Outside the organization (Creditors, Lenders, Investors, Government, Public). Managers need accounting information for day-to-day operational decisions.

We are asked to identify which item is classified as a fixed asset.


Step 1: Understand the definition of fixed assets.


Fixed assets (also called non-current assets or long-term assets) are assets that:

Are purchased for long-term use in the business
Are not meant for resale in the normal course of business
Have a useful life of more than one accounting period
Help in generating revenue for the business
Are subject to depreciation (except land)


Examples: Land, Building, Plant & Machinery, Furniture, Vehicles, Computers, etc.

Step 2: Analyze each option.



(A) Closing Stock:

Closing stock is unsold goods at the end of an accounting period.
It is a current asset because it is meant for sale within the next accounting period.
It gets converted into cash within the operating cycle.


(B) Debtors:

Debtors are customers who owe money to the business for goods sold on credit.
It is a current asset because it will be converted into cash within a short period (usually within the operating cycle).


(C) Furniture:

✓ Furniture is purchased for long-term use in the office or business premises.
It is not meant for resale.
It has a useful life of several years and is subject to depreciation.
Hence, it is a fixed asset.


(D) Bills Receivable:

Bills receivable are written promises from customers to pay a certain amount on a specified date.
They are current assets because they will be converted into cash within a short period (usually within the operating cycle).



Step 3: Classification of assets.


\begin{tabular{|l|l|
\hline
Fixed Assets (Non-Current) & Current Assets

\hline
Land & Cash in Hand/at Bank

Building & Debtors

Plant \& Machinery & Bills Receivable

Furniture \& Fixtures & Closing Stock

Vehicles & Prepaid Expenses

Computers \& Equipment & Accrued Income

\hline
\end{tabular


Final Answer: (C) Furniture Quick Tip: Fixed assets = Long-term use + Not for resale + Subject to depreciation. Current assets = Short-term + Converted to cash within one year/operating cycle. Furniture is always a fixed asset, while stock, debtors, and bills receivable are current assets.

We are asked to identify which item is classified as an intangible asset.


Step 1: Understand the definition of intangible assets.


Intangible assets are assets that:

Have no physical substance (cannot be seen or touched)
Provide economic benefits to the business over a long period
Are non-current in nature
Include items like patents, trademarks, copyrights, and goodwill


Step 2: Differentiate between tangible and intangible assets.


Tangible Assets (have physical substance):

Land
Building
Plant \& Machinery
Furniture
Cash
Stock/Inventory


Intangible Assets (no physical substance):

Goodwill
Patents
Trademarks
Copyrights
Franchises
Computer Software (in some cases)


Step 3: Analyze each option.



(A) Cash:

Cash has physical substance (coins, currency notes) and can be touched.
It is a tangible current asset.


(B) Goodwill:

✓ Goodwill has no physical substance; it cannot be seen or touched.
It represents the reputation, brand value, and customer loyalty of a business.
It is a intangible asset and appears on the balance sheet when acquired through purchase of a business.


(C) Stock:

Stock (inventory) consists of physical goods held for sale.
It has physical substance and can be touched.
It is a tangible current asset.


(D) Land:

Land is a physical property with definite location and boundaries.
It has physical substance and can be touched.
It is a tangible fixed asset.



Step 4: Characteristics of Goodwill as an intangible asset.


Goodwill arises when one company acquires another for a price higher than the fair market value of its net identifiable assets. It represents:

Brand reputation
Customer loyalty
Good employee relations
Superior location
Technical expertise



Final Answer: (B) Goodwill Quick Tip: Remember: Intangible assets = No physical existence but have value. Examples: Goodwill, Patents, Copyrights, Trademarks. Tangible assets = Physical existence (can be seen/touched). Examples: Cash, Stock, Land, Building, Furniture.

We are asked to identify which items are classified as current liabilities.


Step 1: Understand the definition of current liabilities.


Current liabilities are obligations or debts that:

Are payable within a short period (usually within one year or the operating cycle of the business)
Are settled using current assets or by creating other current liabilities
Include amounts owed to creditors, expenses due but not yet paid, and short-term borrowings


Step 2: Analyze each option.



(A) Creditors:

Creditors are suppliers from whom goods have been purchased on credit.
The amount payable to them is due within a short period (usually 30-90 days).
Hence, creditors are current liabilities.


(B) Outstanding expenses:

Outstanding expenses are expenses that have been incurred but not yet paid (e.g., salaries payable, rent payable).
These are due and payable within a short period.
Hence, outstanding expenses are current liabilities.


(C) Bills Payable:

Bills payable are written promises to pay a certain amount on a specified date (similar to creditors but with a formal document).
These are generally short-term and payable within the operating cycle.
Hence, bills payable are current liabilities.



Step 3: Verify if all options are current liabilities.


All three items (Creditors, Outstanding expenses, Bills Payable) share the common characteristics:

They represent amounts owed by the business
They are payable within a short period (usually less than one year)
They are settled using current assets


Therefore, all of these are current liabilities.

Step 4: Common examples of current liabilities.


\begin{tabular{|l|l|
\hline
Current Liabilities & Description

\hline
Creditors (Accounts Payable) & Amount due to suppliers for credit purchases

Bills Payable & Written promises to pay (promissory notes)

Outstanding Expenses & Expenses incurred but not yet paid (salary, rent, etc.)

Bank Overdraft & Short-term borrowing from bank

Short-term Loans & Loans repayable within one year

Advance Income & Payment received before delivering goods/services

\hline
\end{tabular


Final Answer: (D) All of these Quick Tip: Current liabilities = Short-term obligations (payable within 1 year). Common examples: Creditors, Bills Payable, Outstanding Expenses, Bank Overdraft. All of these appear on the liabilities side of the Balance Sheet under "Current Liabilities".

We are asked to classify a Maruti Car (a vehicle) in terms of asset types.


Step 1: Understand the nature of a car as an asset.


A Maruti Car is a vehicle that:

Has physical substance (can be seen and touched)
Is used for transportation purposes in the business
Has a useful life of several years
Is subject to depreciation over its useful life
Is not meant for resale in the normal course of business (if held as a fixed asset)


Step 2: Analyze each option.



(A) Current asset:

Current assets are those that are expected to be converted into cash within one year or the operating cycle (e.g., stock, debtors, cash).
A car is a long-term asset, not meant to be sold within a year.
Hence, a Maruti Car is not a current asset.


(B) Tangible asset:

Tangible assets have physical substance; they can be seen and touched.
A car has a physical form, occupies space, and can be touched.
Hence, a Maruti Car is a tangible asset.


(C) Intangible asset:

Intangible assets have no physical substance (e.g., goodwill, patents, trademarks).
A car clearly has physical existence.
Hence, a Maruti Car is not an intangible asset.


(D) None of these:

Since option (B) is correct, this option is incorrect.



Step 3: Classification of a car in accounting.


In accounting, a car owned by a business is typically classified as:

Tangible Fixed Asset (or Tangible Non-Current Asset)
Recorded under "Plant, Property \& Equipment" or specifically "Vehicles"
Subject to depreciation each year


It is tangible because it has physical existence, and it is a fixed asset (not current) because it is used for business operations over multiple years.


Final Answer: (B) Tangible asset Quick Tip: All assets with physical existence are tangible assets. Examples: Land, Building, Furniture, Vehicles (like Maruti Car), Machinery, Stock, Cash. Tangible assets can be further classified as fixed (long-term use) or current (short-term).

We are asked to identify the type of expenditure whose entire benefit is received within one accounting period.


Step 1: Understand the difference between Revenue and Capital Expenditure.


Revenue Expenditure:

Benefit is consumed within the current accounting period (usually one year)
Recurring in nature
Does not create or add to an asset
Shown in the Income Statement (Profit \& Loss Account)
Examples: Salaries, Rent, Repairs, Office expenses, Purchases


Capital Expenditure:

Benefit is received over multiple accounting periods (more than one year)
Non-recurring in nature
Creates or acquires a fixed asset or improves its earning capacity
Shown in the Balance Sheet as an asset
Examples: Purchase of machinery, Building construction, Computer equipment


Step 2: Analyze the given options.



(A) Current asset:

Current assets (like stock, debtors, cash) are resources, not expenditures.
Expenditure is the amount spent; an asset is what is owned.
Hence, not correct.


(B) Current liability:

Current liabilities (like creditors, outstanding expenses) are obligations, not expenditures.
Hence, not correct.


(C) Revenue expenditure:

✓ Correct. Revenue expenditure is exactly defined as expenditure where the benefit is consumed within the same accounting period.
It is incurred for day-to-day operations and maintenance.


(D) Capital expenditure:

Incorrect. Capital expenditure provides benefit over multiple accounting periods, not just one.



Step 3: Key distinguishing features.


\begin{tabular{|l|l|l|
\hline
Feature & Revenue Expenditure & Capital Expenditure

\hline
Benefit period & One accounting period & Multiple accounting periods

Nature & Recurring & Non-recurring

Treatment & Debited to P\&L Account & Shown in Balance Sheet

Purpose & Maintain earning capacity & Improve/Create earning capacity

Examples & Salary, Rent, Repairs & Purchase of machinery, Building

\hline
\end{tabular


Final Answer: (C) Revenue expenditure Quick Tip: Remember the key test: If the benefit of expenditure lasts for more than one year → Capital Expenditure. If the benefit is exhausted within the current year → Revenue Expenditure. Revenue expenditure is shown in the Profit \& Loss Account; Capital expenditure appears in the Balance Sheet.

We are asked to identify which transaction will be treated as drawings.


Step 1: Understand the meaning of drawings.


Drawings refer to the withdrawal of cash or goods from the business by the owner (proprietor or partner) for personal or private use. Key points:

Drawings reduce the owner's capital in the business
They are not business expenses
They can be in the form of cash, goods, or other assets taken for personal use
Drawings are deducted from capital in the Balance Sheet


Step 2: Analyze each option.



(A) Withdrawing money for payment of salary to employees:

Salary to employees is a legitimate business expense.
The money is withdrawn to pay employees for their services to the business.
This is a business expense, not drawings.


(B) Withdrawing money for payment to creditors:

Payment to creditors is for settling business liabilities (for goods purchased on credit).
This is a business payment, not drawings.


(C) Withdrawing money from business for private expenses:

✓ This is the classic example of drawings.
When the owner takes money for personal use (household expenses, personal shopping, etc.), it is treated as drawings.
It reduces the owner's capital and is not a business expense.


(D) None of these:

Incorrect because option (C) is correct.



Step 3: Examples of drawings.


Common examples of drawings:

Cash withdrawn by owner for personal use
Goods taken from business for personal consumption
Assets of the business used for personal purposes
Payment of owner's personal expenses from business funds


Step 4: Accounting treatment of drawings.



Drawings are recorded in a separate "Drawings Account"
At the end of the accounting period, the drawings account balance is transferred to the Capital Account (deducted from capital)
Journal entry for drawings:
\[ Drawings A/c \quad Dr.
\quad To Cash/Bank A/c \]



Final Answer: (C) Withdrawing money from business for private expenses Quick Tip: Drawings = Owner's personal withdrawals from the business. Always remember: If the withdrawal is for business purposes (salary, creditors, rent, purchases), it's a business expense or payment. If it's for the owner's personal use, it's drawings.

We are asked to identify for whom adopting Accounting Standards is mandatory.


Step 1: Understand what Accounting Standards are.


Accounting Standards are written policies, rules, and guidelines issued by accounting bodies (like ICAI - Institute of Chartered Accountants of India) to ensure uniformity, consistency, and transparency in financial reporting. They prescribe the accounting treatment for various transactions and events.


Step 2: Know the applicability of Accounting Standards.


In India, Accounting Standards are issued by the Institute of Chartered Accountants of India (ICAI). The applicability varies based on the type of entity:


Companies:

Adoption of Accounting Standards is mandatory for all companies as per the Companies Act, 2013.
Companies are required to comply with Accounting Standards notified under the Companies (Accounting Standards) Rules.
Failure to comply can result in penalties and legal consequences.


Sole Traders and Partnership Firms:

For sole proprietorships and partnership firms, Accounting Standards are not mandatory by law.
However, they may voluntarily adopt them for better financial reporting, especially if they need loans from banks or have large-scale operations.
But legally, they are not required to follow Accounting Standards.



Step 3: Analyze each option.



(A) Sole Traders:

Not mandatory. Sole traders can maintain accounts as per their convenience.


(B) Partnership Firms:

Not mandatory unless specified in the partnership deed or required by specific regulations.


(C) Companies:

✓ Correct. Mandatory for all companies registered under the Companies Act.


(D) All of these:

Incorrect because it's not mandatory for sole traders and partnership firms.



Step 4: Why are Accounting Standards mandatory for companies?


Companies have:

Separate legal entity distinct from owners
Large number of stakeholders (shareholders, investors, creditors, public)
Requirement to file financial statements with regulatory authorities (ROC)
Need for transparency and comparability
Public accountability



Final Answer: (C) Companies Quick Tip: Accounting Standards are mandatory for companies under the Companies Act. For sole traders and partnership firms, they are recommended but not legally required. However, if these entities want loans from banks or need to present reliable financial information, they may voluntarily follow Accounting Standards.

We are asked to identify the feature of the Double Entry System of book-keeping.


Step 1: Understand the Double Entry System.


The Double Entry System is a system of book-keeping where every transaction has two aspects:

Debit aspect (Receiver/Benefit/Expense)
Credit aspect (Giver/Source/Income)

For every transaction, equal debit and credit entries are recorded. This is based on the fundamental accounting equation: \[ Assets = Liabilities + Capital \]

Step 2: Key features of Double Entry System.


Main features include:

Double Aspect: Every transaction affects at least two accounts
Both debit and credit aspects are recorded
Total debits always equal total credits
Provides complete and accurate financial records
Helps in preparing Trial Balance
Ensures arithmetic accuracy of accounts


Step 3: Analyze each option.



(A) Double Aspect:

✓ Correct. This is the fundamental feature of the Double Entry System.
Every transaction has two aspects - debit and credit.
Hence, it is also known as the "Dual Aspect Concept".


(B) One Aspect:

Incorrect. This would be the Single Entry System, where only one aspect is recorded (either debit or credit, not both).
Single Entry System is incomplete and not accurate.


(C) Two Posting in only one book:

Incorrect. Postings are made in different books (Journal and then Ledger).
The two aspects are recorded in different accounts, not necessarily in one book.


(D) None of these:

Incorrect because option (A) is correct.



Step 4: Comparison: Double Entry vs Single Entry.


\begin{tabular{|l|l|l|
\hline
Feature & Double Entry System & Single Entry System

\hline
Recording & Both aspects recorded & Incomplete recording

Accuracy & High & Low

Trial Balance & Can be prepared & Cannot be prepared

Reliability & More reliable & Less reliable

Suitability & All types of businesses & Small businesses only

\hline
\end{tabular


Final Answer: (A) Double Aspect Quick Tip: The Double Entry System is based on the Dual Aspect Concept: Every transaction has two effects - Debit and Credit. Remember the accounting equation: Assets = Liabilities + Capital. For every debit, there must be an equal credit. This is the "Double Aspect" feature!

We are asked to identify what the accounting process is also known as.


Step 1: Understand the accounting process.


The accounting process refers to the series of steps involved in recording, classifying, summarizing, and interpreting financial transactions. These steps are performed in a specific sequence and are repeated in every accounting period.


Step 2: Identify the term for the accounting process.


The accounting process is commonly known as the Accounting Cycle because:

It consists of a sequence of steps that are repeated in each accounting period
The steps form a complete circle (cycle) from the beginning to the end of the period
The cycle starts with recording transactions and ends with preparing financial statements and closing entries


Step 3: Steps in the Accounting Cycle.


The main steps in the accounting cycle are:


Identifying and analyzing business transactions
Recording transactions in the Journal (Journalizing)
Posting entries to the Ledger
Preparing Trial Balance
Making adjusting entries
Preparing Adjusted Trial Balance
Preparing Financial Statements (Trading A/c, Profit \& Loss A/c, Balance Sheet)
Making closing entries
Preparing Post-Closing Trial Balance


Step 4: Analyze each option.



(A) Accounting cycle:

✓ Correct. The accounting process is called the accounting cycle because it is a repetitive sequence of steps completed each accounting period.


(B) Accounting mirror:

Incorrect. This is not a standard accounting term.


(C) Accounting cash:

Incorrect. This is not a standard accounting term. Cash is just one element in accounting.


(D) None of these:

Incorrect because option (A) is correct.




Final Answer: (A) Accounting cycle Quick Tip: The accounting process is called the "Accounting Cycle" because it follows a circular pattern: starting with transactions, passing through various stages (journal, ledger, trial balance, adjustments, financial statements), and then beginning again for the next period. Remember the sequence: Journal → Ledger → Trial Balance → Adjustments → Financial Statements → Closing Entries.

We are asked to define what a voucher is in accounting.


Step 1: Understand the meaning of a voucher.


A voucher is a documentary evidence that supports a transaction recorded in the books of accounts. It serves as proof that a transaction has actually occurred.


Step 2: Characteristics of a voucher.



It is a written document (not oral)
It contains details like date, amount, parties involved, and nature of transaction
It authorizes the recording of a transaction in the accounting books
It can be in physical or electronic form
Examples: Cash memos, invoices, receipts, pay slips, debit/credit notes, bank statements


Step 3: Analyze each option.



(A) Written evidence:

✓ Correct. A voucher is always a written document that provides evidence of a transaction.
Oral statements or verbal assurances cannot serve as vouchers in accounting.


(B) Oral evidence:

Incorrect. Oral evidence is not acceptable as a voucher in accounting.
Accounting requires documented proof for reliability and audit purposes.


(C) Both (A) and (B):

Incorrect because a voucher cannot be oral evidence.


(D) None of these:

Incorrect because option (A) is correct.



Step 4: Types of vouchers.


\begin{tabular{|l|l|
\hline
Type of Voucher & Example

\hline
Cash Voucher & Receipt for cash received, Pay slip for cash paid

Purchase Voucher & Invoice from supplier

Sales Voucher & Invoice issued to customer

Journal Voucher & For non-cash transactions (adjustments, transfers)

Debit/Credit Note & For returns and allowances

Bank Voucher & Cheque, Bank statement, Deposit slip

\hline
\end{tabular

Step 5: Importance of vouchers.



Provide authenticity to transactions
Help in audit and verification
Serve as legal evidence in case of disputes
Ensure transparency and accountability



Final Answer: (A) Written evidence Quick Tip: Remember: In accounting, "No voucher, no entry!" A voucher is always a written document that serves as proof of a transaction. Oral evidence is not acceptable. Always keep vouchers safely for future reference and audit purposes.

We are asked to identify which of the given options are source documents.


Step 1: Understand what source documents are.


Source documents are the original records that provide evidence that a business transaction has occurred. They are the foundation upon which accounting entries are made. Key points:

They are the first written evidence of a transaction
They contain details like date, amount, parties involved, and nature of transaction
They serve as proof for auditing and verification purposes
They form the basis for recording entries in the books of accounts


Step 2: Analyze each option.



(A) Cash Memo:

A cash memo is a document issued when a cash transaction occurs (cash sales or cash purchases).
It contains details of items sold, quantity, price, and total amount.
It is a source document for cash transactions.


(B) Invoice:

An invoice (or bill) is a document issued by a seller to a buyer for goods or services provided on credit.
It contains details like description of goods, quantity, rate, amount, and terms of payment.
It is a source document for credit sales and credit purchases.


(C) Pay-in Slip:

A pay-in slip is a document used when depositing cash or cheques into a bank account.
It contains details like account number, amount deposited, and date.
The bank returns a counterfoil or acknowledgment as proof of deposit.
It is a source document for bank transactions.



Step 3: Conclusion.


All three options (Cash Memo, Invoice, Pay-in Slip) are valid source documents used in accounting to record different types of transactions. Therefore, the correct answer is "All of these".


Final Answer: (D) All of these Quick Tip: Source documents = Original evidence of transactions. Common examples: Cash Memo (cash transactions), Invoice (credit transactions), Pay-in Slip (bank deposits), Receipt, Debit/Credit Notes, Vouchers. Always keep source documents safe for audit and verification!

We are asked to identify which type of accounts the rule “Debit all expenses and losses and Credit all incomes and gains” applies to.


Step 1: Recall the three types of accounts and their rules.


In accounting, accounts are classified into three categories:


Personal Accounts: Accounts related to persons, firms, companies, or representatives.

Rule: Debit the receiver, Credit the giver.


Real Accounts: Accounts related to assets and properties (tangible and intangible).

Rule: Debit what comes in, Credit what goes out.


Nominal Accounts: Accounts related to expenses, losses, incomes, and gains.

Rule: Debit all expenses and losses, Credit all incomes and gains.



Step 2: Apply the given rule to each type.



Personal Accounts: The rule “Debit the receiver, Credit the giver” applies, not the rule about expenses and incomes.

Real Accounts: The rule “Debit what comes in, Credit what goes out” applies, not the rule about expenses and incomes.

Nominal Accounts: The rule “Debit all expenses and losses, Credit all incomes and gains” directly applies because nominal accounts deal with expenses, losses, incomes, and gains.


Step 3: Examples of Nominal Accounts.



Expenses and Losses (Debited): Salary A/c, Rent A/c, Wages A/c, Interest Paid A/c, Depreciation A/c, Loss on Sale of Asset A/c.
Incomes and Gains (Credited): Sales A/c, Commission Received A/c, Interest Received A/c, Discount Received A/c, Profit on Sale of Asset A/c.


Step 4: Analyze the given options.



(A) Personal Accounts: Incorrect. Personal accounts follow the rule of "Debit the receiver, Credit the giver."

(B) Real Accounts: Incorrect. Real accounts follow the rule of "Debit what comes in, Credit what goes out."

(C) Nominal Accounts: ✓ Correct. Nominal accounts follow the rule of "Debit all expenses and losses, Credit all incomes and gains."

(D) All of these: Incorrect because personal and real accounts do not follow this rule.



Final Answer: (C) Nominal Accounts Quick Tip: Remember the golden rules of accounting: Personal A/c: Debit the receiver, Credit the giver Real A/c: Debit what comes in, Credit what goes out Nominal A/c: Debit all expenses and losses, Credit all incomes and gains Nominal accounts are temporary accounts closed at the end of each accounting period.

We are asked to identify which account will be credited when goods are purchased from Ravi for cash.


Step 1: Analyze the transaction.


The transaction is: "Purchase of goods from Ravi for cash."

Goods are coming into the business (asset increases)
Cash is going out of the business (asset decreases)
Since it's a cash purchase, no credit is involved from Ravi


Step 2: Identify the accounts affected.


Two accounts are affected in this transaction:

Purchases Account (Goods purchased)
Cash Account (Cash paid)


Step 3: Apply the rules of debit and credit.


Since goods are purchased (expense/loss for the business), we apply the nominal account rule:

Nominal Account (Purchases - Expense): Debit all expenses and losses
Therefore, Purchases A/c will be DEBITED


For Cash Account (Real Account):

Real Account rule: Debit what comes in, Credit what goes out
Cash is going out of the business
Therefore, Cash A/c will be CREDITED


Step 4: Journal Entry for the transaction.

\[ \begin{array}{ll} Purchases A/c & Dr.
\quad To Cash A/c & \end{array} \]

Step 5: Analyze the given options.



(A) Purchase A/c: Incorrect. Purchases A/c is debited, not credited.

(B) Ravi's A/c: Incorrect. Since it's a cash purchase, Ravi is not involved as a creditor. If it were a credit purchase, Ravi's A/c would be credited.

(C) Cash A/c: ✓ Correct. Cash A/c is credited because cash is going out.

(D) Goods A/c: Incorrect. "Goods A/c" is not a standard account name in this context. Purchases A/c is used for goods purchased.



Final Answer: (C) Cash A/c Quick Tip: For cash purchases: Debit Purchases A/c, Credit Cash A/c.
For credit purchases: Debit Purchases A/c, Credit Supplier's (Ravi's) A/c.
Remember: Cash is a real account - Debit what comes in, Credit what goes out. When cash is paid, Cash A/c is credited.

We are asked to identify the term used when the proprietor takes goods from the business for personal use.


Step 1: Understand the meaning of drawings.


Drawings refer to the withdrawal of cash or goods from the business by the owner (proprietor or partner) for personal or private use. Key characteristics:

It reduces the owner's capital in the business
It is not a business expense
It can be in the form of cash, goods, or other assets taken for personal use
It is recorded in a separate "Drawings Account"
At the end of the accounting period, the drawings account balance is transferred to the Capital Account (deducted from capital)


Step 2: Analyze each option.



(A) Capital:

Capital is the amount invested by the owner into the business.
When goods are taken out, capital decreases, but the transaction itself is not called "capital".
Hence, incorrect.


(B) Drawings:

✓ Correct. When the proprietor takes goods for personal use, it is termed as "drawings".
Example: If the owner takes goods worth ₹5,000 for personal use, it is recorded as drawings.


(C) Asset:

Assets are resources owned by the business (like cash, stock, furniture, etc.).
Goods taken out are being removed from the business, so they are not an asset for the business anymore.
Hence, incorrect.


(D) Liability:

Liabilities are obligations of the business to outsiders (creditors, loans, etc.).
Drawings have nothing to do with liabilities.
Hence, incorrect.



Step 3: Journal entry for goods taken as drawings.


When goods are taken by the proprietor for personal use: \[ \begin{array}{ll} Drawings A/c & Dr.
\quad To Purchases A/c & \end{array} \]

Note: Sometimes "Goods A/c" or "Stock A/c" is credited instead of Purchases A/c, depending on the accounting treatment.

Step 4: Effect of drawings on accounts.



Drawings reduce the owner's capital
Drawings reduce the assets of the business (cash or stock)
Drawings are not business expenses, so they don't appear in the Profit \& Loss Account
Drawings are shown as a deduction from Capital in the Balance Sheet



Final Answer: (B) Drawings Quick Tip: Drawings = Owner's personal withdrawals from the business (cash or goods). Remember: Drawings reduce capital and are not business expenses. Journal entry: Debit Drawings A/c, Credit Cash A/c (for cash) or Credit Purchases A/c (for goods).

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Two main advantages of transport are:
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1. Movement of goods and services:

Transport helps in moving raw materials to production sites and finished goods to markets. This promotes trade and commerce.
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2. Mobility of people:

Transport enables people to travel from one place to another - whether for work, education, or tourism.
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Other benefits (for reference):

- Creates employment opportunities

- Connects different regions of the country

- Provides relief during emergencies
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Note: Mentioning any two of the above advantages is sufficient. Quick Tip: Transport is the backbone of economy - it connects production and consumption.

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N/A

[0.3cm]

Two main advantages of transport are:
[0.3cm]

1. Movement of goods and services:

Transport helps in moving raw materials to production sites and finished goods to markets. This promotes trade and commerce.
[0.2cm]

2. Mobility of people:

Transport enables people to travel from one place to another - whether for work, education, or tourism.
[0.2cm]

Other benefits (for reference):

- Creates employment opportunities

- Connects different regions of the country

- Provides relief during emergencies
[0.2cm]

Note: Mentioning any two of the above advantages is sufficient. Quick Tip: Transport is the backbone of economy - it connects production and consumption.