Question 1

Which of the following is considered the book of original entry?

Accepted Answer

The journal is known as the book of original entry because all business transactions are first recorded chronologically in it before being posted to the ledger.

Question 2

The process of recording transactions in a journal is called:

Accepted Answer

Journalising is the process of recording business transactions in the journal in chronological order based on the rules of debit and credit.

Question 3

An explanatory note given below every journal entry is called:

Accepted Answer

Narration is the brief explanation given at the bottom of every journal entry to describe the nature of the transaction.

Question 4

Which account is debited when goods are purchased for cash?

Accepted Answer

When goods are purchased for cash, the Purchases account is debited because goods are an expense or incoming asset for the business.

Question 5

The rule for Nominal Accounts is:

Accepted Answer

The rule for nominal accounts is 'Debit all expenses and losses, and credit all incomes and gains'.

Recording of Transactions - I