Courses
Courses for Kids
Free study material
Offline Centres
More
Store Icon
Store

Recording of Transactions - I Class 11 Notes CBSE Accountancy Chapter 3 (Free PDF Download)

ffImage
Last updated date: 18th May 2024
Total views: 624k
Views today: 6.23k

Revision Notes for CBSE Class 11 Accountancy Chapter-3 - Free PDF Download

Recording of Transactions 1 is considered as a process of executing accounting transactions of a business in different books of accounts. Recording of Transactions Class 11 makes use of cash book, journal book, a ledger account, profit & loss a/c, etc. Accounts Class 11 Chapter 3 notes by Vedantu will give a clear overview of all these accounts, thus helping students in gaining detailed knowledge. The entries in the Recording of Transaction 1 notes act as evidence for transactions in the company.

Download CBSE Class 11 Accountancy Revision Notes 2024-25 PDF

Also, check CBSE Class 11 Accountancy revision notes for All chapters:


Popular Vedantu Learning Centres Near You
centre-image
Mithanpura, Muzaffarpur
location-imgVedantu Learning Centre, 2nd Floor, Ugra Tara Complex, Club Rd, opposite Grand Mall, Mahammadpur Kazi, Mithanpura, Muzaffarpur, Bihar 842002
Visit Centre
centre-image
Anna Nagar, Chennai
location-imgVedantu Learning Centre, Plot No. Y - 217, Plot No 4617, 2nd Ave, Y Block, Anna Nagar, Chennai, Tamil Nadu 600040
Visit Centre
centre-image
Velachery, Chennai
location-imgVedantu Learning Centre, 3rd Floor, ASV Crown Plaza, No.391, Velachery - Tambaram Main Rd, Velachery, Chennai, Tamil Nadu 600042
Visit Centre
centre-image
Tambaram, Chennai
location-imgShree Gugans School CBSE, 54/5, School road, Selaiyur, Tambaram, Chennai, Tamil Nadu 600073
Visit Centre
centre-image
Avadi, Chennai
location-imgVedantu Learning Centre, Ayyappa Enterprises - No: 308 / A CTH Road Avadi, Chennai - 600054
Visit Centre
centre-image
Deeksha Vidyanagar, Bangalore
location-imgSri Venkateshwara Pre-University College, NH 7, Vidyanagar, Bengaluru International Airport Road, Bengaluru, Karnataka 562157
Visit Centre
View More
Competitive Exams after 12th Science

Access Class 11 Accountancy Chapter - 3 Recording of Transactions - 1 Notes

Accounting Equations

Accounting equation shows the relationship between the assets, liabilities and owner’s capital of a person or business

A=L+C

Where A= assets 

L= liabilities

C= capital

The above equation can  be presented in the following forms as its derivatives to enable the determination of missing figures of Capital(C) or Liabilities(L)

(i) A – L = C

(ii) A – L = C

Since the accounting equation shows the fundamental relationship among the items of the balance sheet, it is also called the Balance Sheet Equation

The claim of the proprietors is called capital and that  which is taken from another person from the outside is known as liabilities. 

 The asset side of the balance sheet records all the assets of the business. The liabilities side of the balance sheet is the detailed list of owner’s capital and outsider’s claims. 

Let us take an example :- 

Payal started the business with a capital of  Rs 10.00,000. From the accounting point of view, the resources of this business entity is in the form of cash, i.e.Rs. 10,00,000. Sources of this business entity are the contribution by payal (Proprietor) Rs. 10,00,000 as Capital.

If we put this detail in the form of equality of resources and sources, the picture will emerge somewhat as follows:-

In the Books of Payal

Balance sheet as on… .. .. 

Liabilities

Amount

Assets 

Amount

Liabilities

10,00,000

Asset

10,00,000


In the above balance sheet the total of assets is equal to the total of liabilities

Now we will analyse the transactions listed in example 1 and its effect on different elements and you will observe that the accounting equation always remain balanced:-

  1.  Opened a bank account in bank of India with an amount of Rs. 500000 (Analysis of transaction: This transaction increases the cash at bank (assets) and decreases cash (asset) by Rs. 500000.) 

  2. Bought furniture for Rs. 100000 and a cheque was issued on the same day. (Analysis of transaction: This transaction increases furniture (assets) and decreases bank (assets) by Rs. 100000.) 

  3.  Bought plant and machinery for the business for Rs. 1,10,000 and an advance of Rs. 10,000 in cash is paid to M/s Ramjilal. (Analysis of transaction: This transaction increases plant and machinery (assets) by Rs. 1,10,000, decreases cash by Rs. 10,000 and increases liabilities (M/s Ramjilal as creditor) by Rs. 1,00,000.) 

  4. Goods purchased from M/s Akshay Traders for Rs. 55,000. (Analysis of transaction: This transaction increases goods (assets) and increases liabilities (M/s Akshay Traders as creditors) by Rs. 55,000.) 

  5. Goods costing Rs. 15,000 sold to Samit Enterprises for Rs. 25,000. Analysis of transaction: This transaction decreases stock of goods (assets) by Rs. 15,000 and increases assets (Samit Enterprises as debtors Rs. 25,000) and capital (with the profit of Rs. 10,000)

In the Books of Payal

Journal entries for the year ending…….

Date

Particulars

L.F

Debit

Credit

1. 

Bank a/c. Dr. 

To cash a/c

(Being a/c opened in the bank.)


5,00,000

5,00,000

2. 

Furniture a/c. Dr. 

To bank a/c

(Being furniture purchased and Payment made through the bank.)


1,00,000

1,00,000

3. 

Plant and machinery a/c. Dr. 

To cash a/c

To Ramjilal a/c

(Being plant and machinery purchased on credit and some amount is paid in cash)


1,10,000


10,000

1,00,000

4. 

Purchases a/c. Dr. 

To Akshay Traders a/c

(Being goods purchased on credit from Akshay traders.)


55,000

55,000

5. 

Cash a/c. Dr. 

To sales a/c

To profit and loss a/c

(Being goods sold on profit)


25,000

15,000

10,000


The final equation as per the above transactions analysis table can be summarised in the form of balance sheet :-

Balance sheet as on… 

Liabilities

Amount (Rs.)

Assets 

Amount(Rs.)

Outsiders liability (creditors) 

1,55,000

Cash 

4,90,000



Bank

4,00,000



Furniture

1,00,000



Debtors

25,000

Capital

10,10,000

Stock 

40,000



Plant and machinery

1,10,000


11,65,000


11,65,000


Using Debit and Credit

  • In the double entry system, every transaction affects two sides of the account.

  • The right side of the T shape account is credit side and the left side is debit.


Rules of Debit and Credit:-

Every accounts are categorized into five types for the purposes of recording the transactions:

(a) Asset (b) Liability (c) Capital (d) Expenses/Losses, and (e) Revenues. 

The two fundamental rules to be followed while recording the changes in these accounts: 

(1) For recording changes in Assets/Expenses (Losses):

(i) “Increase in asset is to be debited, and decrease in asset is to be  credited.” 

(ii)“Increase in expenses/losses is  to be debited, and decrease in expenses/ losses is credited.

The rules applicable to the various kinds of accounts that have been summarised in the below charts:

Assets 

(Increase) 

    +

Debit

(Decrease) 

      -
Credit


Liabilities

Decrease

    -

Debit

Increase

    + 

Credit

 

Capital

Decrease

     -

Debit

Increase

    + 

Credit


Expenses/losses

Increase

    +

Debit

Decrease

     -

Credit


Gains/revenue

Decrease

    -

Debit

Increase

   + 

Credit 


Books of Original Entry:- The process of recording transaction in the journal is called Journalising

After the completion of Journalising  there after they are transferred to another account and that process is called posting


Journal is further divided into some number of books of original entry :-

  1. Journal proper 

  2. Cash book

  3. Other day books:-

    1.  Purchase book 

    2. Sales book

    3. Purchase return book

    4. Sales return book

    5. Bills receivable book

    6. Bills payable book


Journal:

In this book transactions are recorded in chronological order as and when they take place. 

Each transaction is debited as well credited with same amount


Let us have a look at the format of the journal.

Journal

Date

Particulars 

L. F

Debit amount

Credit amount

















Let us take an example, for clearance of the journal format 

Example:-  sale of goods worth ₹ 10000 

The golden rule says that debit what comes in and credit what goes out 

Here, we are selling goods, and in return we receiving cash 

So debit what comes in i.e. cash and credit what goes out i.e. goods , 


Here is tubular represent of this transaction:-

Date

Particulars

L. F

Debit

Credit

---

Cash a/c


10000



To sales a/c

(Being goods sold)



10000



Now, refer to example 1 which we have done already, let's record the transition in the books of Miss Payal.

In the Books of Payal

Journal Entries

for the year ending…….

Date 

Particulars 

L. F

Debit

Credit

1

Cash a/c 


1000000



To Capital a/c

(business started with cash) 



1000000

2

Bank a/c 


500000



To cash a/c

(Cash deposited in bank) 



500000

3

Furniture a/c


1,00,000



To bank a/c

(Being furniture purchased) 



1,00,000

4

Plant and machinery a/c


1,10,000



To cash a/c

To Ramjilal  a/c

(Being plant and machinery purchased on credit and some amount is paid in cash) 



10,000

1,00,000

5

Purchases a/c 


55,000



To m/s Akshaya Traders a/c

(Being goods purchased on credit)



55,000

6

Samit enterprises a/c 


25,000



To sales a/c

(Being goods sold on credit) 



25,000


Discount 

There are two types of discount that are explained below:

  1. Trade discount:-  Trade discount is allowed by wholesalers and manufacturers to the retailers at a fixed percentage. Trade discount is not to be shown in the books, 

  2. Cash discount:-  Cash discount is allowed to the customers for making an early payment 


Example: If a retailer sells goods of list price Rs.10000 at 10% trade discount and 2% cash discount 

Ans: 

List price                                                       10000

Less: trade discount @10%                       (1000)

               9000

Less: cash discount @2%.                            (180)

(9000×2÷100)                                           

               8,820 


Accounting entries under goods and services tax:

Record necessary Journal entries assuming CGST @ 5% and SGST @ 5% and all transactions have occurred within Delhi

  1. Amit bought goods Rs. 5,00,000 on credit 

  2. He sold them for Rs. 100000 in the same state on credit 

  3. He paid for railway transport Rs. 4000

  4. He bought a computer printer for Rs.10000

  5. Paid postal charges Rs. 1000


Journal Entries for the year ending

Date

Particulars 

L.F

Debit (Rs)

Credit (Rs)

1

Purchases a/c     Dr.

Input CGST a/c    Dr.

Input SGST a/c    Dr.

To creditors a/c

(Purchased goods on credit)


500000

25000

25000

550000

2

Debtors a/c    Dr.

To sales a/c

To output CGST a/c

To output SGST a/c

(Sales goods on credit)


1100000

100000

50000

50000

3

Transportation charges a/c  Dr.

Input CGST a/c   Dr.

Input SGST a/c    Dr.

To bank a/c

(Being transport charges paid)


40000

2000

2000

44000

4

Computer printer a/c   Dr.

Input CGST a/c    Dr.

Input SGST a/c    Dr.

To bank a/c

(Being Computer printer purchased)


10000

500

500

11000

5

Postal charges a/c     Dr.

Input CGST a/c      Dr.

Input SGST a/c      Dr.

To bank a/c

(Being Postal charges paid)


1000

50

50

1100

Output CGST a/c      Dr.

Output SGST a/c      Dr.

To input CGST a/c

To input SGST a/c

To electronic ledger a/c

(Being output CGST, SGST and input CGST, SGST adjusted)


50000

50000

27550

27550

44900


Ledger:

Business transactions are first recorded in a journal and thereafter the next step is transferring the entries to the respective accounts in the ledger.

The left-hand side is known as the debit side and the right-hand side is the credit side.

This account is  in ‘T’ shape.

Format of ledger account

Dr.                                                                                                                                           

Cr.                                                                                                                                                    

Date

Particulars 

J.F

Amount 

Date 

Particulars  

J.F

Amount 


















Example:-

1. Capital introduced- Rs. 100000 on 1/4/2019

2. Furniture purchased- Rs. 15000 on 1/4/2029

3. Goods purchases- Rs. 75000 on  1/4/2019

4. Salaries paid-  Rs. 10000 on 30/4/2019

5. Sold goods- Rs. 95000 in April 2019

Journal Entries
For the year ending…..

Date

Particulars

L.F

Debit

Credit

1/4/2019

Cash a/c    Dr.


1,00,000



To capital a/c



1,00,000


(Being capital invested) 




1/4/2019

Furniture and equipment a/c Dr. 


15,000



To cash a/c



15,000


(Being furniture and equipment purchased) 




1/4 /2019

Purchase a/c    Dr.


75,000



To cash a/c



75,000


(Being goods are purchased) 




30/4/2019

Salaries a/c   Dr.


10,000



To cash a/c 



10,000


(Being salaries paid) 




April 2019

Cash a/c     Dr.


95,000



To sales a/c



95,000


(Being goods are sold) 




     

Ledger Accounts

Cash account 

Date

Particulars

J. F

Amount

Date

Particulars

J. F

Amount

1/4/2019

To balance b/d


-

1/4/2019

By furniture and equipment


15000

1/4/2019

To capital


1,00,000

1/4/2019

By purchases


75000

April 2019

To sales


95000

30/4/2019

By salaries


10000





30/4/2019

By balance c/d


95000




1,95,000




1,95,000


Capital account 

Date

Particulars

J. F

Amount

Date

Particulars

J. F

Amount





1/4/2019

By balance b/d


-

30/4/2019

To balance c/d


1,00,000

1/4/2019

By cash


1,00,000




1,00,000




1,00,000


Furniture account

Date

Particulars

J. F

Amount

Date

Particulars

J. F

Amount

1/4/2019

To balance b/d


-





1/4/2019

To cash a/c


15,000

30/4/2019

By balance c/d


15,000




15,000




15,000


Purchases account

Date

Particulars

J. F

Amount

Date

Particulars

J. F

Amount

1/4/2019

To balance b/d


-





1/4/2019

To cash a/c


75,000

30/4/2019

By balance c/d


75,000




75,000




75,000


Sales account

Date

Particulars

J. F

Amount

Date

Particulars

J. F

Amount





1/4/2019

By balance b/d


-

30/4/2019

To balance c/d


95,000

30/4/2019

By cash a/c


95,000




95,000




95,000


Salaries account

Date

Particulars

J. F

Amount

Date

Particulars

J. F

Amount





1/4/2019

By balance b/d


10,000

30/4/2019

To balance c/d


20,000

30/4/2019

By cash a/c


10,000




20,000




20,000


CBSE Class 11 Accountancy Notes Chapter 3

Overview

From the above paragraph, it is clear that entries in the Recording of Transactions Class 11 notes are considered as a source of documents. It acts as evidence for all the cash or credit transactions that are taking place in day-to-day activities of the business. On reading the notes of Accountancy Class 11 Chapter 3, students will gain more knowledge on the concepts of the Recording of Transactions 1.

From Accountancy Class 11 Chapter 3 notes, students will learn that Recording of Transactions -1 involves some predetermined steps such as identifying the transactions which are to be registered and preparing the source documents which have already been registered in the basic book called a journal. After completion of these steps, the entries in the journal book are reported in a private account called ledger.


Fundamental Steps of Recording of Transaction - 1

The steps in Accountancy Class 11 Recording of Transactions 1 ensure perfect entries in the book of accounts. Let's discuss the steps involved in the Recording of Transactions:

  • Identifying the financial transactions from a voucher

  • Recording the identified transactions by making an entry in the journal

  • Transfer the entries into private accounts called ledger

  • Plan financial statement by making profit & loss a/c and a balance sheet

  • Communicate the results with various customers


The Recording Transaction Rule

In order to learn and execute the Recording of Transactions, students must have proper knowledge of different financial accounting rules. Accounts Chapter 3 Class 11 notes can help students in understanding the financial accounting rules. 


The Three Rules of Financial Accounting are

  • Personal Account - Debit the receiver and credit the giver

  • Real Account - Debit what comes in and credit what goes out

  • Nominal Account - Debit all expenses and losses and credit all incomes and gains


Recording Transactions Principles

There are some principles of the Recording of Transactions that students should learn from accountancy Class 11 Chapter 3.  The notes of Chapter 3 Accountancy Class 11 help students in understanding these principles. Let's discuss these principles once:

  • Personal accounts are the ones who deal with the credit or lending of money from some company.

  • Real accounts are meant for dealing with assets, liabilities, and equity.

  • Nominal accounts are the ones which deal with expenses, revenue, gains and losses of a company.


Source Documents Importance

Recording of Transactions 1 Class 11 notes shows students the importance of source documents in this process. The following are the reasons why source documents are so important:

  • The documents are considered as the physical evidence for the transactions that are taking place in the company.

  • The documents provide the company with some key details such as time, date, amount and nature of the transaction.

  • The documents can be used as proof in the court of law.

  • The documents can act as a real help for the auditors in the auditing process. 

FAQs on Recording of Transactions - I Class 11 Notes CBSE Accountancy Chapter 3 (Free PDF Download)

1. What is a journal?

A journal is considered a detailed account used for recording all the financial transactions that take place in a business. These entries in the journal are used in future for reconciliation of accounts. The transaction information that is there in the journal is transferred to another official private account which is called a ledger account. A journal gives valuable information such as the date, time, amount and nature of the transaction. The transactions are recorded in the journal in a double-entry method. Single-entry bookkeeping is rarely used in journals. A journal can act as proof in the court of law. 

2. What is a balance sheet?

A balance sheet is considered as a financial statement created to report information about the company's assets, liabilities and shareholders equity at a specific time. The information provided acts as a basis for determining rates of return and calculating the capital structure of the company. A balance sheet as a financial statement shows the viewers what the company owns and owes. It also shows the amount invested by the shareholders of the company. The balance sheet is just as important as other financial statements and is used alongside them. The balance sheets give the creditors of the company a detailed view of the financial strength of the company. 

3. What is the traditional approach for the rules of Debit & Credit?

Under the traditional approach, the ledger accounts can mainly be classified into 2 categories:

Personal Accounts: Including all the accounts that are related to a person such as individuals, companies, firms, banks etc. This is further divided into 3 categories;

  • Natural Persons 

  • Artificial Persons

  • Representative Persons

Impersonal Accounts: Including all the accounts that are unrelated to any person. This may be divided into;

  • Real Accounts

  • Nominal Accounts

4. What are the types of financial statements?

Financial statements usually consist of two statements. They are profit and loss statements and balance sheets, which are important for the external reporting as well as internal management needs. It is crucial to understand the flow of funds along with the changes in the financial position of a company. It's important to make a cash flow statement for such a purpose. All companies registered to the 2013 Company Law have to prepare their balance sheet, profit and loss statement, as well as account according to the procedure prescribed in the revised Annexure III of the Company Law. For more understanding of the subject, you can visit CBSE Class 11 Accountancy Chapter 3 Notes at Vedantu.

5. What is the purpose of posting J.F numbers that are entered in the journal at the time entries are posted to the accounts?

The numbers entered in the ledger whole posting entries into the Accounts are referred to as J.F Number. This helps to determine if transactions have been posted properly or not. This is recorded whenever a transaction is posted. The purpose behind posting J.F numbers in a ledger is to locate entries in a journal book and also to make sure that records have been kept in the books of the original entry.

6. Why is the evidence provided by source documents important to accounting?

The source documents in accounting are important because of the following reasons;

  • It gives evidence of the transaction that has occurred.

  • It works as the backup in times of auditing as well as tax assessment

  • It acts as the most important legal evidence.

To know more about accounting, students can download the vedantu app.

7. Are debits or credits listed first in journal entries? Are debits or credits indented?

Debit gets recorded in the journal first before credit, but both debits, as well as credit, have to be recorded in the journal prior to being recorded in the ledger. Entry for debit does not require any margin, indent or spacing. But for credit entries some margin, spacing, or indent is crucial. The symbol "Dr." is used for debit entry and is always right-aligned. For a detailed explanation, visit Vedantu for free of cost PDF of Class 11 Accountancy Chapter 3 Notes.