Class 11 Accountancy Chapter 4: Recording of Transactions II

Recording of Transactions II Class 11 explains how businesses record different types of transactions using special-purpose books. When a business has many transactions, recording each one in a single journal can become time-consuming. Special-purpose books make the process easier by grouping similar transactions together.

In this chapter, you will learn about different books used to record cash transactions, credit purchases, credit sales and returns. You will also study Journal Proper, posting entries from special-purpose books to the ledger and balancing ledger accounts.

Class 11 Accountancy Chapter 4 Notes

These Class 11 Accountancy Chapter 4 Notes cover the main concepts related to recording transactions in special-purpose books. Understanding the purpose and format of each book will help you learn how business transactions are recorded.

Cash Book Class 11 Accountancy

A cash book is used to record cash transactions. It records cash receipts and cash payments in chronological order. A cash book can also include bank transactions, depending on its format.

The cash book serves as both a book of original entry and a ledger account for cash. The types of cash books covered in this chapter include the following.

Single Column Cash Book

A single column cash book has one amount column on each side for recording cash transactions. The debit side records cash receipts, while the credit side records cash payments.

The cash book is balanced to determine the cash balance. Since cash payments cannot exceed the available cash balance, a cash book normally does not show a credit balance.

Double Column Cash Book

A double column cash book contains two amount columns on each side. The columns included depend on the type of cash book being prepared.

This format allows a business to record cash transactions along with another category, such as bank transactions or discounts, as covered in the prescribed textbook. Follow the format and recording rules given in the relevant NCERT illustration.

Petty Cash Book

A petty cash book records small payments made during the regular activities of a business. These payments may include minor office expenses and other small day-to-day costs.

The petty cashier maintains this book to keep a record of such payments. Under the imprest system, the petty cashier receives a fixed amount at the beginning of a period. The amount spent is then reimbursed so that the original imprest amount can be restored.

Balancing the Cash Book

Balancing a cash book helps determine the cash balance remaining after recording receipts and payments.

To balance a single-column cash book, total the debit and credit sides and calculate the difference between them. The cash balance is carried down to the next period as the opening balance. Follow the balancing method and format shown in the NCERT examples for the relevant type of cash book.

Purchases Book Class 11 Accountancy

A purchases book records credit purchases of goods in which a business deals. It does not record every purchase made by the business.

For example, a trading business records credit purchases of goods meant for resale in the purchases book. Cash purchases are recorded in the cash book, while purchases of assets such as furniture are recorded according to the applicable accounting procedure rather than being treated as ordinary credit purchases of goods.

The purchases book records the relevant details of each transaction, such as the date, supplier, invoice details and amount, according to the format prescribed in the textbook.

Purchases Return Book Class 11

A purchases return book records goods returned to suppliers when the original purchase was made on credit and the transaction falls within the scope of this book.

A business may return goods because they are damaged, defective or do not meet the agreed requirements. The return is recorded using the relevant source document, such as a debit note, as explained in the textbook.

The purchases return book helps maintain a separate record of goods returned to suppliers.

Sales Book Class 11 Accountancy

A sales book records credit sales of goods in which a business deals. It does not record all sales or every transaction involving the sale of an asset.

For example, when a trading business sells goods on credit to a customer, the transaction is entered in the sales book. Cash sales are recorded in the cash book.

The sales book contains details such as the date, customer’s name, invoice information and amount. These details help the business maintain a record of its credit sales.

Sales Return Book Class 11

A sales return book records goods returned by customers when the original sale was made on credit and the transaction falls within the scope of this book.

Customers may return goods because they are damaged, defective or do not match the order. The return is recorded using the relevant source document, such as a credit note, according to the procedure explained in NCERT.

Maintaining a separate sales return book helps a business track goods returned by customers and account for the related transactions.

Journal Proper

Journal Proper is used to record transactions that are not entered in the other special-purpose books. It is also called the journal for recording entries that require a separate journal entry.

The types of entries recorded in Journal Proper depend on the categories covered in the prescribed textbook. These may include opening entries, closing entries, adjustment entries, rectification entries and other entries that do not belong in the specialised books discussed in the chapter.

Students should refer to the NCERT examples to understand which transactions are recorded in Journal Proper and how the entries are prepared.

Posting Entries from Special-Purpose Books to the Ledger

Posting means transferring entries from a book of original entry to the relevant ledger accounts. It helps organise transactions account-wise so that the business can determine the balance of each account.

The posting procedure depends on the special-purpose book being used. Individual transactions may be posted to the relevant personal accounts, while the total of a special-purpose book may be posted to the corresponding ledger account at the end of the relevant period, as prescribed by the textbook.

For example, entries in the purchases book are posted to the respective suppliers’ accounts and the purchases account according to the prescribed procedure. The same principle applies to other special-purpose books, following the relevant posting rules.

Carefully follow the debit and credit treatment shown in the NCERT illustrations when practising ledger posting.

Balancing Ledger Accounts

Balancing a ledger account means finding the difference between the debit and credit sides of an account. This helps determine the account balance at the end of a particular period.

The general procedure is as follows:

1. Add the amounts on the debit and credit sides separately.

2. Calculate the difference between the two totals.

3. Enter the difference on the side with the smaller total to make both sides equal.

4. Record the balance as balance carried down, or Balance c/d, according to the textbook format.

5. Bring the balance forward to the next period as balance brought down, or Balance b/d, where applicable.

The treatment of the balance depends on the nature of the account. Use the NCERT illustrations to understand how the balancing process works for different ledger accounts.

Related Resources

• Class 11 Accountancy Notes

• CBSE Class 11 Accountancy Syllabus 

• Class 11 Accountancy Project

To get additional study support for Accountancy and other Commerce subjects, you can also check the Class 11 Commerce batches by PW.