NCERT Textbook - Recording of Transactions-II Commerce Notes | EduRev

Accountancy Class 11

Commerce : NCERT Textbook - Recording of Transactions-II Commerce Notes | EduRev

 Page 1


I
n chapter 3, you learnt that all the
business transactions are first recorded in the
journal and then they are posted in the ledger
accounts. A small business may be able to record
all its transactions in one book only, i.e., the journal.
But as the business expands and the number of
transactions becomes large, it may become
cumbersome to jour-nalise each transaction. For
quick, efficient and accurate recording of business
transactions, Journal is sub-divided into special
journals. Many of the business transactions are
repetitive in nature. They can be easily recorded in
special journals, each meant for recording all the
transactions of a similar nature. For example, all
cash transactions may be recorded in one book, all credit
sales transactions in another book and all credit
purchases transactions in yet another book and so on.
These special journals are also called daybooks or
subsidiary books. Transactions that cannot be recorded
in any special journal are recorded in journal called the
Journal Proper. Special journals prove economical and
make division of labour possible in accounting work. In
this chapter we will discuss the following special purpose
books:
• Cash Book
• Purchases Book
• Purchases Return (Return Outwards) Book
• Sales Book
• Sales Return (Return Inwards) Book
• Journal Proper
Recording of Transactions-II 4
LEARNING OBJECTIVES
After studying this
chapter, you will be able
to :
• state the need for
special purpose books;
• record the transactions
in cash book and post
them in the ledger;
• prepare the petty cash
book;
• record the transactions
in the special purpose
books;
• post the entries in the
special purpose book
and  to the ledger;
• balance the ledger
accounts.
2020-21
Page 2


I
n chapter 3, you learnt that all the
business transactions are first recorded in the
journal and then they are posted in the ledger
accounts. A small business may be able to record
all its transactions in one book only, i.e., the journal.
But as the business expands and the number of
transactions becomes large, it may become
cumbersome to jour-nalise each transaction. For
quick, efficient and accurate recording of business
transactions, Journal is sub-divided into special
journals. Many of the business transactions are
repetitive in nature. They can be easily recorded in
special journals, each meant for recording all the
transactions of a similar nature. For example, all
cash transactions may be recorded in one book, all credit
sales transactions in another book and all credit
purchases transactions in yet another book and so on.
These special journals are also called daybooks or
subsidiary books. Transactions that cannot be recorded
in any special journal are recorded in journal called the
Journal Proper. Special journals prove economical and
make division of labour possible in accounting work. In
this chapter we will discuss the following special purpose
books:
• Cash Book
• Purchases Book
• Purchases Return (Return Outwards) Book
• Sales Book
• Sales Return (Return Inwards) Book
• Journal Proper
Recording of Transactions-II 4
LEARNING OBJECTIVES
After studying this
chapter, you will be able
to :
• state the need for
special purpose books;
• record the transactions
in cash book and post
them in the ledger;
• prepare the petty cash
book;
• record the transactions
in the special purpose
books;
• post the entries in the
special purpose book
and  to the ledger;
• balance the ledger
accounts.
2020-21
100 Accountancy
4.1 Cash Book
Cash book is a book in which all transactions relating to cash receipts and cash
payments are recorded. It starts with the cash or bank balances at the beginning
of the period.  Generally, it is made on monthly basis. This is a very popular
book and is maintained by all organisations, big or small, profit or not-for-
profit. It serves the purpose of both journal as well as the ledger (cash) account.
It is also called the book of original entry. When a cashbook is maintained,
transactions of cash are not recorded in the journal, and no separate account
for cash or bank is required in the ledger.
4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book
The single column cash book records all cash transactions of the business in a
chronological order, i.e., it is a complete record of cash receipts and cash
payments. When all receipts and payments are made in cash by a business
organisation only, the cash book contains only one amount column on each
(debit and credit) side. The format of single column cash book is shown in
figure 4.1.
Cash Book
Dr. Cr.
Date Receipts L.F. Amount Date Payments L.F. Amount
` `
Fig. 4.1 : Format of single column cash book
Recording of entries in the single column cash book and its balancing is
illustrated by an example. Consider the following transactions of M/s Roopa
Traders observe how they are recorded in a single column cash book.
Date Details Amount
`
2017
Nov. 01 Cash in hand 30,000
Nov. 04 Cash received from Gurmeet 12,000
Nov. 08 Insurance paid (Annual Instalment) 6,000
Nov. 13 Purchased furniture 13,800
Nov. 16 Sold goods for cash 28,000
Nov. 17 Purchased goods from Mudit in cash 17,400
Nov. 20 Purchase stationery 1,100
Nov. 24 Cash paid to Rukmani in full settlement of account 12,500
2020-21
Page 3


I
n chapter 3, you learnt that all the
business transactions are first recorded in the
journal and then they are posted in the ledger
accounts. A small business may be able to record
all its transactions in one book only, i.e., the journal.
But as the business expands and the number of
transactions becomes large, it may become
cumbersome to jour-nalise each transaction. For
quick, efficient and accurate recording of business
transactions, Journal is sub-divided into special
journals. Many of the business transactions are
repetitive in nature. They can be easily recorded in
special journals, each meant for recording all the
transactions of a similar nature. For example, all
cash transactions may be recorded in one book, all credit
sales transactions in another book and all credit
purchases transactions in yet another book and so on.
These special journals are also called daybooks or
subsidiary books. Transactions that cannot be recorded
in any special journal are recorded in journal called the
Journal Proper. Special journals prove economical and
make division of labour possible in accounting work. In
this chapter we will discuss the following special purpose
books:
• Cash Book
• Purchases Book
• Purchases Return (Return Outwards) Book
• Sales Book
• Sales Return (Return Inwards) Book
• Journal Proper
Recording of Transactions-II 4
LEARNING OBJECTIVES
After studying this
chapter, you will be able
to :
• state the need for
special purpose books;
• record the transactions
in cash book and post
them in the ledger;
• prepare the petty cash
book;
• record the transactions
in the special purpose
books;
• post the entries in the
special purpose book
and  to the ledger;
• balance the ledger
accounts.
2020-21
100 Accountancy
4.1 Cash Book
Cash book is a book in which all transactions relating to cash receipts and cash
payments are recorded. It starts with the cash or bank balances at the beginning
of the period.  Generally, it is made on monthly basis. This is a very popular
book and is maintained by all organisations, big or small, profit or not-for-
profit. It serves the purpose of both journal as well as the ledger (cash) account.
It is also called the book of original entry. When a cashbook is maintained,
transactions of cash are not recorded in the journal, and no separate account
for cash or bank is required in the ledger.
4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book
The single column cash book records all cash transactions of the business in a
chronological order, i.e., it is a complete record of cash receipts and cash
payments. When all receipts and payments are made in cash by a business
organisation only, the cash book contains only one amount column on each
(debit and credit) side. The format of single column cash book is shown in
figure 4.1.
Cash Book
Dr. Cr.
Date Receipts L.F. Amount Date Payments L.F. Amount
` `
Fig. 4.1 : Format of single column cash book
Recording of entries in the single column cash book and its balancing is
illustrated by an example. Consider the following transactions of M/s Roopa
Traders observe how they are recorded in a single column cash book.
Date Details Amount
`
2017
Nov. 01 Cash in hand 30,000
Nov. 04 Cash received from Gurmeet 12,000
Nov. 08 Insurance paid (Annual Instalment) 6,000
Nov. 13 Purchased furniture 13,800
Nov. 16 Sold goods for cash 28,000
Nov. 17 Purchased goods from Mudit in cash 17,400
Nov. 20 Purchase stationery 1,100
Nov. 24 Cash paid to Rukmani in full settlement of account 12,500
2020-21
101 Recording of Transactions - II
Nov. 27 Sold goods to Kamal for cash 18,200
Nov. 30 Paid monthly rent 2,500
Nov. 30 Paid salary 3,500
Nov. 30 Deposited in bank 8,000
Roopa Traders
Cash Book
Dr. Cr.
Date Receipts L.F. Amount Date Payments L.F. Amount
` `
2017 2017
Nov. 01 Balance b/d 30,000 Nov. 08 Insurance 6,000
Nov. 04 Gurmeet 12,000 Nov. 13 Furniture 13,800
Nov. 16 Sales 28,000 Nov. 17 Purchases 17,400
Nov. 27 Sales 18,200 Nov. 20 Stationery   1,100
Nov. 24 Rukmani  12,500
Nov. 30 Rent   2,500
Nov. 30 Salary   3,500
Nov. 30 Bank  8,000
Nov. 30 Balance c/d 23,400
88,200 88,200
Dec.01 Balance b/d 23,400
Posting of the Single Column Cash Book
As evident from figure 4.1, the left side of the cash book shows the receipts of
the cash whereas the right side of the cash book shows all the payments
made in cash. The accounts appearing on then debit side for the cash book
are credited in the respective ledger accounts because cash has been received
in respect of them. Thus, in our example, an entry ‘cash received from Gurmeet’
appears on the debit side of the cash book conveys that the cash has been
received from Gurmeet. Therefore, in the ledger, Gurmeet’s account will be
credited by writing ‘Cash’ in the particulars column on the credit side. Similarly,
all the account names appearing on the credit side of the cash book are debited
as cash/cheque has been paid in respect of them. Now, notice, how the
transactions in our example are posted to the related ledger accounts:
2020-21
Page 4


I
n chapter 3, you learnt that all the
business transactions are first recorded in the
journal and then they are posted in the ledger
accounts. A small business may be able to record
all its transactions in one book only, i.e., the journal.
But as the business expands and the number of
transactions becomes large, it may become
cumbersome to jour-nalise each transaction. For
quick, efficient and accurate recording of business
transactions, Journal is sub-divided into special
journals. Many of the business transactions are
repetitive in nature. They can be easily recorded in
special journals, each meant for recording all the
transactions of a similar nature. For example, all
cash transactions may be recorded in one book, all credit
sales transactions in another book and all credit
purchases transactions in yet another book and so on.
These special journals are also called daybooks or
subsidiary books. Transactions that cannot be recorded
in any special journal are recorded in journal called the
Journal Proper. Special journals prove economical and
make division of labour possible in accounting work. In
this chapter we will discuss the following special purpose
books:
• Cash Book
• Purchases Book
• Purchases Return (Return Outwards) Book
• Sales Book
• Sales Return (Return Inwards) Book
• Journal Proper
Recording of Transactions-II 4
LEARNING OBJECTIVES
After studying this
chapter, you will be able
to :
• state the need for
special purpose books;
• record the transactions
in cash book and post
them in the ledger;
• prepare the petty cash
book;
• record the transactions
in the special purpose
books;
• post the entries in the
special purpose book
and  to the ledger;
• balance the ledger
accounts.
2020-21
100 Accountancy
4.1 Cash Book
Cash book is a book in which all transactions relating to cash receipts and cash
payments are recorded. It starts with the cash or bank balances at the beginning
of the period.  Generally, it is made on monthly basis. This is a very popular
book and is maintained by all organisations, big or small, profit or not-for-
profit. It serves the purpose of both journal as well as the ledger (cash) account.
It is also called the book of original entry. When a cashbook is maintained,
transactions of cash are not recorded in the journal, and no separate account
for cash or bank is required in the ledger.
4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book
The single column cash book records all cash transactions of the business in a
chronological order, i.e., it is a complete record of cash receipts and cash
payments. When all receipts and payments are made in cash by a business
organisation only, the cash book contains only one amount column on each
(debit and credit) side. The format of single column cash book is shown in
figure 4.1.
Cash Book
Dr. Cr.
Date Receipts L.F. Amount Date Payments L.F. Amount
` `
Fig. 4.1 : Format of single column cash book
Recording of entries in the single column cash book and its balancing is
illustrated by an example. Consider the following transactions of M/s Roopa
Traders observe how they are recorded in a single column cash book.
Date Details Amount
`
2017
Nov. 01 Cash in hand 30,000
Nov. 04 Cash received from Gurmeet 12,000
Nov. 08 Insurance paid (Annual Instalment) 6,000
Nov. 13 Purchased furniture 13,800
Nov. 16 Sold goods for cash 28,000
Nov. 17 Purchased goods from Mudit in cash 17,400
Nov. 20 Purchase stationery 1,100
Nov. 24 Cash paid to Rukmani in full settlement of account 12,500
2020-21
101 Recording of Transactions - II
Nov. 27 Sold goods to Kamal for cash 18,200
Nov. 30 Paid monthly rent 2,500
Nov. 30 Paid salary 3,500
Nov. 30 Deposited in bank 8,000
Roopa Traders
Cash Book
Dr. Cr.
Date Receipts L.F. Amount Date Payments L.F. Amount
` `
2017 2017
Nov. 01 Balance b/d 30,000 Nov. 08 Insurance 6,000
Nov. 04 Gurmeet 12,000 Nov. 13 Furniture 13,800
Nov. 16 Sales 28,000 Nov. 17 Purchases 17,400
Nov. 27 Sales 18,200 Nov. 20 Stationery   1,100
Nov. 24 Rukmani  12,500
Nov. 30 Rent   2,500
Nov. 30 Salary   3,500
Nov. 30 Bank  8,000
Nov. 30 Balance c/d 23,400
88,200 88,200
Dec.01 Balance b/d 23,400
Posting of the Single Column Cash Book
As evident from figure 4.1, the left side of the cash book shows the receipts of
the cash whereas the right side of the cash book shows all the payments
made in cash. The accounts appearing on then debit side for the cash book
are credited in the respective ledger accounts because cash has been received
in respect of them. Thus, in our example, an entry ‘cash received from Gurmeet’
appears on the debit side of the cash book conveys that the cash has been
received from Gurmeet. Therefore, in the ledger, Gurmeet’s account will be
credited by writing ‘Cash’ in the particulars column on the credit side. Similarly,
all the account names appearing on the credit side of the cash book are debited
as cash/cheque has been paid in respect of them. Now, notice, how the
transactions in our example are posted to the related ledger accounts:
2020-21
102 Accountancy
Books of Roopa Traders
Gurmeet’s Account
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov.04 Cash 12,000
Sales Account
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov. 16 Cash 28,000
Nov. 27 Cash 18,200
Insurance Account
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov. 08 Cash 6,000
Furniture Account
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov. 13 Cash 13,800
Purchases Account
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov. 17 Cash 17,400
Stationery Account
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov. 20 Cash 1,100
2020-21
Page 5


I
n chapter 3, you learnt that all the
business transactions are first recorded in the
journal and then they are posted in the ledger
accounts. A small business may be able to record
all its transactions in one book only, i.e., the journal.
But as the business expands and the number of
transactions becomes large, it may become
cumbersome to jour-nalise each transaction. For
quick, efficient and accurate recording of business
transactions, Journal is sub-divided into special
journals. Many of the business transactions are
repetitive in nature. They can be easily recorded in
special journals, each meant for recording all the
transactions of a similar nature. For example, all
cash transactions may be recorded in one book, all credit
sales transactions in another book and all credit
purchases transactions in yet another book and so on.
These special journals are also called daybooks or
subsidiary books. Transactions that cannot be recorded
in any special journal are recorded in journal called the
Journal Proper. Special journals prove economical and
make division of labour possible in accounting work. In
this chapter we will discuss the following special purpose
books:
• Cash Book
• Purchases Book
• Purchases Return (Return Outwards) Book
• Sales Book
• Sales Return (Return Inwards) Book
• Journal Proper
Recording of Transactions-II 4
LEARNING OBJECTIVES
After studying this
chapter, you will be able
to :
• state the need for
special purpose books;
• record the transactions
in cash book and post
them in the ledger;
• prepare the petty cash
book;
• record the transactions
in the special purpose
books;
• post the entries in the
special purpose book
and  to the ledger;
• balance the ledger
accounts.
2020-21
100 Accountancy
4.1 Cash Book
Cash book is a book in which all transactions relating to cash receipts and cash
payments are recorded. It starts with the cash or bank balances at the beginning
of the period.  Generally, it is made on monthly basis. This is a very popular
book and is maintained by all organisations, big or small, profit or not-for-
profit. It serves the purpose of both journal as well as the ledger (cash) account.
It is also called the book of original entry. When a cashbook is maintained,
transactions of cash are not recorded in the journal, and no separate account
for cash or bank is required in the ledger.
4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book 4.1.1 Single Column Cash Book
The single column cash book records all cash transactions of the business in a
chronological order, i.e., it is a complete record of cash receipts and cash
payments. When all receipts and payments are made in cash by a business
organisation only, the cash book contains only one amount column on each
(debit and credit) side. The format of single column cash book is shown in
figure 4.1.
Cash Book
Dr. Cr.
Date Receipts L.F. Amount Date Payments L.F. Amount
` `
Fig. 4.1 : Format of single column cash book
Recording of entries in the single column cash book and its balancing is
illustrated by an example. Consider the following transactions of M/s Roopa
Traders observe how they are recorded in a single column cash book.
Date Details Amount
`
2017
Nov. 01 Cash in hand 30,000
Nov. 04 Cash received from Gurmeet 12,000
Nov. 08 Insurance paid (Annual Instalment) 6,000
Nov. 13 Purchased furniture 13,800
Nov. 16 Sold goods for cash 28,000
Nov. 17 Purchased goods from Mudit in cash 17,400
Nov. 20 Purchase stationery 1,100
Nov. 24 Cash paid to Rukmani in full settlement of account 12,500
2020-21
101 Recording of Transactions - II
Nov. 27 Sold goods to Kamal for cash 18,200
Nov. 30 Paid monthly rent 2,500
Nov. 30 Paid salary 3,500
Nov. 30 Deposited in bank 8,000
Roopa Traders
Cash Book
Dr. Cr.
Date Receipts L.F. Amount Date Payments L.F. Amount
` `
2017 2017
Nov. 01 Balance b/d 30,000 Nov. 08 Insurance 6,000
Nov. 04 Gurmeet 12,000 Nov. 13 Furniture 13,800
Nov. 16 Sales 28,000 Nov. 17 Purchases 17,400
Nov. 27 Sales 18,200 Nov. 20 Stationery   1,100
Nov. 24 Rukmani  12,500
Nov. 30 Rent   2,500
Nov. 30 Salary   3,500
Nov. 30 Bank  8,000
Nov. 30 Balance c/d 23,400
88,200 88,200
Dec.01 Balance b/d 23,400
Posting of the Single Column Cash Book
As evident from figure 4.1, the left side of the cash book shows the receipts of
the cash whereas the right side of the cash book shows all the payments
made in cash. The accounts appearing on then debit side for the cash book
are credited in the respective ledger accounts because cash has been received
in respect of them. Thus, in our example, an entry ‘cash received from Gurmeet’
appears on the debit side of the cash book conveys that the cash has been
received from Gurmeet. Therefore, in the ledger, Gurmeet’s account will be
credited by writing ‘Cash’ in the particulars column on the credit side. Similarly,
all the account names appearing on the credit side of the cash book are debited
as cash/cheque has been paid in respect of them. Now, notice, how the
transactions in our example are posted to the related ledger accounts:
2020-21
102 Accountancy
Books of Roopa Traders
Gurmeet’s Account
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov.04 Cash 12,000
Sales Account
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov. 16 Cash 28,000
Nov. 27 Cash 18,200
Insurance Account
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov. 08 Cash 6,000
Furniture Account
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov. 13 Cash 13,800
Purchases Account
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov. 17 Cash 17,400
Stationery Account
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov. 20 Cash 1,100
2020-21
103 Recording of Transactions - II
Rukmani’s Account
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov.24 Cash 12,500
 Rent Account
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov.30 Cash 2,500
Salary Account
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov. 30 Cash 3,500
Bank’s Account
Dr.                                                Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
` `
2017
Nov.30 Cash 8,000
4.1.2 Double Column Cash Book 4.1.2 Double Column Cash Book 4.1.2 Double Column Cash Book 4.1.2 Double Column Cash Book 4.1.2 Double Column Cash Book
In this type of cash book, there are two columns of amount on each side of the
cash book. In fact, now-a-days bank transactions are very large in number. In
many organisations, as far as possible, all receipts and payments are affected
through bank.
A businessman generally opens a current account with a bank. Bank, do
not allow any interest on the balance in current account but charge a small
amount, called incidental charges, for the services rendered.
For depositing cash/cheques in the bank account, a form has to be filled,
which is called a pay-in-slip. (refer figure 4.2) It contains a counterfoil also
which is returned to the customer (depositor) with the signature of the cashier,
as receipt.
The bank issues blank cheque forms, to the account holder for withdrawing
money. (refer figure 4.3) The depositor writes the name of the party to whom
payment is to be made after the words Pay printed on the cheque. Cheque
2020-21
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