# CBSE Class 11 Accountancy Recording Of Transaction Concepts And Illustrations

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## Revision Notes for Class 11 Accountancy Chapter 3 Recording of Transactions-I

Class 11 Accountancy students should refer to the following concepts and notes for Chapter 3 Recording of Transactions-I in Class 11. These exam notes for Class 11 Accountancy will be very useful for upcoming class tests and examinations and help you to score good marks

### Chapter 3 Recording of Transactions-I Notes Class 11 Accountancy

Accounting Equation : Total Assets = Total Liabilities Or Total Assets = Internal Liabilities + External Liabilities Or Total Assets = Capital + Liabilities Classification of Transactions Following are the nine basic transactions:

1. Increase in assets with corresponding increase in capital.

2. Increase in assets with corresponding increase in liabilities.

3. Decrease in assets with corresponding decrease in capital.

4. Decrease in assets with corresponding decrease in liabilities.

5. Increase and decrease in assets.

6. Increase and decrease in liabilities

7. Increase and decrease in capital

8. Increase in liabilities and decrease in capital

9. Increase in capital and decrease in liabilities.

Illustration : Show the effect of the following business transactions on assets, liabilities and capital through accounting equations:

1. Commenced business with cash 20,000

2. Goods purchased on credit 7,000

3. Furniture purchased 3,000

4. paid to creditors 2,000

5. Amount withdrawn by the proprietor 4,000

6. Creditors accepted a bill for payment 1,500

7. interest on capital 1,000

8. Transfer from capital to loan 5,000

9. Allotted shares to creditors 1,000

Question for Practice:

Prepare Accounting equation on the basis of following information:

(1) Sohan started business with cash    =80,000

Machinery              =10,000

And stock             =10,000

(2) Interest on the above capital was allowed @ 10%

(3) Money withdrew from the business for his personal use 10,000/-

(4) Interest on drawings 500/-

(5) Depreciation charged on machinery 2,000/-

Q. How the assets liabilities and capital will be affected under following cases:

(1) Purchase of building for cash

(2) Purchase of furniture on credit

(3) Receipt of commission

(4) Payment to creditors

Generally Students commit these mistakes please avoid :

Treatment of adjustment in accounting equation

Dual or triple effect of transaction

Omission in recording amount

Interest on capital and drawing

Debit and credit should be done properly

Depreciation must be treated properly.

RULES OF DEBIT AND CREDIT (I) Traditional or English Approach: This approach is based on the main principle of double entry system i.e. every debit has a credit and every credit has a debit. According to this system we should record both the aspects of a transaction whereas one aspect of a transaction will be debited and other aspect of a transaction will be credited.

(1) Personal Account: Debit the receiver and credit the giver.

(2) Real Account: Debit what comes in and credit what goes out.

(3) Nominal Account: Debit all expenses and losses credit all incomes and gains.

(2) Modern or American Approach: This approach is based on the accounting equation or balance sheet. In this approach accounts are debited or credited according to the nature of an account. In a summarised way the five rules of modern approach is as follows:

1. Increase in asset will be debited and decrease will be credited.

2. Increase in the liabilities will be credited and decrease will be debited.

3. Increase in the capital will be credited and decrease will be debited.

4. Increase in the revenue or income will be credited and decrease will be debited.

5. Increase in expenses and losses will be debited and decrease will be credited.

SOURCE DOCUMENTS

Meaning of Source documents: Business transactions are recorded in the books of accounts on the basis of some written evidence called source document.

Common Source documents are Cash Memo, Invoice or Bill, Receipts, Debit Note, Credit Note, Cheque, Pay in slip

Meaning of Voucher: Voucher is a source by which we record the transactions.

Meaning of Journal: Journal is a book of prime entry in which transactions are copied in order of date from a memorandum or waste book.

Illustration:

Journalise the following transactions in the books of Ravi:

1. Bought goods from Sonam Rs. 20,000 less trade discount 20% plus VAT @ 10%.

2. Sold goods costing Rs. 6,000 to Ram for Rs. 8,000 plus VAT @ 10%

3. Sold the balance goods for Rs. 16,000 and charged VAT @ 10% to Mohan against payment by cheque which was banked on the same day.

4. Deposited the VAT into government account by cheque.

Question for Practice:

Journalise the following transactions:

1. Paid sales tax Rs. 5,000.

2. Sold goods for Rs. 80,000 to Diwan for cash and charged 8% sales tax.

3. Purchased goods from Neelam for Rs. 50,000 plus VAT @ 10%

4. Sold goods to Punam worth Rs. 80,000 plus VAT @ 10%.

5. VAT was deposited into Government Account on its due date.

6. Paid Income Tax Rs. 7,000.

CASH BOOK Meaning: Cash book is a book in which all the transactions related to cash receipts and cash payments are recorded.

 CBSE Class 11 Accountancy Introduction To Accounting Concepts And Illustrations CBSE Class 11 Accountancy Introduction To Accounting Notes
 CBSE Class 11 Accountancy Theory Base Of Accounting Concepts And Illustrations CBSE Class 11 Accountancy Theory Base Of Accounting Notes
 CBSE Class 11 Accountancy Recording Of Transaction Concepts And Illustrations CBSE Class 11 Accountancy Recording Of Transaction Notes
 CBSE Class 11 Accountancy Rectification Of Error Concepts And Illustrations CBSE Class 11 Accountancy Rectification Of Error Notes
 CBSE Class 11 Accountancy Depreciation Provisions And Reserves Concepts And Illustrations CBSE Class 11 Accountancy Depreciation Provisions And Reserves Notes
 CBSE Class 11 Accountancy Financial Statements Concepts And Illustrations CBSE Class 11 Accountancy Financial Statements Notes
 CBSE Class 11 Accountancy Accounts For Incomplete Records Notes Set A CBSE Class 11 Accountancy Accounts For Incomplete Records Notes Set B
 CBSE Class 11 Accountancy Computers And Accounting Information System Notes Set A CBSE Class 11 Accountancy Computers And Accounting Information System Notes Set B
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### CBSE Class 11 Accountancy Chapter 3 Recording of Transactions-I Notes

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### Notes for Accountancy CBSE Class 11 Chapter 3 Recording of Transactions-I

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#### Chapter 3 Recording of Transactions-I Notes for Accountancy CBSE Class 11

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#### Chapter 3 Recording of Transactions-I CBSE Class 11 Accountancy Notes

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#### Notes for CBSE Accountancy Class 11 Chapter 3 Recording of Transactions-I

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