NCERT Class 11 Accountancy Recording of Transaction I

NCERT Class 11 Accountancy - Recording of Transaction I.Download NCERT Chapters and Books in pdf format. Easy to print and read. Copies of these textbooks may be downloaded and used as textbooks or for reference. Refer to other chapters and books at other links (NCERT now providing you soft copies of all textbooks of all subjects from class first to twelfth online). 

Recording of Transactions-I

In chapter 1 and 2, while explaining the development and importance of accounting as a source of disseminating the financial information along with the discussion on basic accounting concepts that guide the recording of business transactions, it has been indicated that accounting involves a process of identifying and analysing the business transactions, recording them, classifying and summarising their effects and finally communicating it to the interested users of accounting information.

In this chapter, we will discuss the details of each step involved in the accounting process. The first step involves identifying the transactions to be recorded and preparing the source documents which are in turn recorded in the basic book of original entry called journal and are then posted to individual accounts in the principal book called ledger.

3.1 Business Transactions and Source Document

After securing good percentage in your previous examination, as promised, your father wishes to buy you a computer. You go to the market along with your father to buy a computer. The dealer gives a cash memo along with the computer and in exchange your father makes cash payment of Rs. 35,000. Purchase of computer for cash is an example of a transaction, which involves reciprocal exchange of two things: (i) payment of cash, (ii)  delivery of a computer. Hence, the transaction involves this aspect, i.e. Give and Take. Payment of cash involves give aspect and delivery of computer is a take aspect. Thus, business transactions are exchanges of economic consideration between parties and have two-fold effects that are recorded in at least two accounts.  Business transactions are usually evidenced by an appropriate documents such as Cash memo, Invoice, Sales bill, Pay-in-slip, Cheque, Salary slip, etc. A document which provides evidence of the transactions is called the Source Document or a Voucher. At times, there may be no documentary for certain items as in case of petty expenses. In such case voucher may be prepared showing the necessary details and got approved by appropriate authority within the firm. All such documents (vouchers) are arranged in chronological order and are serially numbered and kept in a separate file. All recording in books of account is done on the basis of vouchers.

3.1.1 Preparation of Accounting Vouchers

Accounting vouchers may be classified as cash vouchers, debit vouchers, credit vouchers, journal vouchers, etc. There is no set format of accounting vouchers. A specimen of a simple transaction voucher is used in practice is shown in figure 3.1.

These must be preserved in any case till the audit of the accounts and tax assessments for the relevant period are completed. Now a days, accounting is computerised and the necessary accounting vouchers showing the code number and name of the accounts to be debited and credited are prepared for the purpose of necessary recording of transactions. A transaction with one debit and one credit is a simple transaction and the accounting vouchers prepared for such transaction is known as Transaction Voucher, the format of which is shown in figure 3.1. Voucher which records a transaction that entails multiple debits/credits and one credit/debit is called compound voucher. Compound voucher may be: (a) Debit Voucher or (b) Credit Voucher.

Questions for Practice

Short Answers

1. States the three fundamental steps in the accounting process.

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

3. Should a transaction be first recorded in a journal or ledger? Why?

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

5. Why are some accounting systems called double accounting systems?

6. Give a specimen of an account.

7. Why are the rules of debit and credit same for both liability and capital?

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

9. What entry (debit or credit) would you make to: (a) increase revenue (b) decrease in expense, (c) record drawings (d) record the fresh capital introduced by the owner.

10. If a transaction has the effect of decreasing an asset, is the decrease recorded as a debit or as a credit? If the transaction has the effect of decreasing a liability, is the decrease recorded as a debit or as a credit?

Long Answers

1. Describe the events recorded in accounting systems and the importance of source documents in those systems?

2. Describe how debits and credits are used to analyse transactions.

3. Describe how accounts are used to record information about the effects of transactions?

4. What is a journal? Give a specimen of journal showing at least five entries.

5. Differentiate between source documents and vouchers.

6. Accounting equation remains intact under all circumstances. Justify the statement with the help of an example.

7. Explain the double entry mechanism with an illustrative example.

 

Please refer to attached file for NCERT Class 11 Accountancy - Recording of Transaction I

Tags: 

 


Click to View or Download pdf file
Click for more Accountancy Study Material

Latest NCERT & CBSE News

Read the latest news and announcements from NCERT and CBSE below. Important updates relating to your studies which will help you to keep yourself updated with latest happenings in school level education. Keep yourself updated with all latest news and also read articles from teachers which will help you to improve your studies, increase motivation level and promote faster learning

Art Integrated Project work for classes 1 to 10

CBSE Board has decided to introduce Art-Integrated Project work for classes I to X to promote Art-Integrated Learning in schools to make teaching learning Competency-Based and joyful. As part of this, at least one Art-Integrated Project in each subject shall be taken...

CBSE advisory on student marks

CBSE has issued a public advisory for all students to be careful from unscrupulous persons impersonating themselves as officers/officials of CBSE. These people have been contacting parents and have been telling them that they have access to student marks data for Board...

Class 12 Board Exams Datesheet Announced

CBSE has announced the datesheet of the remaining class 12 board exams, see below:  

Board Exams Class 10 and 12 Notification by CBSE

Because of the prevailing condition of spread of COVID-19 pandemic in the country, special efforts are required for conducting examinations in a safe manner. As a number of students have shifted from the district of their school to some other district in the country,...

Board Exams Class 10 and Class 12 Datesheet 2020

CBSE has announced the datesheet for the remaining exams of class 10 and class 12 exams. The exams are going to start in July. The class 10 and 12th board exams will be conducted for the remaining 29 papers from July 1 to July 15, 2020, at various centers nominated by...

Checking of Boards Answer sheets starts today

CBSE has instructed almost 3000 schools to start the evaluation work for class 10th and class 12th board exam answer sheets from today. The checking of answer sheets for class 10th and class 12th was stopped earlier due to covid crisis in the country. Now in order to...

×
Studies Today