Courses

Courses for Kids

Free study material

Store

Talk to our experts

1800-120-456-456

NCERT Solutions

Class 11

Accountancy

Chapter 3 Recording Of Transactions 1

NCERT Solutions for Class 11 Accountancy Chapter 3 Recording of Transactions 1

Q: 5. Why are the rules for debit and credit identical for both Liabilities and Capital in Chapter 3? What is the underlying concept?

The rules are identical because of the Business Entity Concept, a core principle in accounting. According to this concept, the business is treated as an entity separate from its owner. Therefore:Capital as a Liability: The money invested by the owner (Capital) is considered an internal liability for the business, as the business is liable to pay it back to the owner.Uniform Treatment: Since both Capital and other liabilities (like loans, creditors) represent obligations of the business, they are treated the same way. An increase in any obligation is credited, and a decrease is debited.

Q: 8. In what way do source documents serve as the primary evidence for every transaction recorded in the journal?

Source documents like invoices, cash memos, receipts, and cheques are the primary evidence for all journal entries. Their importance, as highlighted in Chapter 3, is:Objectivity: They provide objective, verifiable proof that a transaction actually occurred.Accuracy: They contain essential details like the date, amount, parties involved, and nature of the transaction, ensuring accurate recording.Audit Trail: They form the basis of an audit trail, allowing auditors to trace transactions from financial statements back to the original evidence, which is a requirement under CBSE/NCERT guidelines.

NCERT Class 11 Accounts Chapter 3 Exercise Solutions - FREE PDF Download

NCERT Solutions for Accountancy Class 11 Chapter 3 Recording of Transactions provides comprehensive answers to questions found in the textbook and it explores to understand the fundamental aspects of recording financial transactions. This chapter is crucial as it lays the foundation for accurate and systematic recording of business activities.

With clear explanations and practical examples, Class 11 Accountancy NCERT Solutions helps to strengthen students' scores more in their exams, ensuring they can apply these skills effectively in real-world scenarios. Download the Class 11 Accounts Chapter 3 Exercise Solutions prepared by Vedantu Master Teachers and updated according to the Class 11 Accountancy syllabus.

Access NCERT Solutions for Class 11 Accountancy Chapter 3 - Recording of Transactions

Question 1: State the three fundamental steps in the accounting process.

Answer: The three fundamental steps in the process of accounting are:

Collection of data – The first step requires the collection of the data in the form of collecting data of financial transactions in a particular month in the form of all the vouchers and the bills.
Processing of data – After the process of identification of the transactions is complete, the process of accounting requires the due recording of these very transactions in the book of accounts. Hence the accountants are expected to journalize these transactions, classify them into the respective ledger accounts, and to summarise them through Trial Balance.
Reporting – After when all the accounts are tallied, the trial balance of the financial statements is prepared. A financial statement is the Profit and loss account and Balance sheet. These reports are made available to users. Once the financial statement for a period is reported it is said to be the completion of the cycle. A new accounting cycle begins thereafter. Previous year closing balances become the opening balance for the current cycle.

Question 2: Why is the evidence provided by the source document important to accounting?

Answer: The evidence provided by the source document is important because the source document is the initial document that contains the details of the transactions that have taken place in the business. Thus the source document is important for any organisation as:

It confirms the transactions that have taken place in the organisation.
It provides valid evidence of the transaction in the cases when the dispute may likely arise and the matters are taken to court.
It contains all the relevant details of the transactions such as the date of the transaction, the amount involved in the transaction, parties involved in the transaction, particulars of the transaction, etc.
It acts as a check during the process of auditing.

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

Answer: All the transactions should be recorded in the journal first and then in the ledger. Journal entries of all the transactions have to be passed as and when they occur in chronological order in the course of the business and for this very reason the journal book is also referred to as a day book. Journal is also referred to as the book of the original entry as it encompasses all the details of the transactions such as the date of the transactions, the parties involved, and the amount of the transactions which is directly made from the source documents. The postings in the ledger account are made after when the entries are made in the journal book. Journal is the first book in which the transactions are recorded from the source documents Journal gives complete details about a transaction.

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

Answer: Accounting follows the double entry system as in which there are two sides namely,Debit‟ and „Credit‟. In the journal entries, the column of „Debit Amount‟ comes prior to the column of Credit Amount‟. Thus the side which is indented and posted lately is the credit side.

The format of the journal entry is as follows:

Date	Particulars	Ledger folio	Debit (Amount)	Credit (Amount)
01-04-2018	Purchase A/C Dr To Cash A/c (Being Capital introduced)		100,000	100,000

Question 5: Why are some accounting systems called double accounting systems?

Answer: The double accounting system refers to the system of accounting in which the transaction is recorded in the two sides of the account, namely Debit and Credit. Under the double entry system of accounting, the effect made on the one side of the account is made in simultaneous manner to the other side of the account. This is hence the widely recognized system of accounting which systematically records the transactions and gives the actual financial position of the business. The other method of accounting is the single entry system in which the transactions are recorded in the single side of the account only.

Question 6: Give a specimen of an account.

Account

DR.							CR.
Date	Particulars	J.F	Amount Rs	Date	Particulars	J.F	Amount Rs

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

Answer: As per the business entity concept, a business is considered to be a legal entity that has its existence which is apart from the existence of the owner. Any business has a number of sources to fund itself which can be both internal as well as external. The amount invested by the owner of the business is known as capital which is hence regarded to be the internal source of the business fund. Thus the amount invested by the owner of the business is a liability for the business as it is liable to repay the invested amount back in the case when the business is about to close. In a similar manner, the amount withdrawn by the owner of the business and the net loss incurred by the business is debited from the capital as it reduces the liability of the business. Hence, the treatment given to the creditor of the business is the same treatment given to the owner of the business, and hence rules of the debit and credit are the same for both liability and capital.

Question 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?

Answer: The Journal Folio numbers are used as a reference to denote the page numbers of the journal entry book in which the particular transactions are recorded. This hence allows the users to directly take the reference of the transaction in the journal entry book from the ledger account. This hence allows the users to track the information correspondingly and verify the details of the transactions correspondingly from the book of journal entries.

Question 9: What entry (debit or credit) would you make to:

(a) increase revenue

(b) decrease in expenses,

(d) record the fresh capital introduced by the owner.

Answer:

(a) Increase in Revenue: For this case, Income / Gain should be credited as it increases the revenue of the business making the rise in the amount of the capital.

(b) Decrease in expense: The expenses are usually debited in the books of account. But in this case the expenses are decreasing implying that reverse treatment should be given and hence the expenses have to be credited.

(c) Record drawings: Drawings refer to the withdrawal of a certain amount from the amount capital which thereby reduces the amount of the capital. Hence this should be debited in the books of accounts.

(d) Record the fresh capital introduced: Whenever the fresh capital is reduced in the business it must be credited as it increases the liability of the business by giving the rise of the capital in the business.

Question 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?

Answer: The purchase of the asset is recorded as the debit in the books of account and hence the effects which cause the decrease in the value of the asset will be credited in the books of account. For example, the sale of the asset of the business causes a decrease in the value of the asset and hence such a sale will be credited. The decrease in the liabilities of the business is debited in the books of accounts as the liabilities are recorded on the credit side of the book. For example, the drawings made by the owner of the business decrease the liability of the capital invested by the organisation and hence such transactions will be shown on the debit side.

Question 11: Describe the events recorded in the accounting system and the importance of source documents in those systems.

Answer: Any business goes through a large number of voluminous transactions on a day-to-day basis and hence is not possible for anyone to remember the details of the transactions. Thus the accounting system allows the organisation to record the transactions and keep track of them. These transactions are made based on the source documents which are used as support documents to account and record the transactions.

Only the monetary events are recorded in the books of accounts with the help of supporting documents. These transactions include:

Credit sales are recorded using invoices.
Purchases are recorded using a bill/invoice.
Cash Sale recorded using Cash memo.
Bank deposits made and recorded using bank pay-in-slips
Expenses paid through the bank supported by cheques.
Purchase returns and Sales returns are recorded using debit notes and credit notes respectively.

The importance of the source document in accounting is as follows:

It confirms the occurrence of the transactions which have taken place.
It is valid evidence which can be presented during court proceedings in case of any kind of disputes related to the transaction.
It contains the necessary details of the transactions such as the parties involved, the amount involved, the date of the transaction, particulars of the transaction, etc.
It acts as a check during the process of auditing.

Question 12: Describe how debits and credits are used to analyse transactions.

Answer: As per the dual concept of accounting all the re coded transactions in the books of accounts have two aspects – debit and credit. With the effect on the aspect of the transaction, there is a simultaneous and corresponding effect on the other side of the account. An example of such a transaction is as follows:

A business sells goods worth Rs. 500 on the 1st April 2018. Thus the books of account will debit the cash received from such transaction and credit the sales simultaneously in this transaction. In this example, there is the sale of the goods that the business deals with cash coming into the business. There are three kinds of accounts in accountancy which are:

Personal accounts – These are the accounts that deal with persons. The rule of the personal account is that the receiver must be debited and the giver must be credited. Example: Bank A/c represents a bank, an organisation. The capital account represents the proprietor‟s account, Saradha A/c represents a person's account etc.
Real Account - These are accounts that deal with assets of a material nature. The rule for the real account is to Debit what comes in and credit what goes out. Example: Furniture A/c, Machinery, Goodwill A/c etc.
Nominal accounts - These are the accounts that deal with all kinds of expenses/ incomes. The rule of accounting for the real account is: Debit is all the expenses/ losses and all income/gains should be credited. Example: Salary A/c, Telephone charges A/c, Interest earned etc.

Question 13: Describe how accounts are used to record information about the effects of transactions.

Answer: The journal entry gives a clear picture of particular transactions but it is difficult to assess information about any particular account when there is a chain of transactions related to it. Hence in such a case, the ledger accounts become important as they maintain systematic accounts in tabular format which helps the user to determine the details of the transaction for the particular account. This can be better understood with an example.

01.01.17- Credit Sale is made to Ram for Rs.10000 05.01.17- Goods worth Rs.2000 is returned from Ram 08.01.17- Cheque received Rs.5000 on account from Ram 10.01.17- Cash received Rs.1000 on account from Ram Now this is posted in Journal on various dates. A clear picture can be seen only when the entries are posted in the ledger account of Ram. The balance amount receivable from Ram is clearly shown in the ledger below.

Ram Account

Dr									Dr
Date	Particulars	J F	Amount	Amount	Date	Particulars	JF	Amount	Amount
01.01 .17	To Sales			10000	05. 01. 17	By Sales return s			2000
					08. 01. 17	By Bank A/c			5000
					10. 01. 17	By cash A/c			1000
					31. 01. 17.	By Balance c/d			2000
				10000					10000

Question 14: What is a journal? Give a specimen of a journal showing at least five entries.

Answer: Journal is derived from the French word “Jour”, the meaning of which is “daily records”. Journal thus records the day-to-day transactions of the business chronologically and hence is also called the “Day Book”. The format of the journal is given below.

The format of the journal is shown below:

Date

Particulars

Debit (Amount)

Credit (Amount)

Date: The date of the transaction in which the transaction has occurred so that journal could be made and maintained in a chronological manner from the source document. Particulars: The accounts which have to be debited/ credited.

2017		Rs.
Dec. 01	The business started with cash	15,000
Dec. 07	Purchased goods for cash	20,000
Dec. 09	Sold goods to Swati	5,000
Dec. 12	Purchased furniture	3,000
Dec. 18	Cash received from Swati in full settlement	4,000
Dec. 25	Paid rent	1,000
Dec.30	Paid salary	1,500

Journal Entries in the Books of Gita:

DATE	PARTICULARS	DEBIT	CREDIT
01.12.2017	Cash a/c DR to Capital Account (Being Business commenced with Cash)	15000	15000
07.12.2017	Purchases A/c To Cash Account ( Being Goods purchased for Cash)	20000	20000
09.12.2017	Swathi A/c Dr To Sales A/c(Being Sales to Swati)	5000	5000
12.12.2017	Furniture A/c Dr To Cash A/c (Being Furniture Purchased)	3000	3000
18.12.2017	Cash A/C dR dIscount Allowed Dr. A/c To Swati A/c( Being cash received as full Settlement)	1000	1000
30.12.2017	Salary A/c Dr To Cash A/c (Being Salary Paid)	1500	1500

Question 15: Differentiate between source documents and vouchers.

Answer:

Basis of Difference	Source Documents	Vouchers
Definition	The source document forms the basis for recording any transaction in the books of accounts.	Vouchers are those documents which support an entry in the books of accounts.
Scope	It is used in the initial manner to record the transactions.	It is used as a reference for the interpretation of any particular transaction at any time.
Time of Preparation	The source document is prepared once when an event occurs.	A voucher is prepared on the occurrence of an event or at a later stage.
Function	The source document forms the basis of the preparation of the vouchers which are used for recording the transactions.	This forms the basis for recording the accounting transactions.
Prepared by	It can be made by anyone who is dealing with that particular transaction.	It is prepared only by the concerned authorised person.
Examples	Invoice, cheques, cash memo etc	Cash vouchers, salary register, Letter of credit, goods inward/outward book, etc.

Question 16: The accounting equation remains intact under all circumstances. Justify the Statement with the help of the example.

Answer: The double-entry accounting system states that for every debit there is an equal amount of credit. However, there is unlikely to be the equality of the total assets with the total claims of the business and the accounting equation will persist to be Assets = Liabilities Capital. Hence this equation will remain intact under all the circumstances. The examples for the same are as follows:

Mr. A started a business with cash Rs.100000

Assets = Liabilities Capital

Cash increases by 100000

And Capital 100000

100000 = 0+100000

Purchased goods on credit for Rs.30000

Assets (Inventory) =30000

Creditors = 30000

Assets = Liabilities +Capital

30000= 30000+0

Question 17: Explain the double-entry mechanism with an illustrative example.

Answer:

As per the double entry system of accounting, every transaction has two aspects: debit and credit. Hence the double-entry accounting system states that for every debit there is an equal amount of credit. Thus the ledger account always shows the debit on one side and the credit on the other side to abide by the dual aspect concept.

The three golden rules of accounting must be known in passing an entry:

1. Personal Account- Debit the receiver Credit the giver

2. Real Account - Debit what comes in Credit what goes out

3. Nominal accounts- Debit the expenses/ losses Credit the income / gain

Illustrative example:

Mr. Shyam commenced business with Cash Rs. 200000 and building Rs.150000.

Analysis:

In the above transaction in-hand Cash comes in Rs. 200000 and building comes in Rs. 150000. On the other hand liability to be paid to the proprietor i.e. Capital increase is Rs. 350000.

Journal Entry in the books of Shyam

Particulars	Debit	Credit
Cash A/c Dr	200000	35000
Building A/c Dr	150000
To Capital A/c (Being business commenced)

Question 18: Prepare an accounting equation based on the following:

(a) Harsha started the business with cash of Rs 2,00,000

(b) Purchased goods from Naman for cash Rs 40,000

(d) Bought furniture on credit Rs 7,000

Answer:

Accounting Equation: Assets = Capital + Liabilities

The solution is as follows:

S.No.

Explanation

Assets

Liabilities

Capital

Cash

Stock

Debtors

Furniture

Creditors

(a)

Increase in cash

2,00,000

Increase in capital

2,00,000

NIL

2,00,000

(b)

Increase in stock

40,000

Decrease in cash

(40,000)

1,60,000

40,000

NIL

2,00,000

(c)

Increase in debtors

12,000

Decrease in stock

(10,000)

Profit

2,000

1,60,000

30,000

12,000

NIL

2,02,000

(d)

Increase in furniture

7,000

Increase in creditors

7,000

1,60,000

30,000

12,000

7,000

2,02,000

Question 19: Prepare an accounting equation from the following: Rs

(a) Kunal started the business with cash of 2,50,000

(b) He purchased furniture for cash

(d) He purchases goods on credit

(e) He sold goods (costing Rs 20,000) for cash 35,000 2,000 40,000 26,000

S.No.

Explanation

Assets

Liabilities

Capital

Cash

Furniture

Stock

Creditors

(a)

Increase in cash

2,50,000

Increase in capital

2,50,000

NIL

2,50,000

(b)

Increase in furniture

35,000

Decrease in cash

(35,000)

2,15,000

35,000

NIL

2,50,000

(c)

Decrease in capital (Expense)

(2,000)

Decrease in cash

(2,000)

2,13,000

35,000

NIL

2,48,000

(d)

Increase in stock

40,000

Increase in creditors

40,000

2,13,000

35,000

40,000

2,48,000

(e)

Increase in cash

26,000

Decrease in stock

(20,000)

Increase in capital (Profit)

6,000

2,39,000

35,000

20,000

40,000

2,54,000

Question 20: Mohit has the following transactions, prepare accounting equation:

		Rs
(a)	The business started with cash	1,75,000
(b)	Purchased goods from Rohit	50,000
(c)	Sales of goods on credit to Manish (Costing Rs 17,500)	20,000
(d)	Purchased furniture for office use	10,000
(e)	Cash paid to Rohit in full settlement	48,500
(f)	Cash received from Manish	20,000
(g)	Rent paid	1,000
(h)	Cash withdrawn for personal use	3,000

S.No.

Explanation

Assets

Liabilities

Capital

Cash

Stock

Debtors

Furniture

Creditors

(a)

Increase in cash

1,75,000

Increase in capital

1,75,000

NIL

1,75,000

(b)

Increase in stock

50,000

Increase in creditors (Rohit)

50,000

1,75,000

50,000

1,75,000

(c)

Increase in debtors (Manish)

20,000

Decrease in stock

(17,500)

Increase in capital (Profit)

2,500

1,75,000

32,500

20,000

50,000

1,77,500

(d)

Increase in furniture

10,000

Decrease in cash

(10,000)

1,65,000

32,500

20,000

10,000

50,000

1,77,500

(e)

Decrease in creditors (Rohit)

(50,000)

Decrease in dash

(48,500)

Increase in capital

(Discount received)

1,500

1,16,500

32,500

20,000

10,000

NIL

1,79,000

(f)

Increase in cash

20,000

Decrease in debtors (Manish)

(20,000)

1,36,500

32,500

NIL

10,000

NIL

1,79,000

(g)

Decrease in capital (Expense)

(1,000)

Decrease in cash

1,000

1,35,500

32,500

NIL

10,000

NIL

1,78,000

(h)

Decrease in capital (Drawings)

(3,000)

Decrease in cash

(3,000)

1,32,500

32,500

NIL

10,000

NIL

1,75,000

Question 21: Rohit has the following transactions:

		Rs
(a)	Commenced business with cash	1,50,000
(b)	Purchased machinery on credit	40,000
(c)	Purchased goods for cash	20,000
(d)	Purchased car for personal use	80,000
(e)	Paid to creditors in full settlement	38,000
(f)	Sold goods for cash costing Rs 5,000	4,500
(g)	Paid rent	1,000
(h)	Commission received in advance	2,000

Prepare the Accounting Equation to show the effect of the above transactions on the assets, liabilities and capital.

Answer:

S.N

Explanation

Assets

Liabilities

Capital

Cash

Machinery

Stock

Creditors

Unaccrued Income

(a)

Increase in cash

1,50,0

Increase in capital

1,50,00

1,50,0

NIL

1,50,00

(b)

Increase in machinery

40,000

Increase in creditors

40,000

1,50,0

40,000

1,50,00

(c)

Increase in stock

20,00

Decrease in cash

(20,00

1,30,0

40,000

20,00

40,000

1,50,00

(d)

Decrease in cash

(80,00

Decrease in capital (Drawings)

(80,000

)

50,000

40,000

20,00

40,000

70,000

(e)

Decrease in creditors

(40,00

Decrease in cash

(38,00

Increase in capital

(Discount received)

2,000

12,000

40,000

20,00

NIL

72,000

(f)

Increase in cash

4,500

Decrease in stock

(5,00

Decrease in capital (Loss)

(500)

16,500

40,000

15,00

NIL

71,500

(g)

Decrease in cash

(1,000)

Decrease in capital (Expense)

(1,000)

(d)

Decrease in cash

(80,00

Decrease in capital (Drawings)

(80,000

)

50,000

40,000

20,00

40,000

70,000

(e)

Decrease in creditors

(40,00

Decrease in cash

(38,00

Increase in capital

(Discount received)

2,000

12,000

40,000

20,00

NIL

72,000

(f)

Increase in cash

4,500

Decrease in stock

(5,00

Decrease in capital (Loss)

(500)

16,500

40,000

15,00

NIL

71,500

(g)

Decrease in cash

(1,000)

Decrease in capital (Expense)

(1,000)

15,500

40,000

15,00

NIL

70,500

(h)

Increase in cash

2,000

Increase

in unaccrued income

2,000

17,500

40,000

15,00

NIL

2,000

70,500

Question 22: Use accounting equation to show the effect of the following transactions of M/s Royal Traders:

		Rs
(a)	Started business with cash	1,20,000
(b)	Purchased goods for cash	10,000
(c)	Rent received	5,000
(d)	Salary outstanding	2,000
(e)	Prepaid Insurance	1,000
(f)	Received interest	700
(g)	Sold goods for cash (costing Rs 5,000)	7,000
(h)	Goods destroyed by fire	500

Answer:

S.No.	Explanation	Assets					=	Liabilities	+	Capital
		Cash	+	Stock	+	Prepaid Expenses		Outstanding Expenses
(a)	Increase in cash	1,20,000
	Increase in capital									1,20,000
		1,20,000					=	NIL	+	1,20,000
(b)	Increase in stock			10,000
	Increase in cash	(10,000)					=
		1,10,000	+	10,000			=	NIL	+	1,20,000
(c)	Increase in cash	5,000
	Increase in capital (Profit)									5,000

		1,15,000	+	10,000			=	NIL	+	1,25,000
(d)	Increase in outstanding expenses						=	2,000
	Decrease in capital (Expense)									(2,000)
		1,15,000	+	10,000			=	2,000	+	1,23,000
(e)	Increase in prepaid expenses					1,000
	Decrease in cash	(1,000)
		1,14,000	+	10,000	+	1,000	=	2,000	+	1,23,000
(f)	Increase in cash	700
	Increase in capital (Profit)									700
		1,14,700	+	10,000	+	1,000	=	2,000	+	1,23,700
(g)	Increase in cash	7,000
	Decrease in stock			(5,000)
	Increase in capital (Profit)									2,000
		1,21,700	+	5,000	+	1,000	=	2,000	+	1,25,700
	Decrease in capital (Expense)									(2,000)
		1,15,000	+	10,000			=	2,000	+	1,23,000

Question 23: Show the accounting equation on the basis of the following transaction:

(a)	Udit started business with:		Rs
	(i)	Cash	5,00,000
	(ii)	Goods	1,00,000
(b)	Purchased building for cash		2,00,000
(c)	Purchased goods from Himani		50,000
(d)	Sold goods to Ashu (Cost Rs 25,000)		36,000
(e)	Paid insurance premium		3,000
(f)	Rent outstanding		5,000
(g)	Depreciation on building		8,000
(h)	Cash withdrawn for personal use		20,000
(i)	Rent received in advance		5,000
(j)	Cash paid to Himani on account		20,000
(k)	Cash received from Ashu		30,000

Answer:

S.No.	Explanation	Assets							=	Liabilities					+	Capital
S.No.	Explanation	Cash	+	Stock	+	Building	+	Debtors		Creditors	+	Outstanding Expenses	+	Unaccrued Income
(a)	Increase in cash	5,00,000
	Increase in stock			1,00,000
	Increase in capital															6,00,000
		5,00,000	+	1,00,000					=	NIL					+	6,00,000
(b)	Increase in building					2,00,000
	Decrease in cash	(2,00,000)							=
		3,00,000	+	1,00,000	+	2,00,000			=	NIL					+	6,00,000
(c)	Increase in stock			50,000
	Increase in creditors								=	50,000
		3,00,000	+	1,50,000	+	2,00,000			=	50,000					+	6,00,000
(d)	Increase in debtors							36,000
	Decrease in stock			(25,000)
	Increase in capital (Profit)															11,000
		3,00,000	+	1,25,000	+	2,00,000	+	36,000	=	50,000					+	6,11,000
(e)	Decrease in cash	(3,000)
	Decrease in capital (Expense)															(3,000)
		2,97,000	+	1,25,000	+	2,00,000	+	36,000	=	50,000	+				+	6,08,000
(f)	Decrease in capital (Expense)											5,000
	Increase in liabilities															(5,000)
		2,97,000	+	1,25,000	+	2,00,000	+	36,000	=	50,000	+	5,000			+	6,03,000
(g)	Decrease in building					(8,000)
	Decrease in capital															(8,000)
		2,97,000	+	1,25,000	+	1,92,000	+	36,000	=	50,000	+	5,000			+	5,95,000
(h)	Decrease in cash	(20,000)
	Decrease in capital															(20,000)
		2,97,000	+	1,25,000	+	1,92,000	+	36,000	=	50,000	+	5,000			+	5,75,000
(i)	Increase in cash	5,000
	Increase in liability													5,000
		2,82,000	+	1,25,000	+	1,92,000	+	36,000	=	50,000	+	5,000	+	5,000	+	5,75,000
(j)	Decrease in creditors									(20,000)
	Decrease in cash	(20,000)
		2,62,000	+	1,25,000	+	1,92,000	+	36,000	=	30,000	+	5,000	+	5,000	+	5,75,000
(k)	Increase in cash	30,000
	Decrease in debtors							(30,000)
		2,92,000	+	1,25,000	+	1,92,000	+	6,000	=	30,000	+	5,000	+	5,000	+	5,75,000

Question 24: Show the effect of the following transactions on Assets, Liabilities and Capital through accounting equation:

		Rs
(a)	Started business with cash	1,20,000
(b)	Rent received	10,000
(c)	Invested in shares	50,000
(d)	Received dividend	5,000
(e)	Purchase goods on credit from Ragani	35,000
(f)	Paid cash for household Expenses	7,000
(g)	Sold goods for cash (costing Rs 10,000)	14,000
(h) (i)	Cash paid to Ragani Deposited into bank	35,000 20,000

Solution:

S.No.

Explanation

Assets

Liabilities

Capital

Cash

Stock

Investment

Bank

Creditors

(a)

Increase in cash

1,20,000

Increase in capital

1,20,000

NIL

1,20,000

(b)

Increase in cash

10,000

Increase in capital (Income)

10,000

1,30,000

NIL

1,30,000

S.No.

Explanation

Assets

Liabilities

Capital

Cash

Stock

Investment

Bank

Creditors

(a)

Increase in cash

1,20,000

Increase in capital

1,20,000

NIL

1,20,000

(b)

Increase in cash

10,000

Increase in capital (Income)

10,000

1,30,000

NIL

1,30,000

S.No.

Explanation

Assets

Liabilities

Capital

Cash

Stock

Investment

Bank

Creditors

(a)

Increase in cash

1,20,000

Increase in capital

1,20,000

NIL

1,20,000

(b)

Increase in cash

10,000

Increase in capital (Income)

10,000

1,30,000

NIL

1,30,000

Question 25: Show the effect of following transaction on the accounting equation:

		Rs
(a)	Manoj started business with
	(i) Cash	2,30,000
	(ii) Goods	1,00,000
	(iii) Building	2,00,000
(b)	He purchased goods for cash	50,000
(c)	He sold goods(costing Rs 20,000)	35,000
(d)	He purchased goods from Rahul	55,000
(e)	He sold goods to Varun (Costing Rs 52,000)	60,000
(f)	He paid cash to Rahul in full settlement	53,000
(g)	Salary paid by him	20,000
(h)	Received cash from Varun in full settlement	59,000
(i)	Rent outstanding	3,000
(j)	Prepaid Insurance	2,000

Solution:

S.No.

Explanation

Assets

Liabilities

Capital

Cash

Stock

Building

Debtors

Prepaid Expenses

Creditors

Outstanding Expenses

(a)

Increase in cash, stock and building

2,30,000

1,00,000

2,00,000

Increase in capital

5,30,000

2,30,000

1,00,000

2,00,000

5,30,000

(b)

Increase in stock

50,000

Decrease in cash

(50,000)

1,80,000

1,50,000

2,00,000

5,30,000

(c)

Increase in cash

35,000

Decrease in stock

(20,000)

increase in capital (Profit)

15,000

2,15,000

1,30,000

2,00,000

5,45,000

(d)

Increase in stock

55,000

Increase in creditors

55,000

2,15,000

1,85,000

2,00,000

55,000

5,45,000

(e)

Increase in debtors

60,000

Decrease in stock

(52,000)

Increase in capital (Profit)

8,000

2,15,000

1,33,000

2,00,000

60,000

55,000

5,53,000

(f)

Decrease in creditors

(55,000)

Decrease in cash

(53,000)

Increase in capital (Discount received)

2,000

1,62,000

1,33,000

2,00,000

60,000

NIL

5,55,000

(g)

Decrease in cash

(20,000)

Decrease in capital

(20,000)

1,42,000

1,33,000

2,00,000

60,000

NIL

5,35,000

(h)

Increase in cash

59,000

Decrease in capital (Discount allowed)

(1,000)

Decrease in debtors

60,000

2,01,000

1,33,000

2,00,000

NIL

5,34,000

(i)

Increase in outstanding Expenses

3,000

decrease in capital (Expense)

(3,000)

2,01,000

1,33,000

2,00,000

NIL

3,000

5,31,000

(j)

Decrease in prepaid expenses

2,000

Decrease in cash

(2,000)

1,99,000

1,33,000

2,00,000

NIL

2,000

NIL

3,000

5,31,000

(k)

Increase in cash

13,000

increase in capital (Income)

13,000

2,12,000

1,33,000

2,00,000

NIL

2,000

NIL

3,000

5,44,000

(l)

Decrease in capital

(20,000)

Decrease in cash

(20,000)

1,92,000

1,33,000

1,90,000

NIL

2,000

NIL

3,000

5,24,000

(m)

Decrease in capital

(10,000)

Decrease in building

(10,000)

1,92,000

1,33,000

1,90,000

NIL

2,000

NIL

3,000

5,14,000

(n)

Increase in cash

50,000

Increase in capital

50,000

2,42,000

1,33,000

1,90,000

NIL

2,000

NIL

3,000

5,64,000

(o)

Increase in stock

10,000

Increase in creditors

10,000

2,42,000

1,43,000

1,90,000

NIL

2,000

10,000

3,000

5,64,000

Question 26: Transactions of M/s. Vipin Traders are given below.

		Rs
(a)	Business started with cash	1,25,000
(b)	Purchased goods for cash	50,000
(c)	Purchase furniture from R.K. Furniture	10,000
(d)	Sold goods to Parul Traders (costing Rs 7,000 vide bill no. 5674)	9,000
(e)	Paid cartage	100
(f)	Cash Paid to R.K. furniture in full settlement	9,700
(g)	Cash sales (costing Rs 10,000)	12,000
(h)	Rent received	4,000
(i)	Cash withdrawn for personal use	3,000

Solution:

S.No.

Explanation

Assets

Liabilities

Capital

Cash

Stock

Furniture

Debtors

Creditors

(a)

Increase in cash

1,25,000

Increase in capital

1,25,000

NIL

1,25,000

(b)

Increase in stock

50,000

Decrease in cash

(50,000)

75,000

50,000

NIL

1,25,000

(c)

Increase in furniture

10,000

Increase in creditors

10,000

75,000

50,000

10,000

1,25,000

(d)

Increase in debtors

9,000

Decrease in stock

(7,000)

Increase in capital (Profit)

2,000

75,000

43,000

10,000

9,000

10,000

1,27,000

(e)

Decrease in capital

(100)

(Cartage Expenses)

Decrease in cash

(100)

74,900

43,000

10,000

9,000

10,000

1,26,900

(f)

Decrease in creditors

(10,000)

Decrease in cash

(9,700)

Increase in capital (Discount- received)

300

65,200

43,000

10,000

9,000

NIL

1,27,200

(g)

Increase in cash

12,000

Decrease in stock

(10,000)

Increase in capital (Profit)

2,000

77,200

33,000

10,000

9,000

NIL

1,29,200

(h)

Increase in cash

4,000

Increase in capital (Income)

4,000

81,200

33,000

10,000

9,000

NIL

1,33,200

(i)

Decrease in capital

(3,000)

Decrease in cash

(3,000)

78,200

33,000

10,000

9,000

NIL

1,30,200

CBSE Class 11 Accountancy Chapter 3 Other Study Materials

S. No	Important Study Material Links for Chapter 3 Recording of Transactions 1
1.	Class 11 Recording of Transactions 1 Important Questions
2.	Class 11 Recording of Transactions 1 Revision Notes

Chapter-wise NCERT Solutions for Class 11 Accountancy

S. No	NCERT Solutions Class 11 Accountancy Chapter-wise List
PART 1
1	Chapter 1 - Introduction to Accounting Solutions
2	Chapter 2 - Theory Base of Accounting Solutions
3	Chapter 4 - Recording of Transactions 2 Solutions
4	Chapter 5 - Bank Reconciliation Statement Solutions
5	Chapter 6 - Trial Balance and Rectification of Errors Solutions
6	Chapter 7 - Depreciation, Provisions & Reserves Solutions
PART 2
7	Chapter 8 - Financial Statements 1 Solutions
8	Chapter 9 - Financial Statements 2 Solutions

Important Related Links for CBSE Class 11 Accountancy

S. No	Study Material for Class 11 Accountancy
1.	CBSE Class 11 Accountancy NCERT Books
2.	CBSE Class 11 Accountancy Important Questions
3.	CBSE Class 11 Accountancy NCERT Solutions
4.	CBSE Class 11 Accountancy Revision Notes
5.	CBSE Class 11 Accountancy Sample Papers
6.	CBSE Class 11 Accountancy Syllabus

FAQs on NCERT Solutions for Class 11 Accountancy Chapter 3 Recording of Transactions 1

1. What is the correct step-by-step method to solve a journal entry problem from NCERT Class 11 Accountancy Chapter 3?

As per the NCERT solutions for the 2025-26 syllabus, the correct step-by-step method for solving journal entry problems is:

Step 1: Analyse the Transaction: Identify the nature of the transaction (e.g., sale, purchase, payment).
Step 2: Identify the Accounts Involved: Determine the two accounts affected by the transaction (e.g., Cash A/c and Sales A/c).
Step 3: Apply the Rules of Debit and Credit: Use the Golden Rules of Accounting to decide which account to debit and which to credit.
Step 4: Record the Entry: Enter the transaction in the proper journal format, with the debit entry listed first, followed by the credit entry (slightly indented).
Step 5: Write the Narration: Add a brief explanation of the transaction in brackets below the entry.

2. How should narrations for journal entries in Chapter 3 be written to align with the CBSE 2025-26 pattern?

To align with the CBSE pattern shown in NCERT solutions, every journal entry must be followed by a narration. A proper narration should be:

Brief and Clear: Succinctly describe the transaction.
Enclosed in Brackets: Always write the narration within parentheses ().
Fact-Based: It should state what happened, such as 'Being goods purchased for cash' or 'For salary paid'.

The narration is a mandatory part of the journal entry format and carries marks in exams.

3. Why must transactions be recorded in a journal before being posted to a ledger, as explained in the NCERT solutions?

The NCERT solutions emphasise recording transactions first in a journal because it serves as the book of original entry. The primary reasons are:

Chronological Record: The journal records all transactions in the order they occur, providing a complete date-wise history.
Complete Transaction Details: Each journal entry contains all aspects of a transaction (both debit and credit) in one place, reducing the risk of errors during posting.
Foundation for the Ledger: The ledger is a summary of transactions, classified by account. Without the initial, detailed record in the journal, creating an accurate ledger would be impossible.

4. How do the NCERT Solutions for Chapter 3 explain the process of posting entries from the Journal to the Ledger?

The NCERT solutions demonstrate a systematic process for posting from the journal to the ledger. The correct procedure involves:

1. Identify the Debited Account: Locate the account to be debited in the ledger. On its debit side, record the date and the name of the account that was credited in the journal entry.
2. Identify the Credited Account: Locate the account to be credited in the ledger. On its credit side, record the date and the name of the account that was debited.
3. Record Page Numbers: The Ledger Folio (L.F.) column in the journal is filled with the page number of the ledger where the entry is posted, and the Journal Folio (J.F.) column in the ledger is filled with the journal page number for cross-referencing.

5. Why are the rules for debit and credit identical for both Liabilities and Capital in Chapter 3? What is the underlying concept?

The rules are identical because of the Business Entity Concept, a core principle in accounting. According to this concept, the business is treated as an entity separate from its owner. Therefore:

Capital as a Liability: The money invested by the owner (Capital) is considered an internal liability for the business, as the business is liable to pay it back to the owner.
Uniform Treatment: Since both Capital and other liabilities (like loans, creditors) represent obligations of the business, they are treated the same way. An increase in any obligation is credited, and a decrease is debited.

6. How do you correctly apply the accounting equation (Assets = Liabilities + Capital) to solve numerical problems in Chapter 3?

To solve problems using the accounting equation as per NCERT solutions, you must analyse the effect of each transaction on the three components. For every transaction, identify:

If an asset increases, another asset must decrease, or a liability/capital must increase.
If an asset decreases, another asset must increase, or a liability/capital must decrease.

The key is to ensure that the equation Assets = Liabilities + Capital remains balanced after every single transaction. NCERT solutions show this by presenting the final equation after each step.

7. Beyond just memorising rules, how do the NCERT solutions help in understanding the logic behind debiting an increase in assets but crediting an increase in liabilities?

The NCERT solutions build logical understanding by consistently applying the dual aspect concept. The logic is:

Assets: These are resources the business owns. An increase (e.g., buying furniture) means something of value has come into the business. The rule is 'Debit what comes in'.
Liabilities and Capital: These are obligations or sources of funds. An increase (e.g., taking a loan) means the business's obligation to an external party or owner has increased. The rule is 'Credit the giver' or the source of the funds.

By solving numerous problems step-by-step, the solutions reinforce that these are not arbitrary rules but a logical system to track the flow of economic resources.

8. In what way do source documents serve as the primary evidence for every transaction recorded in the journal?

Source documents like invoices, cash memos, receipts, and cheques are the primary evidence for all journal entries. Their importance, as highlighted in Chapter 3, is:

Objectivity: They provide objective, verifiable proof that a transaction actually occurred.
Accuracy: They contain essential details like the date, amount, parties involved, and nature of the transaction, ensuring accurate recording.
Audit Trail: They form the basis of an audit trail, allowing auditors to trace transactions from financial statements back to the original evidence, which is a requirement under CBSE/NCERT guidelines.