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Revision Notes

Class 11

Accountancy

Chapter 3 Recording Of Transactions I

Recording of Transactions 1 Class 11 Notes: CBSE Accountancy Chapter 3

Q: 3. While revising, what is the main difference to remember between the Journal and the Ledger?

The simplest way to remember is: The Journal is the book of first entry where transactions are recorded chronologically (day by day). The Ledger is the principal book where all transactions from the journal are sorted and posted into individual accounts (like a Cash account, Sales account, etc.). Think of the Journal as a daily diary and the Ledger as an organized index.

Q: 4. Why is preparing a Trial Balance a crucial step to revise from these notes?

Revising the Trial Balance concept is crucial because it checks the arithmetical accuracy of your journal and ledger entries. It confirms that the total debits equal the total credits for all accounts. If the totals match, it gives you confidence that the accounting process is on the right track before you prepare the final financial statements.

Q: 5. What key concepts related to the double-entry system should I focus on in these notes?

When revising the double-entry system, focus on its core principle: every transaction has two effects, a debit and a credit, and the total amount debited must always equal the total amount credited. This ensures that the fundamental accounting equation (Assets = Liabilities + Capital) always remains in balance.

Q: 6. How do these notes summarise the purpose of different source documents?

These notes explain that source documents are the starting point of accounting. They act as evidence for transactions. Key examples to remember are: cash memos for cash sales, invoices for credit sales, receipts as proof of payment, and cheques for bank transactions. They provide the necessary details like date, amount, and parties involved for making a journal entry.

Class 11 Recording of Transactions 1 Notes PDF - FREE Download

Vedantu offers the FREE PDF of Class 11 Accountancy Chapter 3 Notes, "Recording of Transactions 1," which is fundamental for mastering the basics of financial record-keeping and sets the foundation for other chapters in the Class 11 Accountancy Syllabus. This chapter delves into the principles of recording transactions using the double-entry system, which is essential for accurate bookkeeping.

Table of Content

Students will explore how to record different types of transactions, such as cash and credit entries, and understand the significance of maintaining proper documentation. The chapter emphasises the process of making journal entries, which are the initial steps in the accounting cycle. Vedantu’s Class 11 Accountancy Revision Notes will guide you through these concepts with clear, step-by-step explanations and examples, making it easier to grasp and apply the fundamentals of recording transactions in your exams and practical work.

Access Class 11 Accountancy Chapter 3 Recording of Transaction 1 Notes

Accounting Equations

Accounting equation shows the relationship between the assets, liabilities and owner’s capital of a person or business

A=L+C

Where A= assets

L= liabilities

C= capital

The above equation can be presented in the following forms as its derivatives to enable the determination of missing figures of Capital(C) or Liabilities(L)

(i) A – L = C

(ii) A – L = C

Since the accounting equation shows the fundamental relationship among the items of the balance sheet, it is also called the Balance Sheet Equation

The claim of the proprietors is called capital and that which is taken from another person from the outside is known as liabilities.

The asset side of the balance sheet records all the assets of the business. The liabilities side of the balance sheet is the detailed list of owner’s capital and outsider’s claims.

Let us take an example :-

Payal started the business with a capital of Rs 10.00,000. From the accounting point of view, the resources of this business entity is in the form of cash, i.e.Rs. 10,00,000. Sources of this business entity are the contribution by payal (Proprietor) Rs. 10,00,000 as Capital.

If we put this detail in the form of equality of resources and sources, the picture will emerge somewhat as follows:-

In the Books of Payal

Balance sheet as on… .. ..

Liabilities	Amount	Assets	Amount
Liabilities	10,00,000	Asset	10,00,000

In the above balance sheet the total of assets is equal to the total of liabilities

Now we will analyse the transactions listed in example 1 and its effect on different elements and you will observe that the accounting equation always remain balanced:-

Opened a bank account in bank of India with an amount of Rs. 500000 (Analysis of transaction: This transaction increases the cash at bank (assets) and decreases cash (asset) by Rs. 500000.)
Bought furniture for Rs. 100000 and a cheque was issued on the same day. (Analysis of transaction: This transaction increases furniture (assets) and decreases bank (assets) by Rs. 100000.)
Bought plant and machinery for the business for Rs. 1,10,000 and an advance of Rs. 10,000 in cash is paid to M/s Ramjilal. (Analysis of transaction: This transaction increases plant and machinery (assets) by Rs. 1,10,000, decreases cash by Rs. 10,000 and increases liabilities (M/s Ramjilal as creditor) by Rs. 1,00,000.)
Goods purchased from M/s Akshay Traders for Rs. 55,000. (Analysis of transaction: This transaction increases goods (assets) and increases liabilities (M/s Akshay Traders as creditors) by Rs. 55,000.)
Goods costing Rs. 15,000 sold to Samit Enterprises for Rs. 25,000. Analysis of transaction: This transaction decreases stock of goods (assets) by Rs. 15,000 and increases assets (Samit Enterprises as debtors Rs. 25,000) and capital (with the profit of Rs. 10,000)

In the Books of Payal

Journal entries for the year ending…….

Date	Particulars	L.F	Debit	Credit
1.	Bank a/c. Dr. To cash a/c (Being a/c opened in the bank.)		5,00,000	5,00,000
2.	Furniture a/c. Dr. To bank a/c (Being furniture purchased and Payment made through the bank.)		1,00,000	1,00,000
3.	Plant and machinery a/c. Dr. To cash a/c To Ramjilal a/c (Being plant and machinery purchased on credit and some amount is paid in cash)		1,10,000	10,000 1,00,000
4.	Purchases a/c. Dr. To Akshay Traders a/c (Being goods purchased on credit from Akshay traders.)		55,000	55,000
5.	Cash a/c. Dr. To sales a/c To profit and loss a/c (Being goods sold on profit)		25,000	15,000 10,000

The final equation as per the above transactions analysis table can be summarised in the form of balance sheet :-

Balance sheet as on…

Liabilities	Amount (Rs.)	Assets	Amount(Rs.)
Outsiders liability (creditors)	1,55,000	Cash	4,90,000
		Bank	4,00,000
		Furniture	1,00,000
		Debtors	25,000
Capital	10,10,000	Stock	40,000
		Plant and machinery	1,10,000
	11,65,000		11,65,000

Using Debit and Credit

In the double entry system, every transaction affects two sides of the account.
The right side of the T shape account is credit side and the left side is debit.

Rules of Debit and Credit:-

Every accounts are categorized into five types for the purposes of recording the transactions:

(a) Asset (b) Liability (c) Capital (d) Expenses/Losses, and (e) Revenues.

The two fundamental rules to be followed while recording the changes in these accounts:

(1) For recording changes in Assets/Expenses (Losses):

(i) “Increase in asset is to be debited, and decrease in asset is to be credited.”

(ii)“Increase in expenses/losses is to be debited, and decrease in expenses/ losses is credited.

The rules applicable to the various kinds of accounts that have been summarised in the below charts:

Assets

(Increase)

Debit

(Decrease)

-
Credit

Liabilities

Decrease

Debit

Increase

Credit

Capital

Decrease

Debit

Increase

Credit

Expenses/losses

Increase

Debit

Decrease

Credit

Gains/revenue

Decrease

Debit

Increase

Credit

Books of Original Entry:- The process of recording transaction in the journal is called Journalising

After the completion of Journalising there after they are transferred to another account and that process is called posting

Journal is further divided into some number of books of original entry :-

Journal proper
Cash book
Other day books:-

Purchase book
Sales book
Purchase return book
Sales return book
Bills receivable book
Bills payable book

Journal:

In this book transactions are recorded in chronological order as and when they take place.

Each transaction is debited as well credited with same amount

Let us have a look at the format of the journal.

Journal

Date	Particulars	L. F	Debit amount	Credit amount

Let us take an example, for clearance of the journal format

Example:- sale of goods worth ₹ 10000

The golden rule says that debit what comes in and credit what goes out

Here, we are selling goods, and in return we receiving cash

So debit what comes in i.e. cash and credit what goes out i.e. goods ,

Here is tubular represent of this transaction:-

Date

Particulars

L. F

Debit

Credit

---

Cash a/c

10000

To sales a/c

(Being goods sold)

10000

Now, refer to example 1 which we have done already, let's record the transition in the books of Miss Payal.

In the Books of Payal

Journal Entries

for the year ending…….

Date	Particulars	L. F	Debit	Credit
1	Cash a/c		1000000
	To Capital a/c (business started with cash)			1000000
2	Bank a/c		500000
	To cash a/c (Cash deposited in bank)			500000
3	Furniture a/c		1,00,000
	To bank a/c (Being furniture purchased)			1,00,000
4	Plant and machinery a/c		1,10,000
	To cash a/c To Ramjilal a/c (Being plant and machinery purchased on credit and some amount is paid in cash)			10,000 1,00,000
5	Purchases a/c		55,000
	To m/s Akshaya Traders a/c (Being goods purchased on credit)			55,000
6	Samit enterprises a/c		25,000
	To sales a/c (Being goods sold on credit)			25,000

Discount

There are two types of discount that are explained below:

Trade discount:- Trade discount is allowed by wholesalers and manufacturers to the retailers at a fixed percentage. Trade discount is not to be shown in the books,
Cash discount:- Cash discount is allowed to the customers for making an early payment

Example: If a retailer sells goods of list price Rs.10000 at 10% trade discount and 2% cash discount

Ans:

List price 10000

Less: trade discount @10% (1000)

9000

Less: cash discount @2%. (180)

(9000×2÷100)

8,820

Accounting entries under goods and services tax:

Record necessary Journal entries assuming CGST @ 5% and SGST @ 5% and all transactions have occurred within Delhi

Amit bought goods Rs. 5,00,000 on credit
He sold them for Rs. 100000 in the same state on credit
He paid for railway transport Rs. 4000
He bought a computer printer for Rs.10000
Paid postal charges Rs. 1000

Journal Entries for the year ending

Date	Particulars	L.F	Debit (Rs)	Credit (Rs)
1	Purchases a/c Dr. Input CGST a/c Dr. Input SGST a/c Dr. To creditors a/c (Purchased goods on credit)		500000 25000 25000	550000
2	Debtors a/c Dr. To sales a/c To output CGST a/c To output SGST a/c (Sales goods on credit)		1100000	100000 50000 50000
3	Transportation charges a/c Dr. Input CGST a/c Dr. Input SGST a/c Dr. To bank a/c (Being transport charges paid)		40000 2000 2000	44000
4	Computer printer a/c Dr. Input CGST a/c Dr. Input SGST a/c Dr. To bank a/c (Being Computer printer purchased)		10000 500 500	11000
5	Postal charges a/c Dr. Input CGST a/c Dr. Input SGST a/c Dr. To bank a/c (Being Postal charges paid)		1000 50 50	1100
6	Output CGST a/c Dr. Output SGST a/c Dr. To input CGST a/c To input SGST a/c To electronic ledger a/c (Being output CGST, SGST and input CGST, SGST adjusted)		50000 50000	27550 27550 44900

Ledger:

Business transactions are first recorded in a journal and thereafter the next step is transferring the entries to the respective accounts in the ledger.

The left-hand side is known as the debit side and the right-hand side is the credit side.

This account is in ‘T’ shape.

Format of ledger account

Dr.

Cr.

Date	Particulars	J.F	Amount	Date	Particulars	J.F	Amount

Example:-

1. Capital introduced- Rs. 100000 on 1/4/2019

2. Furniture purchased- Rs. 15000 on 1/4/2029

3. Goods purchases- Rs. 75000 on 1/4/2019

4. Salaries paid- Rs. 10000 on 30/4/2019

5. Sold goods- Rs. 95000 in April 2019

Journal Entries
For the year ending…..

Date	Particulars	L.F	Debit	Credit
1/4/2019	Cash a/c Dr.		1,00,000
	To capital a/c			1,00,000
	(Being capital invested)
1/4/2019	Furniture and equipment a/c Dr.		15,000
	To cash a/c			15,000
	(Being furniture and equipment purchased)
1/4 /2019	Purchase a/c Dr.		75,000
	To cash a/c			75,000
	(Being goods are purchased)
30/4/2019	Salaries a/c Dr.		10,000
	To cash a/c			10,000
	(Being salaries paid)
April 2019	Cash a/c Dr.		95,000
	To sales a/c			95,000
	(Being goods are sold)

Ledger Accounts

Cash account

Date

Particulars

J. F

Amount

Date

Particulars

J. F

Amount

1/4/2019

To balance b/d

1/4/2019

By furniture and equipment

15000

1/4/2019

To capital

1,00,000

1/4/2019

By purchases

75000

April 2019

To sales

95000

30/4/2019

By salaries

10000

30/4/2019

By balance c/d

95000

1,95,000

Capital account

Date	Particulars	J. F	Amount	Date	Particulars	J. F	Amount
				1/4/2019	By balance b/d		-
30/4/2019	To balance c/d		1,00,000	1/4/2019	By cash		1,00,000
			1,00,000				1,00,000

Furniture account

Date	Particulars	J. F	Amount	Date	Particulars	J. F	Amount
1/4/2019	To balance b/d		-
1/4/2019	To cash a/c		15,000	30/4/2019	By balance c/d		15,000
			15,000				15,000

Purchases account

Date	Particulars	J. F	Amount	Date	Particulars	J. F	Amount
1/4/2019	To balance b/d		-
1/4/2019	To cash a/c		75,000	30/4/2019	By balance c/d		75,000
			75,000				75,000

Sales account

Date	Particulars	J. F	Amount	Date	Particulars	J. F	Amount
				1/4/2019	By balance b/d		-
30/4/2019	To balance c/d		95,000	30/4/2019	By cash a/c		95,000
			95,000				95,000

Salaries account

Date	Particulars	J. F	Amount	Date	Particulars	J. F	Amount
				1/4/2019	By balance b/d		10,000
30/4/2019	To balance c/d		20,000	30/4/2019	By cash a/c		10,000
			20,000				20,000

5 Important Topics of Class 11 Chapter 3 Recording of Transactions 1

S. No	Important Topics
1	Principles to Record Transactions
2	The Recording Transaction Rule
3	Personal vs Real vs Nominal Account
4	Journal Entries, Balance Sheets, and Ledger Accounts
5	Importance of Source Documents

Importance of Class 11 Accountancy Chapter 3 Notes

The Class 11 Recording of Transactions 1 Notes break down complex concepts into clear, manageable parts, making it easier to understand and remember key principles of recording transactions.
They provide a structured approach to journal entries and the double-entry system, ensuring you follow the correct procedures and avoid common mistakes.
The Class 11 Accountancy Chapter 3 Notes PDF includes practical examples that illustrate how to apply theoretical concepts to real-world scenarios, helping to bridge the gap between theory and practice.
They highlight essential topics and rules, allowing you to focus on the most important aspects of the chapter for effective study and exam preparation.
Vedantu’s Recording of Transactions 1 Notes PDF covers all necessary details, from cash and credit transactions to documentation, ensuring a thorough understanding of the chapter.

Tips for Learning Chapter 3 Recording of Transactions 1 Notes PDF

Start by reading the notes carefully to understand the basic concepts of the double-entry system and journal entries. Pay attention to the definitions and examples provided.
After reading, summarise the main points of each section in your own words. This helps reinforce your understanding and memory.
Work through the practical examples included in the notes. Practising different types of transactions will help you become comfortable with recording them accurately.
Focus on the rules for making journal entries and recording transactions. Regularly review these rules to ensure you apply them correctly.
Refer to any diagrams or tables in the notes that illustrate the recording process. Visual aids can help clarify complex concepts and procedures.
Try solving practice problems related to journal entries and transactions. Check your answers against the solutions provided in the notes to assess your understanding.
Periodically review the notes to keep the information fresh in your mind. Regular revision helps reinforce learning and improves retention.

Conclusion:

Ch 3 Accountancy Class 11 Notes are essential for learning the basics of journal entries and the double-entry system in Accountancy. Vedantu's Revision Notes simplify these concepts with clear explanations and practical examples. They help you understand the key rules and procedures, making it easier to understand and apply the principles of recording transactions. These notes ultimately provide everything you need to know about the chapter at a glance. That being said, students can still opt for a more thorough reading.

Related Study Materials for Class 11 Accountancy Chapter 3

S. No	Additional Study Material Class 11 Accountancy Chapter 1
1	Class 11 Recording of Transactions 1 NCERT Solutions
2	Class 11 Recording of Transactions 1 Important Questions

Revision Notes Links for Class 11 Accountancy

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

FAQs on Recording of Transactions 1 Class 11 Notes: CBSE Accountancy Chapter 3

1. How can these revision notes help me quickly revise Chapter 3, Recording of Transactions 1?

These notes are structured to help you revise efficiently. They start with the basics like source documents and the accounting equation, then move logically through the Journal, Ledger, and finally the Trial Balance. This flow helps you reconnect the concepts in the correct order for a fast and effective review before exams.

2. What is the easiest way to remember the rules of Debit and Credit while revising this chapter?

For a quick recap, focus on the two main approaches summarised in the notes:

Traditional Approach: Debit the receiver, Credit the giver (for personal accounts); Debit what comes in, Credit what goes out (for real accounts); Debit all expenses & losses, Credit all incomes & gains (for nominal accounts).
Modern Approach: To increase an asset or expense, you Debit it. To increase a liability, equity, or revenue, you Credit it. The opposite is true for decreasing them.

3. While revising, what is the main difference to remember between the Journal and the Ledger?

The simplest way to remember is: The Journal is the book of first entry where transactions are recorded chronologically (day by day). The Ledger is the principal book where all transactions from the journal are sorted and posted into individual accounts (like a Cash account, Sales account, etc.). Think of the Journal as a daily diary and the Ledger as an organized index.

4. Why is preparing a Trial Balance a crucial step to revise from these notes?

Revising the Trial Balance concept is crucial because it checks the arithmetical accuracy of your journal and ledger entries. It confirms that the total debits equal the total credits for all accounts. If the totals match, it gives you confidence that the accounting process is on the right track before you prepare the final financial statements.

5. What key concepts related to the double-entry system should I focus on in these notes?

When revising the double-entry system, focus on its core principle: every transaction has two effects, a debit and a credit, and the total amount debited must always equal the total amount credited. This ensures that the fundamental accounting equation (Assets = Liabilities + Capital) always remains in balance.

6. How do these notes summarise the purpose of different source documents?

These notes explain that source documents are the starting point of accounting. They act as evidence for transactions. Key examples to remember are: cash memos for cash sales, invoices for credit sales, receipts as proof of payment, and cheques for bank transactions. They provide the necessary details like date, amount, and parties involved for making a journal entry.

7. What is a common mistake to avoid when posting from the Journal to the Ledger, as highlighted in this topic?

A very common mistake is a posting error, where an amount is written in the correct account but on the wrong side (e.g., debiting instead of crediting). While revising, pay close attention to the examples showing how a debit in a journal entry is always posted to the debit side of the relevant ledger account, and a credit entry is posted to the credit side. This simple check can prevent errors in your Trial Balance.

S. No	Links 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 Sample Papers

Recording of Transactions 1 Class 11 Notes: CBSE Accountancy Chapter 3

Class 11 Recording of Transactions 1 Notes PDF - FREE Download

Access Class 11 Accountancy Chapter 3 Recording of Transaction 1 Notes

Accounting Equations

Discount

Ledger:

5 Important Topics of Class 11 Chapter 3 Recording of Transactions 1

Importance of Class 11 Accountancy Chapter 3 Notes

Tips for Learning Chapter 3 Recording of Transactions 1 Notes PDF

Conclusion:

Related Study Materials for Class 11 Accountancy Chapter 3

Revision Notes Links for Class 11 Accountancy

Related Important Links for Accountancy Class 11

FAQs on Recording of Transactions 1 Class 11 Notes: CBSE Accountancy Chapter 3