Class 11 Accountancy Chapter 4 Recording Of Transaction II
NCERT Notes for Class 11 Accountancy Chapter 4 Recording Of Transaction II, (Accountancy) exam are Students are taught thru NCERT books in some of state board and CBSE Schools. As the chapter involves an end, there is an exercise provided to assist students prepare for evaluation. Students need to clear up those exercises very well because the questions withinside the very last asked from those.
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NCERT Notes for Class 11 Accountancy Chapter 4 Recording Of Transaction II
Class 11 Accountancy Chapter 4 Recording Of Transaction II
Subdivision of Journal
- In small concerns only one journal may serve the purpose, because the number of transactions is very small.
- But in large business concerns the number of transactions are numerous, just one journal will not do the job.
- That will cause much inconvenience i.e., if we have only one journal in a large scale business, it is not possible for one bookkeeper to record all the transactions in time.
- A journal can be used as the only book of original entry because all transactions are recorded in journal first. Instead of recording all kinds of transactions in one journal for each kind of transactions like cash transaction, buying transaction, selling transaction etc. are recorded in separate journal.
- Such book or journal which is used to record one kind of transaction is known as a special journal
Need for special journal
- If all the transactions are recorded in one book (journal), the book will be very large, bulky, and difficult to handle.
- If one bookkeeper is asked to record all the transactions, the possibility of errors and mistakes will be great. It will also create opportunities for committing fraud.
- If all the transactions are recorded in one book, it will be difficult to trace out a particular transaction in future.
- It saves time
- It makes distribution of work among different clerk
- The specialisation of work result increased efficiency
- Prevents errors and fraud
- Information readily available
Types of special journal
- Cash book / cash journal– For recording all cash transactions
- Purchase day book – For recording of all credit purchases of goods
- Purchase return book –For recording goods returned to supplier
- Sales book / or sales journal – For recording all credit sale of goods
- Sales return book or journal – For recording goods returned by customers.
- Bills receivable book or journal – For recording bills received from customers
- Bills payable book or journal – For recording bills given to suppliers
- Journal proper or special journal – All other transaction that cannot be recorded in the special journal are entered in journal proper or special journal.
Cash book used to record all transaction relating to cash receipts and cash payments. Cash book has two sides a debit side and a credit side. All cash receipts are entered on the debit side and all cash payments are recorded on the credit side. A cash book serves the purpose of both journal and ledger. Since all cash transactions are first recorded in cash book it is a book of original entry or journal. It also serves the purpose of ledger account because it is written on the form of an account with debit side and credit side. Cash book is divided inn to single column cash book , double column cash book, triple column cash book and petty cash book.
Single column cash book
A cash book which contains only one column for amount on both sides is called single column cash book.
Format of single column cash book
Dr Single column cash book Cr
Double column cash book
A business man generally opens a current account with a bank. The bank do not allow interest on the balance in current account but charge a small amount called incidental charges or bank charges for the service rendered.
For depositing cash/cheque in the bank account, a form has to be filled which is called pay in slip contains a counter foil also which is returned to the depositor with the signature of the cashier as receipt.
For withdrawing money from the bank the bank issues blank cheque forms to the account holder. A cheque may be a bearer cheque or an order cheque. When the words “or bearer” printed on the cheque is not cancelled, the cheque is called a bearer cheque. A bearer cheque is made payable to the bearer i.e. it is payable to the person who presents it to the bank for encashment. When the word “or bearer” printed on the cheque is cancelled and the word ‘order’ may be written on the cheque, the cheque is called an order cheque. An order cheque is one which is payable to a particular person or to his order. The payee can transfer an order cheque to someone else by signing his or her name on the back of it.
Crossing of a cheque
Crossing of a cheque means “Drawing Two Parallel Lines” across the face of the cheque. Thus, crossing is necessary in order to have safety. Crossed cheques must be presented through the bank only because they are not paid at the counter.
1– General crossing
When a cheque bears two transverse parallel lines at the left hand of its top corner. Words such as ‘and company’ or any other abbreviation (such as & co.) may be written between these two parallel lines, either with or without words ‘not negotiable’, is called General Crossing. The Payment can be paid through bank account only, and should not be made at counter of paying bank.
2- Special crossing
When a cheque bears the name of the bank in between the two parallel lines, with or without the words ‘not negotiable’ is called Special Crossing. The bank will pay to the banker whose name is written in between the crossing lines.
3- Restrictive crossing / account payee crossing
In this, crossing of cheques is done by writing Account Payee or Account Payee only in between the crossing lines. Payment will be credited to the account of payee named in the cheque.
When the number of bank transaction is large, it is convenient to have a separate amount column for bank transactions in the cash book itself instead of recording them in the journal. A cash book with two amount columns on both sides is called double column cash book. One column for cash and another column for bank. All remittance in to bank are recorded on the debit side bank column and all payments / withdrawals from the bank are recorded on the credit side bank column. The cash column of the cash book always shows a debit balance but the bank co9lumn of the cash book may show either a debit balance or even a credit balance. A Credit balance showed when there is an overdraft. Bank overdraft means withdrawal of amount more than deposited in bank.
When a transaction is recorded on both side of the cash book but in different columns such entries are called contra entry.
Format of double column cash book
Dr Double column cash book Cr
Petty cash book
A petty cash book is an additional cash book to record all petty or small payments. The person who makes the small payments is called petty cashier.
Imprest system of petty cash book
In this system a fixed amount is advanced by the main cashier to the petty cashier in the beginning of the period. At the end of the period the petty cashier is reimbursed for the amount he has spent. Thus in the beginning of the period the petty cashier will have a fixed amount of cash balance always. The fixed predetermined maximum amount which a petty cashier will be allowed to hold at the beginning of each period for meeting petty expenses is known as imprest amount. And hence the system is called imprest system of petty cash book.
A petty cash book can be maintained in two ways
- Simple petty cash book
- Analytical petty cash book.
Simple petty cash book
A simple petty cash book is prepared just like a simple cash book with two sides debit side and credit side.
Analytical or columnar petty cash book
In analytical petty cash book there will be a number of columns for the amount on the payment side besides the first total amount column. The other amount columns are provided for items of specific payments that are common.
Format of petty cash book
Dr Analytical Petty cash book Cr
Analysis of payments
Purchase day book/ purchase journal
Purchase book is used to record all credit purchases of goods. The source document for recording entries in the purchase journal is purchase invoice. The purchase invoice is a formal business paper prepared by the supplier of goods containing brief description of goods, quantity, price, discount, tax, net amount payable etc. and send to the purchaser.
Format of purchase day book
Name of supplier
Sales day book/ sales journal
Sales day book or sales journal is used to record all credit sale of goods. Cash sales and sale of assets are not recorded in sales day book. The sales invoice or bill act as the source document for recording entries in this book. It is issued by the firm to the customer.
Format of sales day book
Name of customer
Purchase return book
Purchase return book is used to record the return of goods purchased and for allowance claimed. Goods may be returned because they are found defective inferior in quality, short weight etc. and may also claim allowances for breakage shortage etc. it is also called return outward book. The source document for recording entries in this book is ‘debit note’. A debit note is a statement prepared by the buyer of goods through which he intimates the seller that his account has been debited for the goods returned or for the allowance claimed. It is prepared in duplicate one copy sent to the supplier to whom goods are returned. The duplicate copy is retained by the buyer.
Format of purchase return book
Name of supplier
Sales return book
Sales return book is used to record all sales returns i.e., goods returned by the customers to us and for allowance granted to customers. It is also known as return inward book. The source document for recording entries in sales return book is ‘credit note’. A credit note is a note prepared by the seller through which he informs the customer that his account has been given credit for goods returned or for allowance to be granted to them.
Format of sales return book
Credit note No.
Name of customer
Journal proper is a book maintained to record transactions, which do not find place in special journal. It is also called general journal or journal residual. The following transactions are recorded in this journal
- Opening entry:
- Adjustment entries
- Rectification entries
- Transfer entries
- Other entries
- At the time of dishonour of a cheque the entry for cancellation for discount received or discount allowed
- Purchase or sale of items on credit other than goods
- Goods withdrawn by the owner for personal use
- Goods distributed as free sample
- Loss of goods by theft/fire/ spoilage