CBSE Class 11 Accountancy Revision Notes Chapter 3

CBSE Class 11 Accountancy Revision Notes Chapter-3 Recording Of Transactions – I

Transaction recording is the process of recording a company’s financial transactions in various books of accounts such as the cash book, journal book, ledger account, profit and loss account, and so on. These entries are a source of records that serve as proof for all the transactions of the company. The main reason for documenting transaction-I is to determine an organisation’s financial standing after each fiscal year. This chapter discusses the processes such as recognising the transaction, registering it and preparing the source papers, all of which are recorded in the journal. It is then recorded in private accounts in the Ledger, which is the main book.

With CBSE Class 11 Accountancy Revision Notes Chapter 3 by Extramarks, students get concise study notes for this chapter that highlight all the important concepts in a way that students can understand. Students can access these revision notes at any time from the links provided below.

Revision Notes for CBSE Class 11 Accountancy Chapter-3 – Download 

Access Class 11 Accountancy Chapter – 3 Recording of Transactions – 1 Notes

To ace your examinations, you can download Recording of Transactions-I Class 11 Accountancy revision notes from Extramarks. The notes are created by a team of highly qualified subject experts of Extramarks and allow you to review the whole chapter quickly.

Accounting Equation

The Accounting Equation is the most fundamental concept in accounting. It represents the relationship between a person or business’s assets, liabilities, and owner’s capital. As per the accounting equation, the following holds true:

Assets = Liabilities + Owner’s capital

Here, the LHS of the equation represents the total assets owned by the business and the RHS represents how these assets are financed, whether through liabilities or the owner’s own capital.

For example, consider that you wish to purchase a new computer to start your own business. The computer costs Rs. 60,000 but you only have Rs. 40,000. This means that in order to complete this purchase, you will need to borrow the remaining Rs. 20,000 from somewhere else, maybe your friends and family.

Here, Rs. 60,000 is the value of assets owned. Rs. 40,000 is the owner’s capital, which is your own money that you have used to purchase the asset. The remaining Rs. 20,000 is your liability. It is what you owe to someone else.

Assets (Rs. 60,000) = Liabilities (Rs. 20,000) + Equity (Rs. 40,000)

Discount

There are two different sorts of discounts. Both are described below:

• Discounted trade: Wholesalers and manufacturers provide a fixed percentage trade discount to retailers. This is calculated as a percentage of the list price or the MRP of a product

• Discount in cash: Customers can get a cash discount if they pay their bills early.

For example, consider a product with a list price of Rs. 1,000. A trade discount 10% and a further cash discount of 5% would be calculated in this case as follows:

Ledger

Business transactions are first entered into a journal and transferred to the appropriate ledger accounts. The debit side is located on the left, while the credit side is located on the right. That is a ‘T’ shaped profile. Students can access the Revision Notes for this chapter for a detailed explanation of debits and credits and creating T accounts.

CBSE Class 11 Accountancy Notes Chapter 3

Here we talk about CBSE class 11 Accountancy chapter 3 notes in detail.

Overview

Recording of transactions entails several specified processes, such as identifying the transactions to be recorded and preparing the source documents that have already been registered in the book known as a journal. After these processes are completed, the journal book entries are reported in a private account called a ledger. Recording Transactions is an essential component of the modern-day accounting system as this is where it all starts.

Fundamental Steps of Recording of Transaction – 1

Recording of Transactions is done by ensuring that the book of accounts is perfectly balanced i.e. total credits are equal to total debits. The steps involved in transaction recording are as follows:

• Using a voucher to identify financial transactions
• Making an entry in the journal to record the detected transactions
• Transfer the entries to private ledger accounts
• Make a profit and loss account and a balance sheet to plan your financial statements
• Communicating results to the various stakeholders and decision-makers of the organisation

The Recording Transaction Rule

Students must understand and apply several financial accounting standards to study and perform the Recording of Transactions. Students can use the Accounts Chapter 3 Class 11 notes to grasp financial accounting rules.

The Three Rules of Financial Accounting are

• Personal Account: Make a debit for the receiver and credit for the giver.

• Real Account: What comes in is debited, and what leaves is credited.

• Nominal Account: All losses and expenses should be debited, and all gains and earnings should be credited.

Recording Transaction Principles

Accountancy Class 11 Chapter 3 contains some fundamentals of transaction recording that students should master. Chapter 3 Accountancy class 11 notes assist students in grasping these concepts. The fundamental principles are:

• Personal accounts deal with credit or money lending from a business.
• Assets, obligations, and equity are all dealt with in accounts.
• Nominal accounts deal with a company’s expenses, revenue, gains, and losses.

Importance of Source Documents

Source documents include vouchers, checks, invoices, receipts, etc. These are documents that are created when a transaction occurs, which is why they are called source documents. The reasons for the importance of source documents are as follows:

• The documents are used as physical documentation for the transactions that occur in the company.
• The paperwork gives the business crucial information such as the time, date, amount, and nature of the transaction.
• The documents can be used as evidence in court.
• The documents may be of great assistance to auditors during the auditing process.