Ch 4Recording of Transactions - II — Class 11 Accountancy, concept-first.

Chapter 3 showed that every business transaction is first recorded in the journal and then posted to the ledger accounts. For a small business, recording everything in a single journal works fine.

A cash book is the single most important subsidiary book in any business. It is a special journal that records only cash and bank transactions.

A single column cash book is a special journal that records all cash transactions of a business in the order they occur.

A double column cash book has two amount columns on each side — one for cash and one for bank. This format is used when a business has a large number of bank transactions.

In any business, a huge number of small, repetitive payments are made every day — auto fare, postage, cartage, refreshments, stationery, and so on.

The cash book is balanced in exactly the same way as any ledger account. On the left-hand side (debit side), all cash receipts are recorded date-wise.

All credit purchases of goods are recorded in the purchases journal. Cash purchases are recorded in the cash book, not here.

When a business buys goods on credit, it may later need to send some of them back to the supplier. This happens when the goods are defective, damaged in transit, or do not match the quality or specifi…

All credit sales of merchandise are recorded in the Sales (Journal) Book. Cash sales are never entered here — they go into the Cash Book.

When a customer returns goods that were originally sold on credit, the transaction is recorded in the Sales Return Book (also called the Sales Return Journal).

A business maintains several special journals — the Cash Book, Purchases Book, Sales Book, Purchases Return Book, and Sales Return Book — to record the bulk of its routine transactions.

At the end of an accounting period — typically a month, quarter, or year — every ledger account is balanced.

The key terms introduced in this chapter, with a short meaning for each.

- Cash Book: A special journal that records all cash receipts and payments. It serves as both a journal and the cash account.