CBSE Class 11 Accountancy Revision Notes Chapter 3 Recording of Transactions 1 2026–27
Recording of Transactions 1 explains how business transactions are identified, supported by vouchers, recorded in the journal and posted to ledger accounts.
In CBSE Class 11 Accountancy Chapter 3, students learn accounting equation, debit-credit rules, source documents, journalising and ledger posting.
Recording of Transactions 1 explains how a financial event enters the accounting system. A transaction begins with a source document, affects at least two accounts under the double entry system, and then moves from the journal to the ledger.
These CBSE class 11 accountancy revision notes chapter 3 connect the accounting equation with debit and credit rules. The chapter also explains vouchers, books of original entry, journalising, posting, ledger accounts, discounts and GST journal entries used in Class 11 Accountancy.
Key Takeaways
- Business transaction: Every transaction has a give and take effect.
- Source document: Vouchers, invoices, cash memos and cheques act as evidence.
- Accounting equation: Assets are always equal to liabilities plus capital.
- Journal and ledger: Transactions are first journalised and then posted to ledger accounts.
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Recording of Transactions 1 Class 11 Accountancy Notes: Chapter Overview
Recording of Transactions 1 Class 11 Accountancy Notes explain the first practical stage of accounting. After a transaction is identified, it is supported by a source document, recorded in the journal and posted to the ledger.
This chapter is important for the Class 11 Accountancy Syllabus because later topics depend on correct journal entries, ledger accounts and trial balance preparation.
| Topic | What Students Learn |
| Business transaction | Economic exchange with two-fold effect |
| Source documents | Evidence used for recording transactions |
| Accounting vouchers | Documents prepared for accounting entry |
| Accounting equation | Relationship between assets, liabilities and capital |
| Debit and credit | Rules used for recording account changes |
| Journal | Book of original entry |
| Ledger | Principal book of accounts |
| Posting | Transfer of journal entries to ledger accounts |
| Discount | Treatment of trade discount and cash discount |
| GST entries | Recording input tax and output tax |
What Is a Business Transaction?
A business transaction is an exchange of economic consideration between two parties. It has a give and take effect.
For example, when a business buys a computer for cash, it receives the computer and pays cash. The computer comes into the business, and cash goes out.
Every business transaction affects at least two accounts. This two-fold effect forms the base of the double entry system.
| Transaction | Give Effect | Take Effect |
| Goods purchased for cash | Cash goes out | Goods come in |
| Goods sold for cash | Goods go out | Cash comes in |
| Furniture bought by cheque | Bank balance decreases | Furniture increases |
| Capital introduced in business | Owner brings money | Business receives cash |
Source Documents in Recording of Transactions 1
Source documents are written records that provide evidence of business transactions. Accounting entries are prepared using these documents.
Common source documents include cash memo, invoice, sales bill, pay-in-slip, cheque and salary slip. These documents show details such as date, amount, parties involved and nature of transaction.
| Source Document | Used For |
| Cash memo | Cash purchase or cash sale |
| Invoice | Credit purchase or credit sale |
| Sales bill | Sale of goods |
| Pay-in-slip | Deposit of cash or cheque into bank |
| Cheque | Bank payment |
| Salary slip | Salary payment record |
| Receipt | Proof of payment received |
Source documents are arranged in chronological order and kept safely. They support accounting records and help during audit.
Accounting Vouchers
Accounting vouchers are documents prepared for recording transactions in books of accounts. They may be prepared from source documents.
A voucher contains the name of the firm, voucher number, date, debit account, credit account, amount, narration and authorisation details.
| Type of Voucher | Meaning |
| Cash Voucher | Used for cash receipts or payments |
| Debit Voucher | Used when one or more accounts are debited |
| Credit Voucher | Used when one or more accounts are credited |
| Journal Voucher | Used for complex transactions with multiple debits and credits |
| Transaction Voucher | Used for a simple transaction with one debit and one credit |
Essential Details in an Accounting Voucher
| Detail | Purpose |
| Name of firm | Identifies the business |
| Voucher number | Gives serial control |
| Date | Shows transaction date |
| Debit account | Shows account to be debited |
| Credit account | Shows account to be credited |
| Amount | Shows transaction value |
| Narration | Explains the transaction |
| Prepared by | Shows who prepared the voucher |
| Authorised by | Shows approval |
Accounting Equation
Accounting equation shows the relationship between assets, liabilities and capital.
Assets = Liabilities + Capital
A = L + C
This equation is also called the balance sheet equation because it explains the equality between resources and claims.
| Element | Meaning |
| Assets | Resources owned by the business |
| Liabilities | Amount owed to outsiders |
| Capital | Owner’s claim in the business |
The asset side records what the business owns. The liability side records owner’s capital and outsider’s claims.
Derivatives of Accounting Equation
| Formula | Used To Find |
| Assets = Liabilities + Capital | Total assets |
| Capital = Assets - Liabilities | Missing capital |
| Liabilities = Assets - Capital | Missing liabilities |
Example of Accounting Equation
If a business owns assets worth ₹60,000, has liabilities of ₹20,000 and owner’s capital of ₹40,000, the accounting equation will be:
Assets = Liabilities + Capital
₹60,000 = ₹20,000 + ₹40,000
The equation remains balanced after every transaction because every transaction affects at least two accounts.
Effect of Transactions on Accounting Equation
Each transaction changes assets, liabilities or capital. The equation remains balanced after each change.
| Transaction | Effect on Accounting Equation |
| Owner brings cash into business | Assets increase, capital increases |
| Cash deposited into bank | One asset increases, another asset decreases |
| Furniture bought by cheque | Furniture increases, bank decreases |
| Goods bought on credit | Assets increase, liabilities increase |
| Goods sold at profit | Assets increase and capital increases |
| Rent paid in cash | Expense increases and cash decreases |
| Drawings by owner | Assets decrease and capital decreases |
This analysis helps students understand why every journal entry has equal debit and credit amounts.
Double Entry System
The double entry system records both effects of every transaction. One account is debited, and another account is credited.
For every debit, there is an equal credit. This rule keeps the accounting equation balanced.
| Principle | Meaning |
| Two-fold effect | Every transaction affects at least two accounts |
| Equal amount | Total debit equals total credit |
| Complete record | Both sides of a transaction are recorded |
| Equation balance | Assets remain equal to liabilities plus capital |
Debit and Credit Rules
Debit and credit show the side on which an account is recorded. Debit means the left side of an account. Credit means the right side.
The effect of debit and credit depends on the type of account.
| Account Type | Debit | Credit |
| Assets | Increase | Decrease |
| Liabilities | Decrease | Increase |
| Capital | Decrease | Increase |
| Expenses/Losses | Increase | Decrease |
| Revenues/Gains | Decrease | Increase |
Rules of Debit and Credit
| Change | Rule |
| Increase in asset | Debit |
| Decrease in asset | Credit |
| Increase in liability | Credit |
| Decrease in liability | Debit |
| Increase in capital | Credit |
| Decrease in capital | Debit |
| Increase in expense or loss | Debit |
| Decrease in expense or loss | Credit |
| Increase in revenue or gain | Credit |
| Decrease in revenue or gain | Debit |
Traditional Rules of Accounting
| Type of Account | Debit Rule | Credit Rule |
| Personal Account | Debit the receiver | Credit the giver |
| Real Account | Debit what comes in | Credit what goes out |
| Nominal Account | Debit expenses and losses | Credit incomes and gains |
The modern rules and traditional rules both help students decide which account should be debited and which account should be credited.
Books of Original Entry
Books of original entry are books where transactions are recorded for the first time. Journal is one of the books of original entry.
The journal records transactions in chronological order. After journalising, entries are transferred to ledger accounts.
| Book of Original Entry | Purpose |
| Journal Proper | Records transactions that do not fit special books |
| Cash Book | Records cash and bank transactions |
| Purchases Book | Records credit purchase of goods |
| Sales Book | Records credit sale of goods |
| Purchase Returns Book | Records goods returned to suppliers |
| Sales Returns Book | Records goods returned by customers |
| Bills Receivable Book | Records bills receivable |
| Bills Payable Book | Records bills payable |
Journal in Class 11 Accountancy Chapter 3 Notes
Journal is the book of original entry where transactions are first recorded. Transactions are entered date-wise.
The process of recording transactions in the journal is called journalising.
| Journal Column | Purpose |
| Date | Shows transaction date |
| Particulars | Shows debit and credit accounts |
| L.F. | Shows ledger folio reference |
| Debit Amount | Shows amount debited |
| Credit Amount | Shows amount credited |
Format of Journal
| Date | Particulars | L.F. | Debit Amount | Credit Amount |
| Account debited Dr. | ||||
| To Account credited | ||||
| Narration |
Example of Journal Entry
Goods sold for cash ₹10,000.
| Date | Particulars | L.F. | Debit | Credit |
| Cash A/c Dr. | ₹10,000 | |||
| To Sales A/c | ₹10,000 | |||
| Being goods sold for cash |
Cash is debited because cash comes into the business. Sales is credited because revenue increases.
Ledger in Recording of Transactions 1
A ledger is the principal book of accounts. It contains separate accounts for each item, person or head.
Transactions are first recorded in the journal and then posted to ledger accounts. Ledger helps find the final balance of each account.
| Ledger Feature | Meaning |
| Principal book | Main book of accounts |
| Separate accounts | Each item has its own account |
| Debit side | Left side of the account |
| Credit side | Right side of the account |
| Balance | Difference between debit and credit totals |
Ledger Account Format
| Dr. | Cr. | ||||
| Date | Particulars | Amount | Date | Particulars | Amount |
Posting from Journal to Ledger
Posting means transferring journal entries to ledger accounts. It groups all transactions related to one account in one place.
| Step | Posting Process |
| Step 1 | Locate the account to be debited in the ledger |
| Step 2 | Enter the date on the debit side |
| Step 3 | Write the name of the opposite account in particulars |
| Step 4 | Fill the journal folio reference |
| Step 5 | Enter the amount |
| Step 6 | Repeat the process for the credit account |
Posting helps prepare account balances and supports trial balance preparation.
Journal and Ledger Difference
Journal and ledger are both important in the double entry system, but they serve different purposes.
| Basis | Journal | Ledger |
| Type of book | Book of original entry | Principal book |
| Order | Chronological order | Account-wise order |
| Process | Journalising | Posting |
| Basis | Transaction | Account |
| Use | Records complete transaction | Shows account-wise summary |
| Legal value | Greater value as first record | Supports classification and balance |
| Format | Date, particulars, L.F., debit, credit | Debit side and credit side |
The journal records transactions first. The ledger arranges them account-wise.
Classification of Ledger Accounts
Ledger accounts can be classified into permanent accounts and temporary accounts.
| Type of Account | Meaning | Examples |
| Permanent Accounts | Balances carried forward to next year | Assets, liabilities, capital |
| Temporary Accounts | Closed at the end of the accounting period | Expenses, losses, revenues, gains |
Permanent accounts appear in the Balance Sheet. Temporary accounts are transferred to Trading and Profit and Loss Account.
Trade Discount and Cash Discount
Discount means a reduction in price or amount payable. Recording of Transactions 1 explains two types of discounts.
| Type of Discount | Meaning | Treatment |
| Trade Discount | Deduction from list price | Deducted before recording entry |
| Cash Discount | Deduction for early payment | Recorded in books of accounts |
Example of Discount Calculation
List price = ₹10,000
Trade discount = 10%
Cash discount = 2%
| Particulars | Amount |
| List Price | ₹10,000 |
| Less: Trade Discount @10% | ₹1,000 |
| Invoice Value | ₹9,000 |
| Less: Cash Discount @2% | ₹180 |
| Net Amount | ₹8,820 |
Trade discount is deducted from the list price. Cash discount is recorded because it relates to payment.
GST Journal Entries in Recording of Transactions 1
GST journal entries record input tax and output tax on purchases, sales and expenses.
Input GST is recorded when the business buys goods or services. Output GST is recorded when the business sells goods or services.
| GST Term | Meaning |
| Input CGST | Central GST paid on purchase |
| Input SGST | State GST paid on purchase |
| Input IGST | Integrated GST paid on interstate purchase |
| Output CGST | Central GST collected on sale |
| Output SGST | State GST collected on sale |
| Output IGST | Integrated GST collected on interstate sale |
| Electronic Cash Ledger | Account used for GST payment balance |
Basic GST Entry for Purchase
| Particulars | Debit | Credit |
| Purchases A/c Dr. | ||
| Input CGST A/c Dr. | ||
| Input SGST A/c Dr. | ||
| To Creditors/Bank A/c |
Basic GST Entry for Sale
| Particulars | Debit | Credit |
| Debtors/Bank A/c Dr. | ||
| To Sales A/c | ||
| To Output CGST A/c | ||
| To Output SGST A/c |
GST entries help record tax separately from purchase, sale and expense amounts.
Trial Balance Link in Recording of Transactions 1
Trial balance is prepared after ledger posting. It checks whether the total debit balances and total credit balances are equal.
This chapter builds the base for trial balance because journalising and posting must be correct before account balances can be checked.
| Stage | Purpose |
| Source document | Provides evidence |
| Journal | Records transaction first |
| Ledger | Groups account-wise transactions |
| Trial Balance | Checks debit-credit equality |
A matching trial balance gives an arithmetic check on ledger balances.
Recording of Transactions 1: Quick Revision Tables
Accounting Process in Chapter 3
| Step | Meaning |
| Identify transaction | Select financial event |
| Prepare source document | Collect evidence |
| Prepare voucher | Create accounting support |
| Apply debit-credit rule | Decide accounts affected |
| Record in journal | Journalise transaction |
| Post to ledger | Transfer to account-wise records |
| Prepare trial balance | Check debit-credit equality |
Debit and Credit Summary
| Account | Debit When | Credit When |
| Asset | Asset increases | Asset decreases |
| Liability | Liability decreases | Liability increases |
| Capital | Capital decreases | Capital increases |
| Expense/Loss | Expense or loss increases | Expense or loss decreases |
| Revenue/Gain | Revenue or gain decreases | Revenue or gain increases |
Journal Entry Examples
| Transaction | Debit | Credit |
| Business started with cash | Cash A/c | Capital A/c |
| Furniture purchased for cash | Furniture A/c | Cash A/c |
| Goods purchased on credit | Purchases A/c | Creditor’s A/c |
| Goods sold on credit | Debtor’s A/c | Sales A/c |
| Salary paid | Salaries A/c | Cash/Bank A/c |
| Rent paid | Rent A/c | Cash/Bank A/c |
| Owner withdraws cash | Drawings A/c | Cash A/c |
Key Terms from CBSE Class 11 Accountancy Revision Notes Chapter 3
| Key Term | Meaning |
| Business Transaction | Economic exchange between parties |
| Source Document | Evidence of a business transaction |
| Voucher | Document prepared for accounting entry |
| Accounting Equation | Assets = Liabilities + Capital |
| Balance Sheet Equation | Another name for accounting equation |
| Debit | Left side of an account |
| Credit | Right side of an account |
| Double Entry System | System where every transaction has debit and credit effect |
| Book of Original Entry | Book where transactions are first recorded |
| Journal | Book used for first recording of transactions |
| Journalising | Recording transactions in journal |
| Ledger | Principal book containing all accounts |
| Posting | Transfer of journal entries to ledger |
| Ledger Folio | Reference to ledger page |
| Trade Discount | Discount deducted from list price |
| Cash Discount | Discount allowed for early payment |
| Input GST | Tax paid on purchases or expenses |
| Output GST | Tax collected on sales |
| Trial Balance | Statement checking debit-credit equality |
Useful Links for Class 11 Accountancy Revision Notes
| Section | Useful Links |
| Revision Notes | CBSE Class 11 Accountancy Revision Notes |
| Accountancy Notes | CBSE Class 11 Accountancy Revision Notes Chapter 1 |
| Accountancy Notes | CBSE Class 11 Accountancy Revision Notes Chapter 2 |
| NCERT Solutions | NCERT Solutions Class 11 Accountancy |
| Sample Papers | CBSE Sample Papers for Class 11 Accountancy |
| Important Questions | Important Questions Class 11 Accountancy |
| NCERT Solutions | NCERT Solutions for Class 11 |
| Important Questions | CBSE Important Questions |
| Syllabus | CBSE Class 11 Accountancy Syllabus |
| NCERT Books | NCERT Books for Class 11 Accountancy |
| Commerce Support | CBSE Class 11 Business Studies Revision Notes |
FAQs (Frequently Asked Questions)
Identify the account type first. Debit increases in assets and expenses. Credit increases in liabilities, capital and revenue. After that, check whether each account is increasing or decreasing due to the transaction.
Use the formula Assets = Liabilities + Capital. Assets show what the business owns. Liabilities and capital show how those assets are financed.
Source documents provide proof of transactions. They show details such as date, amount, parties involved and transaction type, which helps prepare vouchers and journal entries.
Journal records transactions first in date-wise order. Ledger arranges the same transactions account-wise, so the balance of each account can be found.
Posting means transferring journal entries to the relevant ledger accounts. It groups all transactions related to one account in one place.
Trade discount is deducted from the list price before recording the entry. Cash discount is recorded in the books because it relates to payment.
Every transaction has two effects under the double entry system. Equal debit and credit amounts keep the accounting equation balanced and help prepare a correct trial balance.