CBSE Class 11 Accountancy Revision Notes Chapter 4 Recording of Transactions 2 2026–27
Recording of Transactions 2 explains how repetitive business transactions are recorded in special purpose books instead of one main journal.
In CBSE Class 11 Accountancy Chapter 4, students learn cash book, petty cash book, purchases book, sales book, returns books, journal proper and ledger posting.
Recording of Transactions 2 explains how accounting becomes faster when a business grows. A small firm may record every transaction in one journal, but a larger firm handles repeated cash sales, credit sales, credit purchases and returns through separate subsidiary books.
These CBSE class 11 accountancy revision notes chapter 4 show how special purpose books organise transactions before they move to ledger accounts. The chapter connects cash book entries, contra entries, petty cash, purchases book, sales book, returns books and journal proper with the later process of balancing accounts.
Key Takeaways
- Subsidiary books: Special journals record repeated transactions of the same nature.
- Cash book: Records cash and bank transactions and also works as a ledger account.
- Petty cash book: Records small payments through the imprest system.
- Journal proper: Records transactions outside special purpose books.
Confused by cash book, contra entry and subsidiary books?
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Recording of Transactions 2 Class 11 Accountancy Notes: Chapter Overview
Recording of Transactions 2 Class 11 Accountancy Notes focus on special purpose books. These books reduce the load on the journal and make transaction recording faster, cleaner and easier to check.
| Topic | What Students Learn |
| Special purpose books | Separate books for repeated transactions |
| Cash book | Cash and bank receipts and payments |
| Single column cash book | Cash receipts and cash payments |
| Double column cash book | Cash and bank transactions in one book |
| Petty cash book | Small payments recorded by a petty cashier |
| Purchases book | Credit purchases of goods |
| Sales book | Credit sales of goods |
| Purchases return book | Goods returned to suppliers |
| Sales return book | Goods returned by customers |
| Journal proper | Transactions outside subsidiary books |
| Ledger posting | Transfer of entries to ledger accounts |
Why Are Special Purpose Books Used?
Special purpose books are used when transaction volume increases. A business may have many cash transactions, credit purchases, credit sales and returns every month. Recording all of them in one journal makes the work slow and difficult to review.
Special journals divide accounting work by transaction type. This makes recording faster and allows different staff members to handle different books.
| Need | How Special Purpose Books Help |
| Large transaction volume | Repeated transactions get separate books |
| Faster recording | Similar entries are grouped together |
| Better checking | Each book has a clear purpose |
| Division of labour | Different staff can handle different books |
| Easier posting | Periodic totals are posted to ledger accounts |
Subsidiary Books in Class 11 Accountancy Chapter 4 Notes
Subsidiary books are also called day books or special journals. Each subsidiary book records a specific type of transaction.
| Subsidiary Book | Transaction Recorded |
| Cash Book | Cash and bank receipts and payments |
| Purchases Book | Credit purchases of goods |
| Sales Book | Credit sales of goods |
| Purchases Return Book | Goods returned to suppliers |
| Sales Return Book | Goods returned by customers |
| Journal Proper | Entries outside special journals |
Subsidiary books improve the accuracy of financial records because each book has a defined use.
Cash Book
Cash book records all cash receipts and cash payments. It may also record bank transactions depending on the format used.
Cash book serves two purposes. It is a book of original entry because transactions are first recorded in it. It also works as a ledger account for cash or bank, so a separate cash account or bank account is generally avoided when the relevant column exists in the cash book.
| Feature | Explanation |
| Records cash receipts | Amounts received in cash |
| Records cash payments | Amounts paid in cash |
| Opens with balance | Starts with cash or bank balance |
| Prepared periodically | Usually prepared monthly |
| Works as ledger | Cash or bank account details are available in the book |
Single Column Cash Book
Single column cash book records only cash transactions. It has one amount column on each side.
The left side records cash receipts. The right side records cash payments.
| Dr. Receipts Side | Cr. Payments Side |
| Opening cash balance | Cash paid for expenses |
| Cash received from debtors | Cash purchases |
| Cash sales | Cash paid to creditors |
| Other cash receipts | Closing cash balance |
Format of Single Column Cash Book
| Date | Receipts | L.F. | Amount | Date | Payments | L.F. | Amount |
Posting from Single Column Cash Book
Entries on the receipt side of the cash book are posted to the credit side of the related ledger accounts. Entries on the payment side are posted to the debit side of the related ledger accounts.
| Cash Book Entry | Ledger Posting |
| Cash received from a person | Credit that person’s account |
| Cash paid to a person | Debit that person’s account |
| Cash sales | Credit Sales Account |
| Cash purchases | Debit Purchases Account |
| Rent paid | Debit Rent Account |
Double Column Cash Book
Double column cash book has two amount columns on each side. One column records cash, and the other records bank transactions.
This format is useful because modern businesses often receive and pay money through banks.
| Side | Cash Column | Bank Column |
| Debit side | Cash receipts | Bank deposits and bank receipts |
| Credit side | Cash payments | Bank payments and withdrawals |
Bank Transactions in Double Column Cash Book
Bank transactions include deposits, withdrawals, cheques received, cheques issued, bank charges and interest entries.
| Transaction | Cash Book Treatment |
| Cash deposited into bank | Bank column debit and cash column credit |
| Cash withdrawn from bank for office use | Cash column debit and bank column credit |
| Cheque received and deposited same day | Bank column debit |
| Cheque received and deposited later | Cash column debit first, then contra entry on deposit |
| Cheque dishonoured | Bank column credit |
| Bank charges | Bank column credit |
| Interest collected by bank | Bank column debit |
Contra Entry
Contra entry appears when both sides of a transaction are recorded in the cash book itself. It usually happens when cash moves between cash and bank.
A contra entry is marked with “C” in the L.F. column. These entries are skipped during ledger posting because both effects already appear in the cash book.
| Contra Entry Situation | Entry in Cash Book |
| Cash deposited into bank | Bank column debit, cash column credit |
| Cash withdrawn from bank | Cash column debit, bank column credit |
Cheque, Pay-in-Slip and Bank Column
A pay-in-slip is used when cash or cheque is deposited into a bank account. The bank returns the counterfoil as proof of deposit.
A cheque is used to withdraw money or make payment through a bank account. Cheques may be bearer, order or crossed cheques.
| Bank Document | Purpose |
| Pay-in-slip | Deposit cash or cheque into bank |
| Cheque | Make payment or withdraw money |
| Bearer cheque | Paid to bearer |
| Order cheque | Paid to named person or order |
| Crossed cheque | Paid through bank |
| A/c payee cheque | Deposited only in payee’s account |
Understanding bank column entries also helps students later when they study bank reconciliation statement.
Petty Cash Book
Petty cash book records small and repetitive payments. Examples include postage, cartage, conveyance, courier charges, stationery and small office expenses.
Large businesses appoint a petty cashier to record these small payments. This keeps the main cash book clean and reduces the work of the main cashier.
| Small Payment | Recorded In |
| Postage | Petty Cash Book |
| Bus fare | Petty Cash Book |
| Courier charges | Petty Cash Book |
| Stationery | Petty Cash Book |
| Refreshments | Petty Cash Book |
| Cartage | Petty Cash Book |
Imprest System in Petty Cash Book
Under the imprest system, the petty cashier receives a fixed amount at the beginning of a period. This amount is called the imprest amount.
The petty cashier makes small payments from this amount. At the end of the period, the head cashier reimburses the amount spent, so the petty cashier again has the full imprest amount.
| Step | Process |
| Step 1 | Head cashier gives fixed imprest amount |
| Step 2 | Petty cashier pays small expenses |
| Step 3 | Petty cashier records expenses in petty cash book |
| Step 4 | Periodic total is calculated |
| Step 5 | Head cashier reimburses the amount spent |
Advantages of Petty Cash Book
Petty cash book improves control over small expenses. It also saves time because the main cashier handles larger cash transactions.
| Advantage | Explanation |
| Saves time | Main cashier handles larger transactions |
| Better control | Petty payments are tracked separately |
| Easy recording | Similar expenses are grouped in columns |
| Less bulky cash book | Small payments stay outside main cash book |
| Faster posting | Periodic totals can be posted to ledger |
Purchases Book
Purchases book records only credit purchases of goods. Cash purchases are recorded in the cash book. Credit purchase of assets such as furniture or machinery is recorded in journal proper.
The source document for purchases book is the invoice or bill received from the supplier.
| Recorded in Purchases Book | Recorded Elsewhere |
| Credit purchase of goods | Cash purchase of goods |
| Goods bought for resale on credit | Credit purchase of fixed assets |
| Supplier invoices for goods | Cash book or journal proper entries |
Format of Purchases Book
| Date | Invoice No. | Name of Supplier | L.F. | Amount |
The monthly total of purchases book is posted to the debit of Purchases Account. Individual supplier accounts are credited.
Sales Book
Sales book records only credit sales of goods. Cash sales are recorded in the cash book. Sale of assets is recorded in journal proper.
The source document for sales book is the sales invoice or bill issued to the customer.
| Recorded in Sales Book | Recorded Elsewhere |
| Credit sale of goods | Cash sale of goods |
| Goods sold on account | Sale of fixed assets |
| Customer invoices for goods | Cash book or journal proper entries |
Format of Sales Book
| Date | Invoice No. | Name of Customer | L.F. | Amount |
The monthly total of sales book is posted to the credit of Sales Account. Individual customer accounts are debited.
Purchases Return Book
Purchases return book records goods returned to suppliers. It is also called return outwards book.
This book is used when goods bought on credit are returned due to damage, wrong quality, wrong quantity or other issues.
| Term | Meaning |
| Purchases Return Book | Records goods returned to suppliers |
| Return Outwards Book | Another name for purchases return book |
| Debit Note | Document sent to supplier for goods returned |
The total of purchases return book is posted to the credit of Purchases Return Account. Individual supplier accounts are debited.
Sales Return Book
Sales return book records goods returned by customers. It is also called return inwards book.
This book is used when goods sold on credit are returned by customers.
| Term | Meaning |
| Sales Return Book | Records goods returned by customers |
| Return Inwards Book | Another name for sales return book |
| Credit Note | Document sent to customer for goods returned |
The total of sales return book is posted to the debit of Sales Return Account. Individual customer accounts are credited.
Return Inwards and Return Outwards Difference
Return inwards and return outwards are common terms in Recording of Transactions 2 Class 11 Accountancy Chapter 4 CBSE Notes.
| Basis | Return Inwards | Return Outwards |
| Meaning | Goods returned by customers | Goods returned to suppliers |
| Related Book | Sales Return Book | Purchases Return Book |
| Document | Credit Note | Debit Note |
| Effect | Reduces sales | Reduces purchases |
| Ledger Posting | Sales Return Account is debited | Purchases Return Account is credited |
Journal Proper
Journal proper records transactions that do not fit into any special purpose book. It is also called a simple journal or miscellaneous journal.
Journal proper is used for opening entries, closing entries, adjustment entries, transfer entries and credit purchase or sale of assets.
| Transaction | Recorded In |
| Opening entry | Journal Proper |
| Closing entry | Journal Proper |
| Adjustment entry | Journal Proper |
| Transfer entry | Journal Proper |
| Credit purchase of machinery | Journal Proper |
| Credit sale of furniture | Journal Proper |
| Rectification entry | Journal Proper |
Cash Transactions and Credit Transactions
Competitor coverage often separates cash and credit transactions because students need to know the book used for each type.
| Transaction Type | Meaning | Book Used |
| Cash Transaction | Cash or bank payment happens immediately | Cash Book |
| Credit Purchase of Goods | Goods bought now, payment later | Purchases Book |
| Credit Sale of Goods | Goods sold now, payment later | Sales Book |
| Return of Credit Purchase | Goods returned to supplier | Purchases Return Book |
| Return of Credit Sale | Goods returned by customer | Sales Return Book |
| Other Credit Transaction | Falls outside special books | Journal Proper |
Ledger Posting from Subsidiary Books
Ledger posting means transferring totals and individual entries from subsidiary books to ledger accounts.
| Subsidiary Book | Ledger Posting |
| Cash Book | Related accounts posted from receipt and payment sides |
| Purchases Book | Purchases Account debited, suppliers credited |
| Sales Book | Customers debited, Sales Account credited |
| Purchases Return Book | Suppliers debited, Purchases Return Account credited |
| Sales Return Book | Sales Return Account debited, customers credited |
| Petty Cash Book | Expense accounts debited, Petty Cash Account credited |
| Journal Proper | Posted according to debit and credit entry |
Balancing of Accounts
Balancing means finding the difference between the debit side and credit side of an account. The balance is carried forward to the next period.
| Account Type | Usual Balance |
| Cash Account | Debit balance |
| Bank Account | Debit or credit balance |
| Asset Accounts | Debit balance |
| Liability Accounts | Credit balance |
| Capital Account | Credit balance |
| Expense Accounts | Debit balance |
| Income Accounts | Credit balance |
Cash book usually shows a debit balance because cash payments cannot exceed cash available. Bank column may show credit balance when there is an overdraft.
Trial Balance Link in Recording of Transactions 2
Trial balance is prepared after ledger accounts are posted and balanced. Chapter 4 supports trial balance preparation because special purpose books provide the entries that move into ledger accounts.
| Stage | Purpose |
| Subsidiary books | Record transactions by type |
| Ledger posting | Transfer entries to accounts |
| Balancing of accounts | Find account balances |
| Trial balance | Check debit and credit totals |
This link helps students understand why accurate subsidiary book entries are important.
Bank Reconciliation Statement Link
Bank reconciliation statement is studied as a separate topic, but Chapter 4 prepares its base through double column cash book, bank column, cheque entries, bank charges, overdraft and dishonoured cheques.
| Cash Book Topic | Later Use in Bank Reconciliation |
| Bank column | Compares with pass book |
| Cheque issued | May remain outstanding |
| Cheque deposited | May remain uncleared |
| Bank charges | May appear first in pass book |
| Interest credited by bank | May need cash book update |
| Cheque dishonoured | Requires correction in cash book |
5 Important Topics in Class 11 Accountancy Chapter 4
| Important Topic | Why It Matters |
| Special purpose books | Shows why journal is divided |
| Cash book | Records cash and bank transactions |
| Petty cash book | Handles small payments |
| Purchases and sales books | Records credit goods transactions |
| Returns books and journal proper | Covers returns and miscellaneous entries |
Recording of Transactions 2: Quick Revision Table
| Concept | Key Point |
| Special purpose books | Used for repeated transactions |
| Subsidiary books | Another name for special journals |
| Cash book | Records cash and bank transactions |
| Single column cash book | Records cash only |
| Double column cash book | Records cash and bank |
| Petty cash book | Records small payments |
| Imprest system | Fixed petty cash amount restored periodically |
| Purchases book | Records credit purchase of goods |
| Sales book | Records credit sale of goods |
| Purchases return book | Records goods returned to suppliers |
| Sales return book | Records goods returned by customers |
| Journal proper | Records entries outside special books |
| Contra entry | Cash and bank entry recorded in cash book |
| Ledger posting | Transfer from books to ledger accounts |
| Balancing | Finding debit-credit difference |
Key Terms from CBSE Class 11 Accountancy Revision Notes Chapter 4
| Key Term | Meaning |
| Special Purpose Books | Books used for specific types of transactions |
| Subsidiary Books | Special journals for repeated transactions |
| Day Books | Another name for subsidiary books |
| Cash Book | Book for cash and bank transactions |
| Single Column Cash Book | Cash book with one amount column on each side |
| Double Column Cash Book | Cash book with cash and bank columns |
| Petty Cash Book | Book for small payments |
| Imprest Amount | Fixed amount given to petty cashier |
| Purchases Book | Book for credit purchases of goods |
| Sales Book | Book for credit sales of goods |
| Purchases Return Book | Book for returns to suppliers |
| Return Outwards | Goods returned to suppliers |
| Sales Return Book | Book for returns from customers |
| Return Inwards | Goods returned by customers |
| Journal Proper | Journal for entries outside subsidiary books |
| Contra Entry | Entry affecting cash and bank columns together |
| Ledger Posting | Transfer of entries to ledger accounts |
| Balancing of Accounts | Finding the balance of an account |
| Debit Note | Document for goods returned to supplier |
| Credit Note | Document for goods returned by customer |
| Trial Balance | Statement prepared after ledger balances |
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)
Subsidiary books are used to record repeated transactions separately. They make accounting faster because cash transactions, credit purchases, credit sales and returns are recorded in their own books.
Cash book records cash receipts, cash payments and bank transactions. Single column cash book records cash only, while double column cash book records cash and bank together.
Contra entry records movement between cash and bank in the cash book. Cash deposited into bank and cash withdrawn from bank for office use are common examples.
Purchases book records credit purchases of goods. Sales book records credit sales of goods. Cash purchases and cash sales are recorded in the cash book.
Return inwards means goods returned by customers. Return outwards means goods returned to suppliers. Return inwards reduces sales, while return outwards reduces purchases.
Journal proper records entries outside subsidiary books. Opening entries, closing entries, adjustment entries, transfer entries and credit purchase or sale of assets go to journal proper.
Under the imprest system, the petty cashier receives a fixed amount. After making small payments, the head cashier reimburses the amount spent so the petty cashier again has the original fixed amount.