Worksheets › Class 11 › Recording of Transactions – I › Cheat sheet
Class 11 Recording of Transactions – I: cheat sheet
CBSE Accountancy. Source documents, the accounting equation, the rules of debit and credit, journal entries with narrations, and posting to the ledger and balancing it.
Key ideas
- Every entry starts from a source document: a cash memo, invoice, receipt, pay-in-slip, cheque or debit note.
- The accounting equation always holds: each transaction changes at least two items by equal amounts.
- Debit an increase in an asset, an expense or drawings; credit an increase in a liability, capital or a revenue; decreases go the other way.
- A journal entry names the account debited (Dr.) first, then “To” the account credited, then the narration in brackets.
- Goods bought and sold go to the Purchases and Sales accounts; goods the owner takes for personal use are Drawings Dr. To Purchases.
- Posting carries each entry to the ledger: “To …” on the debit side of the account debited and “By …” on the credit side of the account credited.
- To balance an account, write the difference on the smaller side as “Balance c/d” so the totals agree, then bring it down on the other side as “Balance b/d”.
Remember
| Accounting equation | Assets = Liabilities + Capital |
| Asset, expense, drawings | increase: debit; decrease: credit |
| Liability, capital, revenue | increase: credit; decrease: debit |
| Started business with cash | Cash A/c Dr. To Capital A/c (assets and capital both up) |
| Goods bought on credit | Purchases A/c Dr. To Supplier’s A/c (assets and liabilities both up) |
| Rent or salaries paid | Rent A/c Dr. To Cash A/c (assets and capital both down) |
| Cash paid to a creditor | Creditor’s A/c Dr. To Cash A/c (assets and liabilities both down) |
Watch out
- Debiting Cash when cash is paid out: cash going out is credited.
- Debiting furniture bought for the office to Purchases instead of Furniture.
- Writing “Balance c/d” on the bigger side of the account.
- Recording goods taken by the owner as a sale.
Worked example
Goods were sold on credit to Neel for ₹13,500 and ₹24,500; Neel paid ₹6,000 in cash. (a) What is the balance of Neel’s account? (b) Is it a debit or a credit balance?
Working: Neel A/c Dr. side: To Sales A/c ₹13,500; To Sales A/c ₹24,500 Cr. side: By Cash A/c ₹6,000; By Balance c/d ₹32,000 Totals: ₹38,000 on each side. Balance: ₹32,000 debit, brought down as “To Balance b/d”.
Answer: (a) ₹32,000; (b) debit
Practise Recording of Transactions – I
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