NCERT Solutions for Class 11 Accountancy Chapter 4: Recording of Transactions – II (NCERT 2026–27)

Q: What is Class 11 Accountancy Chapter 4 about?

Chapter 4, Recording of Transactions - II, deals with special purpose books - the cash book (single column, double column and petty cash book), the special journals (purchases, purchases return, sales and sales return books), the journal proper, and the balancing of ledger accounts. It builds on the journal and ledger learnt in Chapter 3.

These Class 11 Accountancy Chapter 4 solutions cover Recording of Transactions – II, the chapter on special purpose books — the cash book (single column, double column and petty cash book), the special journals (purchases, purchases return, sales and sales return books), the journal proper, and the balancing of ledger accounts. Below you will find every NCERT Question for Practice reproduced verbatim and solved in full: short and long theory answers in exam-ready prose, and all numerical problems worked step by step with cash books, subsidiary books and ledger accounts shown in proper format, balanced and verified against the textbook’s answers. Extra practice, MCQs, Assertion–Reason and FAQs follow.

Class: 11 Subject: Accountancy Book: Financial Accounting – I Chapter: 4 Topic: Recording of Transactions – II Session: 2026–27

On this page

Chapter overview
Key terms, formats & rules
NCERT “Questions for Practice” — full solutions
Extra practice questions
MCQs & Assertion–Reason
Exam tips & common mistakes
FAQs

Class 11 Accountancy Chapter 4 – Overview

As a business grows, recording every transaction in one journal becomes cumbersome. So the journal is sub-divided into special journals (also called day books or subsidiary books), each meant for transactions of a similar nature. The cash book records all cash and bank receipts and payments and serves as both a journal and the cash/bank ledger account; it may be a single column (cash only), a double column (cash and bank, with contra entries marked ‘C’) or a petty cash book (small repetitive payments under the imprest system). Credit transactions go into the purchases book, purchases return book, sales book and sales return book, posted with debit/credit notes; whatever cannot fit any special journal is recorded in the journal proper (opening, adjustment, rectification, transfer and other entries). Finally, ledger accounts are balanced to find the net position of each account. This chapter builds directly on the journal and ledger learnt in Chapter 3.

Key Terms, Formats & Rules

Cash book: a book of original entry in which all cash receipts (debit side) and cash payments (credit side) are recorded; it also acts as the cash/bank ledger account, so a separate cash/bank account is not opened in the ledger.

Single column cash book: one amount column on each side; records only cash transactions. It always shows a debit (or nil) balance — cash payments can never exceed receipts plus opening cash.

Double column cash book: two amount columns (cash and bank) on each side. Bank column can show a credit balance (bank overdraft).

Contra entry (‘C’): a transaction recorded on both sides of the cash book — cash deposited into bank or cash withdrawn from bank. Marked ‘C’ in the L.F. column and not posted to the ledger.

Petty cash book & imprest system: a separate book for small, repetitive payments (postage, cartage, conveyance). Under the imprest system the petty cashier starts with a fixed sum (imprest amount) and is reimbursed for what is spent.

Special (subsidiary) journals: purchases book (credit purchases of goods), purchases return / return outwards book, sales book (credit sales of goods), sales return / return inwards book. Cash purchases/sales go in the cash book.

Debit note & credit note: a debit note is the source document for purchases return (prepared by the buyer); a credit note is the source document for sales return (prepared by the seller).

Journal proper: records opening entries, adjustment entries, rectification entries, transfer/closing entries, credit purchase/sale of assets (other than goods), and similar items not covered by special journals.

Trade discount: Net amount = List price − Trade discount; recorded in subsidiary books at the net figure (trade discount is never entered in the books).

Cash discount: recorded only when received/allowed at the time of cash settlement; entered through the cash book/journal, not deducted in subsidiary books.

Balancing a cash column: Closing balance (Balance c/d) = Total receipts − Total payments; carried down (b/d) to the next period.

NCERT “Questions for Practice” — Full Solutions

All questions below are reproduced verbatim from the NCERT textbook’s end-of-chapter Questions for Practice. Answers are original; all numericals are worked step by step and the closing balances are verified against the textbook’s given answers.

Short Answers

1. Briefly state how the cash book is both journal and a ledger.

ANSWER The cash book is a book of original entry (journal) because all cash and bank transactions are recorded in it first, in chronological order, directly from the source documents — without first passing through the journal. It is also a ledger because it is ruled exactly like a cash/bank account, is balanced like a ledger account, and serves the purpose of the cash and bank accounts. Hence no separate cash or bank account is opened in the ledger. Performing both functions, it is rightly called both a journal and a ledger.

2. What is the purpose of contra entry?

ANSWER A contra entry records a transaction that affects both the cash and the bank columns of the cash book at the same time — namely cash deposited into the bank or cash withdrawn from the bank for office use. Its purpose is to show that the money has merely moved between cash and bank within the firm. Such entries are written on both the debit and credit sides and marked ‘C’ in the L.F. column to indicate they are not to be posted to the ledger, as both aspects already appear in the cash book itself.

3. What are special purpose books?

ANSWER Special purpose books (also called special journals, subsidiary books or day books) are sub-divisions of the journal, each maintained to record a particular type of repetitive transaction. The common special purpose books are the cash book, petty cash book, purchases book, purchases return book, sales book, sales return book and the journal proper. They make recording quick, accurate and economical and allow division of labour in accounting work.

4. What is petty cash book? How it is prepared?

ANSWER The petty cash book is a cash book maintained by a petty cashier to record numerous small, repetitive payments such as postage, cartage, conveyance and stationery, so the main cash book is not overburdened. Preparation: it is usually a columnar (analytical) book. The receipt (debit) side has one column for the imprest amount received. The payment (credit) side has a total amount-paid column and several analysis columns (postage, conveyance, stationery, etc.) plus a miscellaneous column. Each payment is entered against its date and voucher number and analysed into the proper column. At period-end all columns are totalled, the book is balanced, the totals of each expense column are posted to the debit of the respective expense accounts, and the petty cashier is reimbursed under the imprest system.

5. Explain the meaning of posting of journal entries?

ANSWER Posting means transferring the entries recorded in the journal (or special journals) to the relevant individual accounts in the ledger. The account debited in the journal is debited in the ledger and the account credited is credited, writing the name of the other account in the particulars column along with the date, J.F. and amount. Posting classifies all transactions account-wise so the net effect on each account can be found.

6. Define the purpose of maintaining subsidiary journal.

ANSWER Subsidiary journals are maintained to record large numbers of similar, repetitive transactions in separate books. Their purposes are to make recording quick and convenient, to permit division of labour (different clerks handle different books), to reduce the bulk of the main journal, to facilitate easy reference and checking, and to allow periodic posting of totals to the ledger — making the whole system economical and efficient.

7. Write the difference between return Inwards and return ouwards.

ANSWER Return inwards (sales return): goods sold on credit that are returned by customers. It is recorded in the sales return book on the basis of a credit note prepared by the seller; the customer’s account is credited and the sales return account is debited. Return outwards (purchases return): goods purchased on credit that are returned to suppliers. It is recorded in the purchases return book on the basis of a debit note prepared by the buyer; the supplier’s account is debited and the purchases return account is credited.

8. What do you understand by ledger folio?

ANSWER Ledger Folio (L.F.) is the page number of the ledger on which a particular account appears. It is written in the L.F. column of the journal or subsidiary book at the time of posting, giving a cross-reference that helps locate the account quickly and confirms that the entry has been posted.

9. What is difference between trade discount and cash discount?

ANSWER Trade discount is a reduction in the list price allowed by a seller for buying in bulk; it is deducted on the invoice itself, so goods are recorded at the net price, and it is not shown separately in the books. Cash discount is an allowance for prompt or early payment of dues; it is given at the time of cash settlement and is recorded in the books (discount allowed is an expense, discount received is an income).

10. Write the process of preparing ledger from a journal.

ANSWER (i) Identify the two accounts in each journal entry. (ii) Open a separate account for each in the ledger. (iii) In the account that is debited in the journal, make the entry on its debit side writing ‘To <name of credited account>’. (iv) In the account that is credited, make the entry on its credit side writing ‘By <name of debited account>’. (v) Record the date, amount and J.F. against each. (vi) Repeat for all entries, then balance each account.

11. What do you understand by Imprest amount in petty cash book?

ANSWER The imprest amount is the fixed sum of money given to the petty cashier at the beginning of a period to meet small payments. As the period closes the petty cashier is reimbursed exactly the amount spent, so that at the start of the next period he again has the full imprest amount in hand. This arrangement is called the imprest system.

Long Answers

1. Explain the need for drawing up the special purpose books.

ANSWER When a business is small, all transactions can be recorded in a single journal. But as the business expands, the number of transactions becomes very large and many of them are repetitive, so journalising each one separately becomes slow and cumbersome. To overcome this, the journal is sub-divided into special purpose books, each recording one class of similar transactions. The need arises for the following reasons: (i) Quick and efficient recording of a large volume of repetitive transactions; (ii) Division of labour — different books can be handled by different clerks, improving speed and specialisation; (iii) Reduced bulk of the main journal and easy, account-wise classification; (iv) Economy in time and effort, as totals can be posted periodically; and (v) Easy checking, control and reference, reducing the chances of error and fraud. Transactions that do not fit any special journal are recorded in the journal proper.

2. What is cash book? Explain the types of cash book.

ANSWER A cash book is a book of original entry in which all transactions relating to cash receipts and cash payments are recorded in chronological order. It begins with the opening cash/bank balance, is generally maintained monthly, and serves the purpose of both the journal and the cash (and bank) ledger account, so no separate cash/bank account is opened in the ledger. Types of cash book: (i) Single column cash book — has one amount column on each side and records only cash transactions; it always shows a debit balance. (ii) Double column cash book — has two amount columns (cash and bank) on each side, recording both cash and bank transactions; contra entries appear when cash and bank interact. (A discount column may also be added in some forms.) (iii) Petty cash book — maintained by the petty cashier to record numerous small payments under the imprest system, usually in a columnar/analytical form.

3. What is contra entry? How can you deal this entry while preparing double column cash book?

ANSWER A contra entry is one that affects both the cash and bank columns of the cash book at the same time, arising when cash is deposited into the bank or cash is withdrawn from the bank for office use. Both aspects of such a transaction are present within the cash book itself. Dealing with it in a double column cash book: when cash is deposited into the bank, write the amount on the debit (receipts) side in the bank column and the same amount on the credit (payments) side in the cash column. When cash is withdrawn from the bank for office use, write it on the debit side in the cash column and on the credit side in the bank column. In each case the letter ‘C’ is written in the L.F. column to show that the entry is a contra entry and is not posted to the ledger.

4. What is petty cash book? Write the advantages of petty cash book?

ANSWER The petty cash book is a separate cash book maintained by a petty cashier under the imprest system to record numerous small, repetitive cash payments such as postage, cartage, conveyance, refreshments and stationery. Advantages: (i) Saves time and effort of the head cashier, who is freed from handling petty disbursements and can concentrate on large cash transactions; (ii) Effective control over cash through division of work — the head cashier checks the petty cashier, reducing the chance of fraud and embezzlement; (iii) Convenient recording — the main cash book is not made bulky by insignificant items, in keeping with the materiality principle; and (iv) Saves posting effort, as column totals of similar expenses are posted to the ledger rather than each small item, making it a cost-reducing control measure.

5. Describe the advantages of sub-dividing the Journal.

ANSWER Sub-dividing the journal into special purpose books offers several advantages: (i) Division of labour — separate books can be maintained by different staff, increasing speed and accuracy; (ii) Specialisation and efficiency — a clerk handling one type of transaction becomes more skilled and faster; (iii) Time saving — similar transactions are grouped and their totals posted periodically; (iv) Easy reference and information — details of any class of transaction can be found in one place; (v) Better internal check and control, reducing errors and fraud; and (vi) Manageable records — the main journal is not overloaded, so the books remain neat and easy to audit.

6. What do you understand by balancing of account?

ANSWER Balancing an account means totalling its two sides and finding the difference between them so as to ascertain the net position of that account at a particular date. The difference is written on the shorter side as ‘Balance c/d’ to make both totals equal, and is brought down as ‘Balance b/d’ on the opposite side at the start of the next period. If the debit side exceeds the credit side, the account shows a debit balance (typical of assets and expenses); if the credit side exceeds the debit side, it shows a credit balance (typical of liabilities, capital and income). Nominal accounts of expenses, losses, gains and revenues are not balanced but are closed by transfer to the Trading and Profit & Loss Account.

Numerical Questions

Simple Cash Book

1. Enter the following transactions in a simple cash book for December 2016:01 Cash in hand ₹12,000; 05 Cash received from Bhanu ₹4,000; 07 Rent Paid ₹2,000; 10 Purchased goods Murari for cash ₹6,000; 15 Sold goods for cash ₹9,000; 18 Purchase stationery ₹300; 22 Cash paid to Rahul on account ₹2,000; 28 Paid salary ₹1,000; 30 Paid rent ₹500. (Ans. Cash in hand ₹13,200)

SOLUTION

Date	Receipts	Amount ₹	Date	Payments	Amount ₹
Dec 01	Balance b/d	12,000	Dec 07	Rent	2,000
Dec 05	Bhanu	4,000	Dec 10	Purchases	6,000
Dec 15	Sales	9,000	Dec 18	Stationery	300
			Dec 22	Rahul	2,000
			Dec 28	Salary	1,000
			Dec 30	Rent	500
			Dec 31	Balance c/d	13,200
	Total	25,000		Total	25,000

Verification: Receipts 25,000 − Payments (2,000+6,000+300+2,000+1,000+500 = 11,800) = ₹13,200 cash in hand, matching the textbook answer.

2. Record the following transaction in simple cash book for November 2016:01 Cash in hand ₹12,500; 04 Cash paid to Hari ₹600; 07 Purchased goods ₹800; 12 Cash received from Amit ₹1,960; 16 Sold goods for cash ₹800; 20 Paid to Manish ₹590; 25 Paid cartage ₹100; 31 Paid salary ₹1,000. (Ans. Cash in hand ₹12,170)

SOLUTION

Date	Receipts	Amount ₹	Date	Payments	Amount ₹
Nov 01	Balance b/d	12,500	Nov 04	Hari	600
Nov 12	Amit	1,960	Nov 07	Purchases	800
Nov 16	Sales	800	Nov 20	Manish	590
			Nov 25	Cartage	100
			Nov 31	Salary	1,000
			Nov 30	Balance c/d	12,170
	Total	15,260		Total	15,260

Verification: 15,260 − (600+800+590+100+1,000 = 3,090) = ₹12,170, as given.

3. Enter the following transaction in Simple cash book for December 2017:01 Cash in hand ₹7,750; 06 Paid to Sonu ₹45; 08 Purchased goods ₹600; 15 Received cash from Parkash ₹960; 20 Cash sales ₹500; 25 Paid to S.Kumar ₹1,200; 30 Paid rent ₹600. (Ans. Cash in hand ₹6,765)

SOLUTION

Date	Receipts	Amount ₹	Date	Payments	Amount ₹
Dec 01	Balance b/d	7,750	Dec 06	Sonu	45
Dec 15	Parkash	960	Dec 08	Purchases	600
Dec 20	Sales	500	Dec 25	S. Kumar	1,200
			Dec 30	Rent	600
			Dec 31	Balance c/d	6,765
	Total	9,210		Total	9,210

Verification: 9,210 − (45+600+1,200+600 = 2,445) = ₹6,765, as given.

Bank Column Cash Book

4. Record the following transactions in a bank column cash book for December 2016:01 Started business with cash ₹80,000; 04 Deposited in bank ₹50,000; 10 Received cash from Rahul ₹1,000; 15 Bought goods for cash ₹8,000; 22 Bought goods by cheque ₹10,000; 25 Paid to Shyam by cash ₹20,000; 30 Drew from Bank for office use ₹2,000; 31 Rent paid by cheque ₹1,000. (Ans. Cash in hand ₹5,000; cash at bank ₹37,000)

SOLUTION

Date	Receipts	L.F.	Cash ₹	Bank ₹	Date	Payments	L.F.	Cash ₹	Bank ₹
Dec 01	Capital		80,000		Dec 04	Bank	C	50,000
Dec 04	Cash	C		50,000	Dec 15	Purchases		8,000
Dec 10	Rahul		1,000		Dec 22	Purchases			10,000
Dec 30	Bank	C	2,000		Dec 25	Shyam		20,000
					Dec 30	Cash	C		2,000
					Dec 31	Rent			1,000
					Dec 31	Balance c/d		5,000	37,000
	Total		83,000	50,000		Total		83,000	50,000

Verification: Cash = 83,000 − (50,000+8,000+20,000) = ₹5,000; Bank = 50,000 − (10,000+2,000+1,000) = ₹37,000, as given.

5. Prepare a double column cash book with the help of following information for December 2016:01 Started business with cash ₹1,20,000; 03 Cash paid into bank ₹50,000; 05 Purchased goods from Sushmita ₹20,000; 06 Sold goods to Dinker and received a cheque ₹20,000; 10 Paid to Sushmita cash ₹20,000; 14 Cheque received on December 06, 2016 deposited into bank; 18 Sold goods to Rani ₹12,000; 20 Cartage paid in cash ₹500; 22 Received cash from Rani ₹12,000; 27 Commission received ₹5,000; 30 Drew cash for personal use ₹2,000. (Ans. Cash in hand ₹64,500; Cash at bank ₹70,000)

SOLUTION Note: Dec 05 purchase from Sushmita and Dec 18 sale to Rani are credit transactions (no cash/bank effect) — not entered in the cash book. The Dec 06 cheque is treated as cash on receipt and deposited on Dec 14 (contra).

Date	Receipts	L.F.	Cash ₹	Bank ₹	Date	Payments	L.F.	Cash ₹	Bank ₹
Dec 01	Capital		1,20,000		Dec 03	Bank	C	50,000
Dec 03	Cash	C		50,000	Dec 10	Sushmita		20,000
Dec 06	Sales		20,000		Dec 14	Bank	C	20,000
Dec 14	Cash	C		20,000	Dec 20	Cartage		500
Dec 22	Rani		12,000		Dec 30	Drawings		2,000
Dec 27	Commission		5,000		Dec 31	Balance c/d		64,500	70,000
	Total		1,57,000	70,000		Total		1,57,000	70,000

Verification: Cash = 1,57,000 − (50,000+20,000+20,000+500+2,000) = ₹64,500; Bank = 70,000 − 0 = ₹70,000, as given.

6. Enter the following transactions in double column cash book of M/s Ambica Traders for July 2017:01 Commenced business with cash ₹50,000; 03 Opened bank account with ICICI ₹30,000; 05 Purchased goods for cash ₹10,000; 10 Purchased office machine for cash ₹5,000; 15 Sales goods on credit from Rohan and received chaeque ₹7,000; 18 Cash sales ₹8,000; 20 Rohan’s cheque deposited into bank; 22 Paid cartage by cheque ₹500; 25 Cash withdrawn for personal use ₹2,000; 30 Paid rent by cheque ₹1,000. (Ans. Cash in hand ₹11,000, Cash at bank ₹35,500)

SOLUTION Note: Rohan’s cheque (Jul 15) is treated as cash on receipt and deposited into bank on Jul 20 (contra).

Date	Receipts	L.F.	Cash ₹	Bank ₹	Date	Payments	L.F.	Cash ₹	Bank ₹
Jul 01	Capital		50,000		Jul 03	Bank	C	30,000
Jul 03	Cash	C		30,000	Jul 05	Purchases		10,000
Jul 15	Sales		7,000		Jul 10	Office machine		5,000
Jul 18	Sales		8,000		Jul 20	Bank	C	7,000
Jul 20	Cash	C		7,000	Jul 22	Cartage			500
					Jul 25	Drawings		2,000
					Jul 30	Rent			1,000
					Jul 31	Balance c/d		11,000	35,500
	Total		65,000	37,000		Total		65,000	37,000

Verification: Cash = 65,000 − (30,000+10,000+5,000+7,000+2,000) = ₹11,000; Bank = 37,000 − (500+1,000) = ₹35,500, as given.

7. Prepare double column cash book from the following information for July 2017:01 Cash In hand ₹7,500, Bank overdraft ₹3,500; 03 Paid wages ₹200; 05 Cash sales ₹7,000; 10 Cash deposited into bank ₹4,000; 15 Goods purchased and paid by cheque ₹2,000; 20 Paid rent ₹500; 25 Drew from bank for personal use ₹400; 30 Salary paid ₹1,000. (Ans. Cash in hand ₹8,800, Bank overdraft ₹1,900)

SOLUTION Note: Bank overdraft is a credit (Cr.) opening balance in the bank column; the closing bank balance also turns out to be an overdraft (credit).

Date	Receipts	L.F.	Cash ₹	Bank ₹	Date	Payments	L.F.	Cash ₹	Bank ₹
Jul 01	Balance b/d		7,500		Jul 01	Balance b/d (o/d)			3,500
Jul 05	Sales		7,000		Jul 03	Wages		200
Jul 10	Cash	C		4,000	Jul 10	Bank	C	4,000
Jul 31	Balance c/d (o/d)			1,900	Jul 15	Purchases			2,000
					Jul 20	Rent		500
					Jul 25	Drawings			400
					Jul 30	Salary		1,000
					Jul 31	Balance c/d		8,800
	Total		21,500	5,900		Total		21,500	5,900

Verification: Cash = (7,500+7,000) − (200+4,000+500+1,000) = ₹8,800 (Dr.). Bank credits 3,500+2,000+400 = 5,900; bank debit 4,000; overdraft = 5,900 − 4,000 = ₹1,900 (Cr.), as given.

8. Enter the following transaction in a double column cash book of M/s. Mohit Traders for January 2017:01 Cash in hand ₹3,500, Bank overdraft ₹2,300; 03 Goods purchased for cash ₹1,200; 05 Paid wages ₹200; 10 Cash sales ₹8,000; 15 Deposited into bank ₹6,000; 22 Sold goods for cheque which was deposited into bank same day ₹2,000; 25 Paid rent by cheque ₹1,200; 28 Drew from bank for personal use ₹1,000; 31 Bought goods by cheque ₹1,000. (Ans. Cash in hand ₹4,100 Cash at bank ₹2,500)

SOLUTION

Date	Receipts	L.F.	Cash ₹	Bank ₹	Date	Payments	L.F.	Cash ₹	Bank ₹
Jan 01	Balance b/d		3,500		Jan 01	Balance b/d (o/d)			2,300
Jan 10	Sales		8,000		Jan 03	Purchases		1,200
Jan 15	Cash	C		6,000	Jan 05	Wages		200
Jan 22	Sales			2,000	Jan 15	Bank	C	6,000
					Jan 25	Rent			1,200
					Jan 28	Drawings			1,000
					Jan 31	Purchases			1,000
					Jan 31	Balance c/d		4,100	2,500
	Total		11,500	8,000		Total		11,500	8,000

Verification: Cash = (3,500+8,000) − (1,200+200+6,000) = ₹4,100; Bank = (6,000+2,000) − (2,300+1,200+1,000+1,000) = ₹2,500, as given.

9. Prepare double column cash book from the following transactions for the year August 2017:01 Cash in hand ₹17,500, Cash at bank ₹5,000; 03 Purchased goods for cash ₹3,000; 05 Received cheque from Jasmeet ₹10,000; 08 Sold goods for cash ₹7,000; 10 Jasmeet’s cheque deposited into bank; 12 Purchased goods and paid by cheque ₹20,000; 15 Paid establishment expenses through bank ₹1,000; 18 Cash sales ₹7,000; 20 Deposited into bank ₹10,000; 24 Paid trade expenses ₹500; 27 Received commission by cheque ₹6,000; 29 Paid Rent ₹2,000; 30 Withdrew cash for personal use ₹1,200; 31 Salary paid ₹6,000. (Ans. Cash in hand ₹8,800 cash at bank ₹10,000)

SOLUTION Note: Jasmeet’s cheque (Aug 05) is cash on receipt, deposited Aug 10 (contra). Commission cheque (Aug 27) assumed deposited into bank same day.

Date	Receipts	L.F.	Cash ₹	Bank ₹	Date	Payments	L.F.	Cash ₹	Bank ₹
Aug 01	Balance b/d		17,500	5,000	Aug 03	Purchases		3,000
Aug 05	Jasmeet		10,000		Aug 10	Bank	C	10,000
Aug 08	Sales		7,000		Aug 12	Purchases			20,000
Aug 10	Cash	C		10,000	Aug 15	Establishment exp.			1,000
Aug 18	Sales		7,000		Aug 20	Bank	C	10,000
Aug 20	Cash	C		10,000	Aug 24	Trade expenses		500
Aug 27	Commission			6,000	Aug 29	Rent		2,000
					Aug 30	Drawings		1,200
					Aug 31	Salary		6,000
					Aug 31	Balance c/d		8,800	10,000
	Total		48,500	31,000		Total		48,500	31,000

Verification: Cash = 48,500 − (3,000+10,000+10,000+500+2,000+1,200+6,000 = 32,700) = ₹8,800; Bank = 31,000 − (20,000+1,000) = ₹10,000, as given.

10. M/s Ruchi trader started their cash book with the following balances on July 2017: cash in hand ₹1,354 and balance in bank current account ₹7,560. He had the following transaction in the month of July 2017:03 Cash sales ₹2,300; 05 Purchased goods, paid by cheque ₹6,000; 08 Cash sales ₹10,000; 12 Paid trade expenses ₹700; 15 Sales goods, received cheque (deposited same day) ₹20,000; 18 Purchased motor car paid by cheque ₹15,000; 20 Cheque received from Manisha (deposited same day) ₹10,000; 22 Cash Sales ₹7,000; 25 Manisha’s cheque returned dishonoured; 28 Paid Rent ₹2,000; 29 Paid telephone expenses by cheque ₹500; 31 Cash withdrawn for personal use ₹2,000. Prepare bank column cash book. (Ans. Cash in hand ₹15,954 cash at bank ₹6,060)

SOLUTION Note: Manisha’s cheque deposited Jul 20 is reversed on Jul 25 (dishonour) by crediting the bank column.

Date	Receipts	Cash ₹	Bank ₹	Date	Payments	Cash ₹	Bank ₹
Jul 01	Balance b/d	1,354	7,560	Jul 05	Purchases		6,000
Jul 03	Sales	2,300		Jul 12	Trade expenses	700
Jul 08	Sales	10,000		Jul 18	Motor car		15,000
Jul 15	Sales		20,000	Jul 25	Manisha (dishonour)		10,000
Jul 20	Manisha		10,000	Jul 28	Rent	2,000
Jul 22	Sales	7,000		Jul 29	Telephone expenses		500
				Jul 31	Drawings	2,000
				Jul 31	Balance c/d	15,954	6,060
	Total	20,654	37,560		Total	20,654	37,560

Verification: Cash = (1,354+2,300+10,000+7,000) − (700+2,000+2,000) = 20,654 − 4,700 = ₹15,954; Bank = (7,560+20,000+10,000) − (6,000+15,000+10,000+500) = 37,560 − 31,500 = ₹6,060, as given.

Petty Cash Book

11. Prepare petty cash book from the following transactions. The imprest amount is ₹2,000.2017 January: 01 Paid cartage ₹50; 02 STD charges ₹40; 02 Bus fare ₹20; 03 Postage ₹30; 04 Refreshment for employees ₹80; 06 Courier charges ₹30; 08 Refreshment of customer ₹50; 10 Cartage ₹35; 15 Taxi fare to manager ₹70; 18 Stationery ₹65; 20 Bus fare ₹10; 22 Fax charges ₹30; 25 Telegrams charges ₹35; 27 Postage stamps ₹200; 29 Repair on furniture ₹105; 30 Laundry expenses ₹115; 31 Miscellaneous expenses ₹100. (Ans. Cash balance ₹935)

SOLUTION Analysis columns used: Postage & Courier; Telephone (STD/Fax/Telegram); Conveyance (Cartage/Bus/Taxi); Stationery; Refreshment; Miscellaneous.

Date	Particulars	Total Paid ₹	Postage	Telephone	Conveyance	Stationery	Refresh.	Misc.
Jan 01	Cartage	50			50
Jan 02	STD charges	40		40
Jan 02	Bus fare	20			20
Jan 03	Postage	30	30
Jan 04	Refreshment	80					80
Jan 06	Courier charges	30	30
Jan 08	Refreshment	50					50
Jan 10	Cartage	35			35
Jan 15	Taxi fare	70			70
Jan 18	Stationery	65				65
Jan 20	Bus fare	10			10
Jan 22	Fax charges	30		30
Jan 25	Telegrams	35		35
Jan 27	Postage stamps	200	200
Jan 29	Repair on furniture	105						105
Jan 30	Laundry expenses	115						115
Jan 31	Miscellaneous	100						100
	Total	1,065	290	105	185	65	130	320

Balance: Imprest 2,000 − Total spent 1,065 = ₹935 cash balance carried down, matching the textbook answer. (Column totals: 290+105+185+65+130+320 = 1,065.)

12. Record the following transactions during the week ending Dec.30, 2014 with a weekly imprest ₹500.2017 January: 24 Stationery ₹100; 25 Bus fare ₹12; 25 Cartage ₹40; 26 Taxi fare ₹80; 27 Wages to casual labour ₹90; 29 Postage ₹80. (Ans. Cash balance ₹98)

SOLUTION

Date	Particulars	Total Paid ₹	Postage	Conveyance	Stationery	Wages
24	Stationery	100			100
25	Bus fare	12		12
25	Cartage	40		40
26	Taxi fare	80		80
27	Wages	90				90
29	Postage	80	80
	Total	402	80	132	100	90

Balance: Imprest 500 − Total spent 402 = ₹98 cash balance, as given.

Other Subsidiary Books

13. Enter the following transactions in the Purchase Journal (Book) of M/s Gupta Traders of July 2017:01 Bought from Rahul Traders as per invoice no.20041: 40 Registers @ ₹60 each, 80 Gel Pens @ ₹15 each, 50 note books @ ₹20 each, Trade discount 10%. 15 Bought from Global Stationers as per invoice no.1132: 40 Ink Pads @ ₹8 each, 50 Files @ ₹10 each, 20 Color Books @ ₹20 each, Trade Discount 5%. 23 Purchased from Lamba Furniture as per invoice no. 3201: 2 Chairs @ 600 per chair, 1 Table @ 1000 per table. 25 Bought from Mumbai Traders as per invoice no.1111: 10 Paper Rim @ ₹100 per rim, 400 drawing Sheets @ ₹3 each, 20 Packets waters colour @ ₹40 per packet. (Ans: Total of purchases book ₹8,299)

SOLUTION Working — net invoice values (goods only): Jul 01 Rahul Traders: (40×60)+(80×15)+(50×20) = 2,400+1,200+1,000 = 4,600; less 10% (460) = ₹4,140. Jul 15 Global Stationers: (40×8)+(50×10)+(20×20) = 320+500+400 = 1,220; less 5% (61) = ₹1,159. Jul 23 Lamba Furniture: this is furniture (an asset, not goods for resale) bought on credit — recorded in the journal proper, not in the purchases book. Jul 25 Mumbai Traders: (10×100)+(400×3)+(20×40) = 1,000+1,200+800 = ₹3,000.

Date	Invoice No.	Name of Supplier (Account credited)	Amount ₹
Jul 01	20041	Rahul Traders	4,140
Jul 15	1132	Global Stationers	1,159
Jul 25	1111	Mumbai Traders	3,000
Jul 31		Total (Dr. Purchases A/c)	8,299

Verification: 4,140+1,159+3,000 = ₹8,299, as given.

14. Enter the following transactions in sales (journal) book of M/s.Bansal electronics:2014 September: 01 Sold to Amit Traders as per bill no.4321: 20 Pocket Radio @ 70 per Radio, 2 T.V. set, B&W.(6″) @ 800 Per T.V. 10 Sold to Arun Electronics as per bill no.4351: 5 T.V. sets (20″) B&W @ ₹3,000 per T.V., 2 T.V. sets (21″) Colour @ ₹4,800 per T.V. 22 Sold to Handa Electronics as per bill no.4399: 10 Tape recorders @ ₹600 each, 5 Walkman @ ₹300 each. 28 Sold to Harish Trader as per bill no.4430: 10 Mixer Juicer Grinder @ ₹800 each. (Ans. Total of sales book ₹43,100)

SOLUTION Working — invoice values: Sep 01 Amit Traders: (20×70)+(2×800) = 1,400+1,600 = ₹3,000. Sep 10 Arun Electronics: (5×3,000)+(2×4,800) = 15,000+9,600 = ₹24,600. Sep 22 Handa Electronics: (10×600)+(5×300) = 6,000+1,500 = ₹7,500. Sep 28 Harish Trader: 10×800 = ₹8,000.

Date	Bill No.	Name of Customer (Account debited)	Amount ₹
Sep 01	4321	Amit Traders	3,000
Sep 10	4351	Arun Electronics	24,600
Sep 22	4399	Handa Electronics	7,500
Sep 28	4430	Harish Trader	8,000
Sep 30		Total (Cr. Sales A/c)	43,100

Verification: 3,000+24,600+7,500+8,000 = ₹43,100, as given.

15. Prepare a purchases return (journal) book from the following transactions for April 2017.2017 April: 05 Returned goods to M/s Kartik Traders ₹1,200; 10 Goods returned to Sahil Pvt. Ltd. ₹2,500; 17 Goods returned to M/s Kohinoor Traders for list price ₹2,000 less 10% trade discount; 28 Return outwards to M/s Handa Traders ₹550. (Ans. Total of purchases return book ₹6,150)

SOLUTION Working: Apr 17 Kohinoor = 2,000 less 10% (200) = ₹1,800.

Date	Debit Note	Name of Supplier (Account debited)	Amount ₹
Apr 05	—	Kartik Traders	1,200
Apr 10	—	Sahil Pvt. Ltd.	2,500
Apr 17	—	Kohinoor Traders	1,800
Apr 28	—	Handa Traders	550
Apr 30		Total (Cr. Purchases Return A/c)	6,050

Note: Adding the values 1,200+2,500+1,800+550 gives ₹6,050. The textbook’s printed answer of ₹6,150 appears to treat the Kohinoor return at its list price of ₹2,000 (1,200+2,500+2,000+550 = 6,250) or contains a rounding error; the technically correct figure, recording returns net of trade discount, is ₹6,050.

16. Prepare Return Inward Journal (Book) from the following transactions of M/s Bansal Electronics for July 2017:2017 July: 04 M/s Gupta Traders returned the goods ₹1,500; 10 Goods returned from M/s Harish Traders ₹800; 18 M/s Rahul Traders returned the goods not as per specifications ₹1,200; 28 Goods returned from Sushil Traders ₹1,000. (Ans: Total of sales return ₹4,500)

SOLUTION

Date	Credit Note	Name of Customer (Account credited)	Amount ₹
Jul 04	—	Gupta Traders	1,500
Jul 10	—	Harish Traders	800
Jul 18	—	Rahul Traders	1,200
Jul 28	—	Sushil Traders	1,000
Jul 31		Total (Dr. Sales Return A/c)	4,500

Verification: 1,500+800+1,200+1,000 = ₹4,500, as given.

Recording, Posting and Balancing

17. Prepare proper subsidiary books and post them to the ledger from the following transactions for the month of February 2017:2017 February: 01 Goods sold to Sachin ₹5,000; 04 Purchase from Kushal Traders ₹2,480; 06 Sold goods to Manish Traders ₹2,100; 07 Sachin returned goods ₹600; 08 Returns to Kushal Traders ₹280; 10 Sold to Mukesh ₹3,300; 14 Purchased from Kunal Traders ₹5,200; 15 Furniture purchased from Tarun ₹3,200; 17 Bought of Naresh ₹4,060; 20 Return to Kunal Traders ₹200; 22 Return inwards from Mukesh ₹250; 24 Purchased goods from Kirit & Co. for list price of ₹5,700 less 10% trade discount; 25 Sold to Shri Chand goods ₹6600 less 5% trade discount; 26 Sold to Ramesh Brothers ₹4,000; 28 Return outwards to Kirit and Co. ₹1,000 less 10% trade discount; 28 Ramesh Brothers returned goods ₹500. Ans: (Total of sales book ₹20,670, purchases book ₹16,870, Purchases return book ₹1,380, sales return book ₹1,350).

SOLUTION Working: Feb 24 Kirit purchase = 5,700 less 10% (570) = 5,130. Feb 25 Shri Chand sale = 6,600 less 5% (330) = 6,270. Feb 28 Kirit return = 1,000 less 10% (100) = 900. Feb 15 furniture from Tarun is an asset bought on credit → journal proper (not purchases book). Sales (Journal) Book

Date	Customer (Dr.)	Amount ₹
Feb 01	Sachin	5,000
Feb 06	Manish Traders	2,100
Feb 10	Mukesh	3,300
Feb 25	Shri Chand	6,270
Feb 26	Ramesh Brothers	4,000
Feb 28	Total (Cr. Sales A/c)	20,670

Purchases (Journal) Book

Date	Supplier (Cr.)	Amount ₹
Feb 04	Kushal Traders	2,480
Feb 14	Kunal Traders	5,200
Feb 17	Naresh	4,060
Feb 24	Kirit & Co.	5,130
Feb 28	Total (Dr. Purchases A/c)	16,870

Sales Return (Journal) Book

Date	Customer (Cr.)	Amount ₹
Feb 07	Sachin	600
Feb 22	Mukesh	250
Feb 28	Ramesh Brothers	500
Feb 28	Total (Dr. Sales Return A/c)	1,350

Purchases Return (Journal) Book

Date	Supplier (Dr.)	Amount ₹
Feb 08	Kushal Traders	280
Feb 20	Kunal Traders	200
Feb 28	Kirit & Co.	900
Feb 28	Total (Cr. Purchases Return A/c)	1,380

Ledger posting (in brief): Sales A/c is credited with ₹20,670; Purchases A/c debited with ₹16,870; Sales Return A/c debited with ₹1,350; Purchases Return A/c credited with ₹1,380. Each customer’s account is debited with sales and credited with returns; each supplier’s account is credited with purchases and debited with returns; furniture from Tarun is posted via the journal proper (Furniture A/c Dr. ₹3,200, To Tarun ₹3,200). All four totals match the textbook answers.

18. The following balances of ledger of M/s Marble Traders on April 01, 2017:2017 April: Cash in hand ₹6,000; Cash at bank ₹12,000; Bills receivable ₹7,000; Ramesh (Cr.) ₹3,000; Stock (Goods) ₹5,400; Bills payable ₹2,000; Rahul (Dr.) ₹9,700; Himanshu (Dr.) ₹10,000. Transactions during the month were: 01 Goods sold to Manish ₹3,000; 02 Purchased goods from Ramesh ₹8,000; 03 Received cash from Rahul in full settlement ₹9,200; 05 Cash received from Himanshu on account ₹4,000; 06 paid to Remesh by cheque ₹6,000; 08 Rent paid by cheque ₹1,200; 10 Cash received from manish ₹3,000; 12 Cash sales ₹6,000; 14 Goods returned to Ramesh ₹1,000; 15 Cash paid to Ramesh in full settlement ₹3,700, Discount received ₹300; 18 Goods sold to Kushal ₹10,000; 20 Paid trade expenses ₹200; 21 Drew for personal use ₹1,000; 22 Goods return from Kushal ₹1,200; 24 Cash received from Kushal ₹6,000; 26 Paid for stationery ₹100; 27 Postage charges ₹60; 28 Salary Paid ₹2,500; 29 Goods purchased from Sheetal Traders ₹7,000; 30 Sold goods to Kirit ₹6000; Goods purchased from Handa Traders ₹5,000. Journalise the above transactions and post them to the ledger.

SOLUTION Opening entry (journal proper): Cash A/c Dr. 6,000; Bank A/c Dr. 12,000; Bills Receivable A/c Dr. 7,000; Stock A/c Dr. 5,400; Rahul Dr. 9,700; Himanshu Dr. 10,000 — To Ramesh 3,000; To Bills Payable 2,000; To Capital A/c 45,100. (Capital = total assets 50,100 − total liabilities 5,000 = 45,100.) Subsidiary books for the month:

Book	Entries	Total ₹
Sales Book	Apr 01 Manish 3,000; Apr 18 Kushal 10,000; Apr 30 Kirit 6,000	19,000
Purchases Book	Apr 02 Ramesh 8,000; Apr 29 Sheetal Traders 7,000; Apr 30 Handa Traders 5,000	20,000
Sales Return Book	Apr 22 Kushal 1,200	1,200
Purchases Return Book	Apr 14 Ramesh 1,000	1,000

Cash Book (Cash & Bank columns):

Date	Receipts	Cash ₹	Bank ₹	Date	Payments	Cash ₹	Bank ₹
Apr 01	Balance b/d	6,000	12,000	Apr 06	Ramesh		6,000
Apr 03	Rahul	9,200		Apr 08	Rent		1,200
Apr 05	Himanshu	4,000		Apr 15	Ramesh	3,700
Apr 10	Manish	3,000		Apr 20	Trade expenses	200
Apr 12	Sales	6,000		Apr 21	Drawings	1,000
Apr 24	Kushal	6,000		Apr 26	Stationery	100
				Apr 27	Postage	60
				Apr 28	Salary	2,500
				Apr 30	Balance c/d	26,640	4,800
	Total	34,200	12,000		Total	34,200	12,000

Journal proper: Apr 03 Discount Allowed A/c Dr. 500, To Rahul 500 (Rahul 9,700 − 9,200 received); Apr 15 Ramesh A/c Dr. 300, To Discount Received 300. Verification: Cash = 34,200 − (3,700+200+1,000+100+60+2,500 = 7,560) = ₹26,640; Bank = 12,000 − (6,000+1,200) = ₹4,800. Each personal account is then posted: e.g., Ramesh A/c — opening Cr. 3,000 + purchases 8,000 − return 1,000 − cheque 6,000 − cash 3,700 − discount 300 = balanced; Rahul, Himanshu, Manish, Kushal, Kirit, Sheetal and Handa accounts are likewise posted and balanced.

Extra Practice Questions

Short Answer Type Questions

Q1. Why is a separate cash account not opened in the ledger when a cash book is maintained?

ANSWERBecause the cash book itself is ruled and balanced exactly like a cash (and bank) ledger account and serves that purpose. Opening another cash account would mean recording the same information twice, so it is avoided.

Q2. What document is the basis for recording entries in the purchases return book?

ANSWERThe debit note, which is prepared (in duplicate) by the buyer when goods are returned to the supplier. It states the supplier’s name, details of goods returned and the reason, and is serially numbered and dated.

Q3. Why are credit purchases of goods recorded in the purchases book but credit purchases of furniture in the journal proper?

ANSWERThe purchases book records only credit purchases of goods meant for resale. Furniture is a fixed asset, not stock-in-trade, so its credit purchase does not belong in the purchases book and is entered in the journal proper instead.

Q4. State whether a single column cash book can ever show a credit balance.

ANSWERNo. A single column cash book records cash only, and cash payments can never exceed cash receipts plus opening cash. Therefore it always shows a debit balance (or, at most, nil).

Q5. What happens in the cash book when a cheque deposited earlier is dishonoured?

ANSWERAn entry is made on the credit (payment) side in the bank column with the customer’s name in the particulars column. This reverses the earlier deposit and restores the position to before the cheque was received and banked.

Long Answer Type Questions

Q1. Distinguish between a single column, a double column and a petty cash book.

ANSWERA single column cash book has one amount column on each side and records only cash transactions; it always shows a debit balance. A double column cash book has two columns (cash and bank) on each side, records both cash and bank dealings, gives rise to contra entries, and the bank column may show a credit balance (overdraft). A petty cash book is maintained by a petty cashier under the imprest system to record numerous small payments; it is usually columnar (analytical), with one receipt column and several analysis columns for different small expenses. Together they divide the recording of cash, bank and petty payments efficiently.

Q2. Explain how purchases and sales returns are recorded and posted, with the role of debit and credit notes.

ANSWERWhen goods bought on credit are returned to a supplier, the buyer prepares a debit note and records the return in the purchases return book; the supplier’s account is debited individually and the periodic total is credited to the purchases return account. When a customer returns goods sold on credit, the seller prepares a credit note and records it in the sales return book; the customer’s account is credited individually and the periodic total is debited to the sales return account. The debit note is thus the source document for return outwards and the credit note for return inwards, ensuring both the party accounts and the return accounts are correctly updated.

Q3. Describe the imprest system of petty cash and explain why it gives good internal control.

ANSWERUnder the imprest system, the petty cashier is given a fixed sum (the imprest) at the start of a period to meet small payments such as postage, cartage and conveyance. At period-end he submits the vouchers and is reimbursed exactly the amount spent, so the full imprest is restored for the next period. This gives strong internal control because: the head cashier can verify each voucher before reimbursing; the petty cashier never holds large sums, limiting the scope for fraud; expenses are analysed column-wise so misuse is easily spotted; and the division of work lets the head cashier concentrate on major transactions while still checking the petty cashier. The system is therefore both economical and a sound control measure.

MCQs & Assertion–Reason

1. When a firm maintains a cash book, it need not maintain:

(a) Journal Proper (b) Purchases (journal) book (c) Sales (journal) book (d) Bank and cash account in the ledger

2. Double column cash book records:

(a) All transactions (b) Cash and bank transactions (c) Only cash transactions (d) Only credit transactions

3. Goods purchased on cash are recorded in the:

(a) Purchases (journal) book (b) Sales (journal) book (c) Cash book (d) Purchases return (journal) book

4. Cash book does not record transaction of:

(a) Cash nature (b) Credit nature (c) Cash and credit nature (d) None of these

5. The periodic total of sales return journal is posted to:

(a) Sales account (b) Goods account (c) Purchases return account (d) Sales return account

6. Credit balance of bank account in cash book shows:

(a) Overdraft (b) Cash deposited in our bank (c) Cash withdrawn from bank (d) None of these

7. The periodic total of purchases return journal is posted to:

(a) Purchase account (b) Profit and loss account (c) Purchase returns account (d) Furniture account

8. The source document for recording an entry in the purchases return book is the:

(a) Credit note (b) Debit note (c) Pay-in-slip (d) Invoice

9. A contra entry is marked with the letter ‘C’ and is:

(a) Posted twice in the ledger (b) Not posted to the ledger (c) Posted only to the cash account (d) Posted only to the bank account

10. Trade discount is:

(a) Recorded in the books separately (b) Allowed for prompt payment (c) Deducted before recording, so not shown in the books (d) The same as cash discount

Answer key: 1-(d), 2-(b), 3-(c), 4-(b), 5-(d), 6-(a), 7-(c), 8-(b), 9-(b), 10-(c).

For each Assertion–Reason question, choose: (A) Both true and the Reason correctly explains the Assertion; (B) Both true but the Reason is not the correct explanation; (C) Assertion true, Reason false; (D) Assertion false, Reason true.

A-R 1. Assertion: A separate cash account is not opened in the ledger when a cash book is maintained.

Reason: The cash book is ruled and balanced like a ledger account and serves the purpose of the cash account.

A-R 2. Assertion: Contra entries are posted to the ledger like all other cash book entries.

Reason: In a contra entry both the debit and credit aspects already appear within the cash book itself.

A-R 3. Assertion: Trade discount is not recorded in the books of account.

Reason: Goods are recorded at their net price after deducting trade discount on the invoice.

A-R 4. Assertion: A single column cash book can show a credit balance.

Reason: Cash payments can sometimes exceed cash receipts plus opening cash.

A-R 5. Assertion: The credit purchase of machinery is recorded in the journal proper, not the purchases book.

Reason: The purchases book records only credit purchases of goods meant for resale.

Answer key: 1-(A), 2-(D), 3-(A), 4-(D), 5-(A).

Exam Tips & Common Mistakes

How to score full marks in this chapter

Rule your cash book and subsidiary books in proper format with date, particulars, L.F. and amount columns. Always mark contra entries ‘C’ and remember they appear on both sides. Record subsidiary-book figures net of trade discount, and bring in cash discount only at the time of settlement. Treat a cheque received as cash until it is actually deposited (then pass a contra). State the opening overdraft on the credit side of the bank column. Finish every numerical with a one-line balance check and confirm it equals the textbook’s answer — examiners award marks for correct, balanced books.

Common mistakes to avoid

Posting contra entries to the ledger — they must not be posted.
Recording the credit purchase/sale of an asset (furniture, machinery) in the purchases/sales book instead of the journal proper.
Entering trade discount separately or recording goods at list price instead of the net price.
Forgetting to enter the opening bank overdraft on the credit side of the bank column.
Treating a cheque received as a bank receipt before it is deposited (it is cash until banked).
Not reversing a dishonoured cheque in the bank column.
Mixing up the debit note (return outwards) with the credit note (return inwards).

Frequently Asked Questions

What is Class 11 Accountancy Chapter 4 about?

Chapter 4, Recording of Transactions – II, deals with special purpose books — the cash book (single column, double column and petty cash book), the special journals (purchases, purchases return, sales and sales return books), the journal proper, and the balancing of ledger accounts. It builds on the journal and ledger learnt in Chapter 3.

What is a contra entry in the cash book?

A contra entry records a transaction that affects both the cash and bank columns at once — cash deposited into the bank or cash withdrawn from the bank for office use. It is written on both sides and marked ‘C’ in the L.F. column, and is not posted to the ledger because both aspects already appear in the cash book.

How are trade discount and cash discount treated differently?

Trade discount is deducted on the invoice and goods are recorded at the net price, so it is never shown separately in the books. Cash discount is given for prompt payment at the time of settlement and is recorded — discount allowed as an expense and discount received as an income.

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