PLUS ONE ACCOUNTANCY NOTES Chapter 4 Recording of Transactions - II Capsule Notes

SPECIAL PURPOSE BOOKS (SUBSIDIARY BOOKS)
Meaning: Journals divided for specific transaction types when volume is large.
List: Cash Book, Purchases Book, Purchases Return Book, Sales Book, Sales Return Book, Bills Receivable Book, Bills Payable Book, Journal Proper.
Advantages: Division of labour, specialisation, quick information, easy error detection, time-saving (posting from totals).
CASH BOOK
Single Column: Records only cash transactions. Always shows debit balance (cash in hand).
Double Column (Bank): Records cash & bank. Two columns each side. Contra Entry (C) affects both cash & bank (cash deposited/withdrawn).
Petty Cash Book (Imprest System): Fixed imprest amount given; reimbursed exact spent at period end. Records small payments (postage, stationery).
Dishonour of Cheque: Reverse entry – Dr. Customer A/c, Cr. Bank.
PURCHASES BOOK & PURCHASES RETURN BOOK
Purchases Book: Records credit purchases of goods (for resale). Source: Invoice. Net amount after Trade Discount recorded. Total debited to Purchases A/c.
Purchases Return Book: Records goods returned to suppliers (Return Outwards). Source: Debit Note. Supplier's A/c debited; total credited to Purchases Return A/c.
SALES BOOK & SALES RETURN BOOK
Sales Book: Records credit sales of goods. Source: Sales Invoice (copy). Net amount after Trade Discount recorded. Total credited to Sales A/c.
Sales Return Book: Records goods returned by customers (Return Inwards). Source: Credit Note. Customer's A/c credited; total debited to Sales Return A/c.
BILLS OF EXCHANGE BOOKS
Bills Receivable Book: Records bills accepted by customers (asset). Total posted to Bills Receivable A/c (Dr.).
Bills Payable Book: Records bills accepted by the firm (liability). Total posted to Bills Payable A/c (Cr.).
JOURNAL PROPER
Records transactions not in other books:
Opening Entry: To bring asset, liability, capital balances.
Adjustment Entries: Outstanding, prepaid, depreciation, accrued income.
Rectification Entries: Correct errors.
Transfer/Closing Entries: To P&L, Capital.
Other: Credit purchase of asset, goods withdrawn, free samples, loss by fire, dishonour of bill.
IMPORTANT EXAM QUESTIONS
1. Record transactions in special journal: "Purchased machinery for cash ₹10,000" – Cash Book; "Bought goods from KV stores ₹3,000" – Purchases Book; "Returned goods to Arul Jyothi Traders ₹1,000" – Purchases Return Book; "Bought furniture from Alankar Traders ₹5,000" – Journal Proper; "Sold goods to Pratheesh for cash ₹2,000" – Cash Book; "Paid salary ₹4,000" – Cash Book (2 marks – 2022 IMP).
2. Prepare double column cash book from given transactions (8 marks – common). Include contra entries, dishonour.
3. Explain Imprest System and advantages of Petty Cash Book.
4. Distinguish Trade Discount vs Cash Discount. Which is recorded in books? (Cash discount).
5. Source document for Sales Return Book? (Credit Note). For Purchases Return Book? (Debit Note).
6. Purchased machinery from Rajesh on credit – which book? (Journal Proper).