RECORDING OF THE TRANSACTIONS

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DRUG STORE AND BUSINESS MANAGEMENT
RECORDING OF THE TRANSACTIONS
Mr. Maroti M. Jeurkar Lecturer, YBCP, chandrapur
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BOOK KEEPING Book keeping is defined as the
science and art of systematically and correctly
recording of all transactions which involve the
transfer of money or moneys worth.
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DOUBLE ENTRY BOOK- KEEPING Double entry Book
keeping is defined as the science and art of
systematically and correctly recording of all
transaction which involves the transfer of money
or money worth. The double entry book keeping
system is based on the fact that every
transaction has two fold aspect, a giving aspect
receiving aspect Principle In double entry
Book- Keeping the basic principles are 1.The
receiver is debited with the monetary value of
whatever he receives. 2.The giver is credited
with the monetary value of whatever he gives.
3.Every debit requires a credit vice
versa. Advantages 1. It is scientific method of
maintaining the books of accounts 2. It helps in
recording both the aspects of every transaction
3. It is easy to find assets and liabilities
income and expenditure, purchase and sale for
particular period 4. It is easy to find out the
net profit or loss earned by an enterprise 5. It
is easy to make comparison between the previous
year and current year 6. The exact state of
business can be easily verified by preparing
balance sheet 7. It helps in locating the error
in ledger.
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Golden Principle of Accounts
Personal Account
Real Account
Nominal Account
Person Name, Bank, company, Institution, Firm
Cash, Building, Furniture, Land,
Building, etc.
Salary, Wages, Rent, Taxes, Interest,
Commission etc.

• Rules-
• Debit All Expenses
• Losses
• Credit all Income Gains

• Rules-
• Debit the Receiver
• Credit the Giver

• Rules-
• Debit What Comes In
• Credit What Goes Out

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BOOKS OF ORIGINAL ENTRY The different account
books are 1. Journal 2. Cash book a) Simple
cash book b) Two columnar cash book c) Three
columnar cash book d) Petty cash book 3. Other
day books a) Purchase book b) Sales book c)
Purchases return book d) Sales return book
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JOURNAL -Book of original entry. -Journal
provides a chronological record of all
transactions with details of the accounts debited
and credited and the amount of each transaction.
FORMAT OF JOURNAL
Date Particular L.F Debit (Rs.) Credit (Rs.)
1 2 3 4 5
NARRATION
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RULES OF JOURNALIZING. In the double entry book
keeping system, two accounts are affected during
accounting. One account is debited other is
credited. The following are the rules of
journalizing 1 Personal accounts Debit the
receiver credit the giver 2 Real account
Debit what comes in credit what goes out. 3
Nominal account Debit all expenses credit all
incomes. 4 The goods account is divided into
four categories Purchase account When goods are
purchased then debit entry is made in the
purchase account Sales account. When any goods
are sold, then credit entry is made in the sales
account. Purchase return account this account is
always credited. Sales return account This
account is always debited. 5 Capital account
this account is always credited. 6 Drawing
account This account is always debited. 7
Trade discount NO journal entry of trade
discount is done because it is deducted from the
cash memo or invoice. 8 Cash discount The cash
discount is recd. Or allowed when the payment is
made or recd. This fact must be recorded at the
same place where cash transaction is recorded.
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CASH BOOK Cash book is used to keep a record of
all transactions related to cash receipt and cash
payment. Cash book is also a book of original
entries because the transactions are recorded
from the source document for the first time. When
a cash book is maintained, transaction of cash is
not recorded in the journal. It is a popular
form of cash book. In this type, the following
three columns are provided on each side of the
cash book. a) The first column is for discount,
which is nominal account b) The second column is
for cash, which is a real account c) The third
column is for bank which is a personal account
recording of transaction in three columnar cash
book 1 when amount is received in cash, it is
recorded in the debit side in the cash column
the discount allowed in the discount column of
the debit side. 2 All cash payments are to be
recorded in the credit side in the cash column
the discount recd. From the party in the credit
side of discount column.
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• Single column cash book or simple cash book.
• A cash book which contains only one column is
  called a single column or simple cash book. A
  cash account is divided into two sections by
  central vertical line. The debit entries are made
  on the left side the credit entries are made on
  the right side.
• Dr. Cr.

Date Particular L.F. Amount Date Particular L.F. Amount
               
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2) Two columnar cash book. There is great
importance of discount in cash transactions. If a
businessman receives or allows cash discount,
then two columnar cash book is needed to record
it. The two columns are provided on each side of
the cash book. A) The first column is discount,
which is a nominal account. B) The second column
is for cash which is real account. Dr.
Cr.
Date Particular L.F. Discount cash Date Particular L.F. Discount cash
                   
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3) Three columnar cash book. It is a popular
form of cash book. In this type of cash book, the
following three columns are provided on each side
of the cash book. A) The first column is for
discount, which is a nominal account. B) The
second column is for cash, which is a real
account. c) The third column is for bank, which
is a personal account. Dr. Cr.
Date Particular L.F. Discount cash bank Date Particular L.F. Discount cash bank
                       
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4. PETTY CASH BOOK Large number of small
payments, such as, for conveyance (bus, taxi),
stationery, postage, telegrams, cartage and
other miscellaneous expenses are made in any
business organization. If all these payments are
handles by the cashier and are recorded in cash
book, the procedure is found to be very
cumbersome. To avoid this, a petty cashier is
appointed who makes all small payments and
records them in his cash book which is called the
petty cash book. Dr. Cr.
Date Particulars Total Amt. Rs. Date Particular S Voucher No Total Amt Rs. R Con Veyance Rs. Statio -Nery Rs Postage Tel Rs Cartage R Mis C. Rs Remark
                         
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LEDGER A Ledger is divided into two sections by
central vertical line. The debit entries are made
on the left side the credit entries are made on
the right side. Dr. Cr.
Date Particular J.F. Amount Date Particular J.F. Amount
               
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Journal Ledger
1.It is the book of original entry It is the book of secondary entry
2.All the transactions are recorded chronologically. All the transactions are recorded analytical.All the transactions relating to a particular account are recorded in order of their occurrence
3. Balancing is not done. Balancing is done.
4. From Documents source entries are posted in Journal. From journal entries are posted in ledger.
5. From Journal, ledger is prepared. From ledger, trial balance is prepared.
6. The process of recording entries in the journal is called Journalising. The process of recording entries in the ledger is called Posting.
7. The unit of classification of data within the ledger is the Transaction. The unit of classification of data within the ledger is the account.
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Ledger
Date Year Month Particular J.f Amount (Rs) Date Year Month Particular J.f Amount (Rs)
               
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THANK YOU