This GSEB Class 11 Commerce Accounts Notes Part 1 Chapter 2 Dual Effect of Transactions and Types of Accounts covers all the important topics and concepts as mentioned in the chapter.
Dual Effect of Transactions and Types of Accounts Class 11 GSEB Notes
Before writing business transactions in the books of accounts, it is important for writer of books of accounts, to understand the transaction, to decide the types of transaction and to know that effect of the transaction. According to Double Entry book-keeping system, transaction is at a centre for writing books of accounts. For each transaction two entries are to be passed or to be recorded. Means, for every transaction at least two effects are there in the accounts, in which one account is receiving the consideration and another account is giving the consideration. Thus, for every transaction two effects are to be passed.
For e.g., for cash transaction, for expense transaction or for any asset transaction, entry is to be passed frequently. This types of the entries are of the different dates and on the different pages of journal book. From this, to get the required information easily, all this effects of the transaction, which are there on the different pages under the different heads are to be recorded in a separate book. This way, under the different heads when the transactions are recorded it is known as Account’. This types of the accounts are may be of the Personal account, Real account or Nominal account.
→ Business transaction means the exchange of products/services of business for cash and/or on credit between two or more than two persons.
→ Those business transactions the value of which can be measured in money form or cash; and where the exchange of money in cash is to be made immediately or in future is called economic transaction.
→ Non-economic transactions are those transactions whose value cannot be measured in terms of money.
→ A transaction in which there money is paid / received for the exchange of goods or services, is called cash transaction.
→ Purchase-sales of goods, asset, service are made in present but their money is payable or receivable in future. These transactions are recognized as credit transactions.
→ Internal transactions are economic transactions of business but they are non-cash transactions.
→ Voucher is a written document of business transaction.
→ Voucher is the pillar of accounting, which is first step to write accounts.
→ There are two types of accounts :
- Personal accounts and
- Impersonal accounts.
→ There are two types of Impersonal accounts :
- Real accounts and
- Nominal accounts.
→ Due to credit transaction, debtor-creditor relation comes into existence between business and the other person.
→ Live persons are included in natural person.
→ Partnership firm, Company, Co-operatives, Association, Club, Social organizations, Religious institutes, etc. are included in artificial person.
→ Rules of Debit and Credit of accounts:
- Rule of Personal Account:
“Debit the Receiver, Credit the Giver.”
- Rule of Real Account:
“Debit what comes in, Credit what goes out.”
- Rule of Nominal Account:
“Debit expenses and losses, Credit incomes and gain.”
→ Dual effect means debit and credit effect.
→ Business transaction can be internal or external.
→ There are three types of economic transactions :
- Cash transaction
- Credit transaction and
- Special or Other transaction.
→ Only economic transactions of business are recorded in the books of accounts. Non-economic transactions are not recorded.
→ When money is paid or received in exchange for the work except physical asset, they are treated as service.
→ Any amount, which is outstanding to pay for assets, goods or services acquired in the past, is known as payable.
→ Any amount, which is outstanding to receive for assets, goods or services, provided in the past is called receivable.
→ Nominal accounts are also called as income- expenditure accounts.
→ In Internal transactions, there is no need of other parties. While External transactions are between business and other parties.
→ Types of vouchers :
- (1) Sales bill
- Purchase bill
- Credit note
- Debit note
- Counter folio of cheque
- Receipt issued
- Receipt received and
- Expense bill.