BCom Financial Accounting Study Material Notes Recording of Business Transaction

BCom Financial Accounting Study Material Notes Recording of Business Transaction

In this post you will get  information of  BCom Financial Accounting Study Material Notes Recording of Business Transaction in financial accounting.  It is necessary to know how business transactions will be recorded in the accounting books. Accounting books mean those books which are used for Recording of Business Transactions.

Meaning of Business Transaction

An exchange of money or money’s worth as goods and services between two parties is called a business transaction. It may relate to purchase and sale of goods, receipt and payment of cash and rendering of service by one party to another. In accounting, only business transactions are recorded. When payment of a business transaction is made immediately, it is called cash transactions but when the payment is postponed to a future date, it is called a credit transaction.There are two main stages of Recording of Business  Transactions. In the first stage, transactions are recorded in journal and in the second stage, items are posted from journal to ledger.

BCom Financial Accounting Study Material Notes Recording of Business Transaction

BCom Financial Accounting Study Material Notes Recording of Business Transaction

It is necessary to know how business transactions will be recorded in the accounting books. Ledger and journal are accounting books. Accounting books mean those books which are used for recording the business transactions. An exchange of money or money’s worth as goods and services between two parties is called a business transaction. It may relate to purchase and sale of goods, receipt and payment of cash and rendering of service by one party to another. In accounting, only business transactions are recorded. When payment of a business transaction is made immediately, it is called cash transactions but when the payment is postponed to a future date, it is called a credit transaction.There are two main stages of recording transactions. In the first stage, transactions are recorded in journal and in the second stage, items are posted from journal to ledger.

Sub-Division of Journal

All business transactions are to be first recorded in the journal. When the number of transactions is large, recording of all transactions in one journal will not only be inconvenient but also cause delay in collecting information required. Thus, where transactions are numerous and particularly of repetitive and similar nature, it is practicable to divide the main journal into sub-journal in order to facilitate the recording of transactions of similar nature. Thus the journal can be divided as follows :

  • Cash book
  • Purchases book
  • Sales book
  • Purchases returns book
  • Sales returns book
  • Bills receivable book
  • Bills payable book
  • Journal proper

See Also : Complete Topic/Chapter Wise Study Material for BCom 1st Year

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