Question

Bought goods for cash from M/s. Modern trader what is the journal entry

Answer 1

The current transaction affects two accounts.. Purchases account(Goods are purchased), Cash account..(purchased for cash)..

Purchases account is a nominal account ( All expenses incomes gains losses come under nominal account; Purchases is an expense)

Cash account is a real account ( all assets and Liabilities come under Real account: cash is an asset)


The Three golden rules of accounting are..

Personal account - Debit the receiver, credit the giver

Nominal account - Debit All expenses and losses, credit All incomes and gains

Real account - Debit what comes in, credit what goes out

In contention with the above rules..

Purchases account should be debited (its an expense)

Cash account should be credited (cash is going out)


so the Journal Entry will be...

Purchases account Dr xxxx

To Cash account xxxx

(Being Goods purchased for cash)