Question

Cash sales on 7,700 accounting rules
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Answer 1

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Answer 2

Answer:

Journal is a record that keeps accounting transactions in chronological order, i.e. as they occur.

In a simple journal entry , two accounts are involved one of which is Debited and the other is Credited.

Before recording a journal entry, it is important to understand the NATURE OF ACCOUNTS involved in the journal entry.

We know there are three types of accounts-

Real account - All assets of a firm, which are tangible or intangible, fall under the category “Real Accounts“. Golden rule for real accounts is “Debit what comes in ,Credit what goes out”

Personal account - These accounts are related to individuals, firms, companies, etc. Golden rule for personal accounts is “Debit the receiver,Credit the giver”

Nominal account - Accounts which are related to expenses, losses, incomes or gains are called Nominal accounts.Golden rule for nominal accounts is “Debit all expenses & losses, Credit all incomes & gains”

Now, a journal entry for cash sales involves two accounts

Cash a\c , which is a real account as it is a current asset.

Sales a\c, which is a nominal account as sale is a type of income.

During this transaction

Cash is increasing . Applying the golden rule of real account, CASH A/C WILL BE DEBITED as cash is coming in the business ( debit what comes in).

Sale is now income for us. Since it is nominal account , SALES A/C WILL BE CREDITED.

TO CONCLUDE ,THE JOURNAL ENTRY WILL BE

CASH A/C DR.

TO SALES A/C

(Being cash sales for respective amount)

THANK YOU.