Commenced business with cash40,000 and furinture 10,000
Answers
Answer:
Cash A/C ….. . . . . dr
Furniture A/C. .. . .dr
Machinery A/C . ….dr
To Capital A/C
How,
Step 1 : Read the QUESTION and Interpret the transaction:
According to this question, The owner of business invest cash, Furniture and Machine in his Business,
Step 2 : find “A/c's" from above transaction,*
From the above transaction there are four accounts,
First is “CASH A/c”
Second is “FFURNITURE A/c”
Third is “MACHINERY A/c”
Fourth is “CAPITAL A/c” ( we know that Capital A/c represent the Owner of business
Step 3 :classify the A/c in “Personal, Real or Nominal”,
From step 2,
CASH, Furniture & Machinery are Real A/c and
CAPITAL is Personal A/c
Step 4: Apply “Traditional Approach”
(1) Real A/c rule :-
Debit whats comes in
Credit whats goes out
From Step 3 CASH, FURNITURE & MACHINERY are real A/c and from Step 1 CASH, FURNITURE & MACHINERY comes in (in business), Therefore , “CASH FURNITURE & MACHINERYA/c will be Debit.
(2) Personal A/c rule :-
Debit the receiver
Credit the gaver
Answer:
cash account debit to capital account to furniture account 50000