ENYRY OF OPENING A CURRENT ACCOUNT BY PERSONAL CHEQUE
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Opening a current bank account by Cheque..
The current transaction affects two accounts...Bank a/c (Payer).. because We are paying through Cheque. ,Bank a/c(current account; payee)... because We are opening a current account..
The 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
Bank account is a Real account( Bank balance is an asset; all assets and Liabilities come under Real account)
in contention with the above rules....
Bank a/c (payee ; current account) should be debited..coz cash is comingin..
Bank a/c (Payer) should be credited..coz we are paying through Cheque,cash is going out
So the Journal Entry will be...
Bank a/c (current a/c) Dr xxxx
To Bank a/c xxxx
(being current account opened with an initial deposit)
The current transaction affects two accounts...Bank a/c (Payer).. because We are paying through Cheque. ,Bank a/c(current account; payee)... because We are opening a current account..
The 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
Bank account is a Real account( Bank balance is an asset; all assets and Liabilities come under Real account)
in contention with the above rules....
Bank a/c (payee ; current account) should be debited..coz cash is comingin..
Bank a/c (Payer) should be credited..coz we are paying through Cheque,cash is going out
So the Journal Entry will be...
Bank a/c (current a/c) Dr xxxx
To Bank a/c xxxx
(being current account opened with an initial deposit)
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