Question

furniture purchased on credit​

Answer 1

Explanation:

Furniture Account(Debit)

To Cash Account(Credit)

Reason:- Furniture and Cash belongs to real A/c

According to golden rule for real A/c

Debit- what comes in

Credit- what goes out

Hence when furniture is purchased for cash, assets (furniture) of the company increases and assets (cash) of the company decreases.

Note- Alternatively if the furniture is purchased on credit, then the Cash A/c in the above entry will be replaced by Name of the Creditor i.e, Creditor A/c

In this case, Creditor A/c belongs to personal A/c and golden rule for personal A/c is

Debit- the receiver

Credit- the giver

Therefore, when furniture is purchased on credit, the Creditor is giving the furniture without any decrease in company cash.

I tried my best to explain. Hope u understood.