Question

Goods purchased for cash from madan lal rs 5000

Answer 1

Purchase account dr. 5,000

........ To Cash A/c............... 5,000

[ being goods are purchase by the business in cash.]

In above journal entry.,

Business received goods hence purchase account is debited and business paid cash fir this hence cash account is credited for business.

Note.. It must notices that If transaction shows both credit and Cash concept then always business prefer cash aspect... For e. G in above entry... ⬆⬆⬆

Answer 2

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 5000

To Cash account 5000

(Being Goods purchased for cash)