Question

Is it possible to pass a single journal entry for two or more transactions? If yes ,than what is this type of journal entry called ? Explain this entry with in example.
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Answer 1

Answer:

Yes it is called compound entry which has two or more transactions

Ex. Cash Ac Dr

To Rohan Ac

To Ram Ac

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Answer 2

Yes, it is possible to pass a single journal entry for two or more transactions. These are called compound journal entry. It is used when multiple transactions occur between the same parties, involving the same accounts, and at the same time.

• For example, let's say that ABC Company purchases goods worth ₹1,000 on credit from XYZ Company, and also pays XYZ Company ₹500 for services rendered. Instead of making separate journal entries for these transactions, ABC Company can combine them into a single entry as follows:

1. Date: MM/DD/YYYY
2. Particulars Debit Credit
3. XYZ Company A/C ₹1,000
4. Service Expenses A/C ₹500
5. Accounts Payable A/C ₹1,500

• In this entry, the debit of ₹1,000 represents the amount owed to XYZ Company for the goods purchased on credit, while the credit of ₹500 represents the amount paid to XYZ Company for the services rendered. The remaining credit of ₹1,500 represents the total amount owed to XYZ Company, which is recorded in the Accounts Payable account.
• Compound journal entries are useful in simplifying the accounting process and reducing the number of journal entries that need to be recorded. However, it is important to ensure that the transactions being combined are related and occur at the same time. The compound entry must also be clear and understandable for future reference and auditing purposes.

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