Question

journal entry of cash received from Naresh on account​

Answer 1

Answered:

Cash A/c   xxx

               To Naresh   xxx

(Being cash received from Naresh)

Explanation:

• "The Golden Rules of Accounting are-

1. Debit the receiver and credit the giver.
2. Debit what comes in and credit what goes out.
3. Debit expenses and losses, credit income and gains."

• Cash account is a real account ,hence Rule 2 will be applicable and since the cash in coming in the firm, cash account will be debited.
• Naresh account is a personal account , hence Rule 1 will be applicable and since Naresh is the giver, his account will be credited.

Hence, as per the modern rule of accounting, cash is an asset and increase in asset is debited while Naresh is an asset (debtor) and decrease in asset is credited.

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Answer 2

Answer:

• Credit the giver and debit the recipient.
• Debit what is received and credit what is expended.
• Debit losses and expenses, credit gains and profits.
• Since the cash account is indeed a real account and Rule 2 will apply as a result, the cash account would be debited.
• Since Rule 1 will apply because Naresh's account is just a personal account and he is the giver, the account would be credited.
• Therefore, according to the current accounting standard, Naresh is a debtor and an increase in asset value is debited while cash is an asset.

Explanation:

• The Account balance is deducted each time cash is received. The Bank account is credited each time money is disbursed.
• It is known as being paid on account when a payments is made against that account such that the item in the company's books for accounts payable is no longer outstanding.
• As a debit to the account, payments made upon account reduce accounts payable.
• The vast majority of lenders allow payments on account.

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