Question

Mr x comments budiness on 1st april 2011 by introducing capital of Rs 50000 during the year following transaction taken place (1) Bought furniture for cash 16000 (2) purchased goods for 20,000

Answer 1

As Per the golden rules of accounting

Personal account - Debit the receiver credit the giver

Real account - Debit what comes in credit what goes out

Nominal account - Debit All expenses and losses, credit all incomes and Gains

All assets and liabilities come under Real accounts.. When asset increases/Liability decreases concerned account should be Debited and when asset decreases/ liability increases. concerned account should be credited..


Nominal account..all expenses should be debited..

So cash is debited, capital is credited...and Furniture is debited, cash is credited... Purchases is debited and cash is credited..

The Journal entries in the books of Mr.X

Cash a/c. Dr 50000

To Capital a/c. 50000

(Being cash brought into the business)


Furniture a/c. Dr. 16000

To Cash a/c. 16000

(Being Furniture bought for cash)


Purchases a/c Dr. 20000

To cash a/c. 20000

(Being Purchases made on cash)