Question

Neeraj bought a vehicle on credit from
Vijay. Which of the following journal entries
will be made for this transaction in Neeraj's
books?
Select one:
a. Dr.Vehicle Cr.Cash.
b. Dr. Neeraj Cr.Purchases.
c. Dr.Purchases Cr.Vijay.
d. Dr. Vehicle Cr.Neeraj.​

Answer 1

$Answer :$

The Journal Entry for transaction is:

(c) Dr. Purchases Cr. Vijay

Hope this helps you ❤

Answer 2

Answer:

The correct option is (c)Dr.Purchases Cr.Vijay.

Explanation:

Golden Rules of Accounting-

• Debit The Receiver, Credit The Giver

In the case of personal accounts, this principle is applied. When someone gives something to the organisation, it becomes an inflow, and the person must be credited in the books.

• Debit what comes in, Credit what goes out.

In the case of real accounts, this principle is applied. As a result, debiting what comes in adds to the existing account balance. Similarly, crediting what goes out reduces the account balance.

• Debit all expenses and losses and credit all profits and gains.

When the account in question is a nominal account, this rule applies. Crediting all income and gains increases capital, while debiting expenses and losses decreases capital.

• In the question, Purchases is a nominal account hence, rule 3 is applicable. Purchases being an expense, make the purchase account debit when there is an increase in expense.
• Whereas, Vijay is a personal account , hence rule 1 is applicable. Vijay's account is credited as Vijay is a Giver of vehicle.

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