Prepare ‘T’ shape account of machinery from the following transactions: (4)
(a) Purchase of machinery for cash Rs. 80,000.
(b) Machine destroyed by fire Rs. 10,000.
(c) Machine purchased on credit Rs. 20,000.
(d) Goods costing Rs. 15,000 sold at profit of Rs. 5,000.
Distinguish between book keeping and accounting.
Answers
Answer:Bookkeeping is mainly related to identifying, measuring, and recording, financial transactions
Accounting is the process of summarizing, interpreting, and communicating financial transactions which were classified in the ledger account
For the two T accounts there kindly check the attached images.
a) Machinery is debited because the asset is increasing while the asset of cash is decreasing thus credited.
b)When a machine is destroyed by fire we open a loss by fire account and debit it with amount lost while the machine account is credited.
c)Machine is debited when bought while the creditor account is credited.
d) The total price for the goods sold is 15000+5000 which gives 20000. thus sales account is credited while cash(assuming it was sold on cash) is credited.
