Question 5.
On which side will the decrease in the following accounts be recorded ? Also, state the nature of the account:
(i) Cash
(ii) Bank Overdraft
(iii) Outstanding salary paid
(iv) Outstanding Rent
(v) Prepaid Insurance
(vi) Mohan, Proprietor of the business
Answers
The answer is stated below:
Explanation:
1.
Cash - The decrease will be recorded on the Credit Side of the account, and the nature of the account is Real account.
2.
Bank Overdraft - The decrease will be recorded on the Debit Side of the account, and the nature of the account is Personal account.
3.
Salary Outstanding paid - The decrease will be recorded on the Debit Side of the account, and the nature of the account is Personal account.
4.
Rent Outstanding - The decrease will be recorded on the Debit Side of the account, and the nature of the account is Personal account.
5.
Prepaid Insurance - The decrease will be recorded on the Credit Side of the account, and the nature of the account is Personal account.
6.
Mohan, Proprietor of the business - The decrease will be recorded on the Debit Side of the account, and the nature of the account is Real account.
Answer:
1.
Cash - The decrease will be recorded on the Credit Side of the account, and the nature of the account is Real account.
2.
Bank Overdraft - The decrease will be recorded on the Debit Side of the account, and the nature of the account is Personal account.
3.
Salary Outstanding paid - The decrease will be recorded on the Debit Side of the account, and the nature of the account is Personal account.
4.
Rent Outstanding - The decrease will be recorded on the Debit Side of the account, and the nature of the account is Personal account.
5.
Prepaid Insurance - The decrease will be recorded on the Credit Side of the account, and the nature of the account is Personal account.
6.
Mohan, Proprietor of the business - The decrease will be recorded on the Debit Side of the account, and the nature of the account is Real account.
Explanation: