Question

Started business with cash ₹80000 and goods ₹40000

Answer 1

capital a/c dr. 80000
purchase a/c dr. 40000
to cash 120000

Answer 2

3 golden rules

• debit the receiver , credit the giver

• debit what comes in , credit what goes out

• debit all the expenses and losses , credit all the incomes and gains

----------------------------------------------------------------------------------------------------------------

Reason for debit and credit

Cash A/c - real A/c , money comes into the business therefore its debited

Purchases - real A/c , Stock comes into the business therefore its debited

Capital A/c - personal A/c , where owner whos the giver of cash and goods to the business , therefore its credited

----------------------------------------------------------------------------------------------------------------

Journal entry

Cash A/c Dr 80000

Purchases A/c Dr 40000

To Capital A/c 1200000

(being started business with cash And goods )

Hope its useful..!!