Started business with cash ₹80000 and goods ₹40000
Answers
purchase a/c dr. 40000
to cash 120000
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
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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
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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..!!