Question

started business with cash Rs 80000​

Answer 1

ANSWER :

The journal entry for the transaction "Started business with cash Rs. 80000" is :-

$: \mapsto: \: \sf{ \large{Cash \: \: A/C \: \: Dr. \: \: \: \: \: \: \: \: Rs. \: 80000}} \: \: \: \: \: \: \: \: \: \: \: \\ \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \sf{ \large{To \: \: Capital \: \: Account \: \: \: \: \: \: \: \: \: \: \: \: \: Rs. \: 80000}}$

EXPLANATION :

• Step 1. Identification of accounts :- In this transaction, the business has received cash from the owner to start and carry out its business activities. Such amount brought in by the owner is termed as Capital and is recorded in Capital A/C. Again, the amount of Capital is brought in the form of Cash and the other account involved is Cash A/C.

• Step 2. Classification of accounts :- According to Modern Approach of classification, Capital A/C is taken as Capital Account and Cash A/C is taken as Assets Account.

• Step 3. Application of rules for Debit and Credit :- In the given transaction, when the cash is invested in the business in the form of Capital, the value of Capital in the business increases and hence the Capital A/C will be credited (As per the rule being capital increase). Again, Asset of the business also increases in the form of Cash and therefore, the Cash A/C will be debited (As per the rule being asset increase).