Question

What are the two aspects of furniture purchased for cash

Answer 1

ANSWER :

The two aspects of Furniture purchased for cash are :-

• [1] Furniture A/C

• [2] Cash A/C

➢ In the transaction "Furniture purchased for cash", the business has paid cash for the purchase of Furniture. Hence, in this transaction, two accounts are involved, Furniture A/C and Cash A/C.

➺ Furniture is an Asset.

• ❖ According to the Traditional Approach of accounts classification, Furniture A/C is a Real Account. Again, according to the Modern Approach of accounts classification, Furniture A/C is an Asset Account.

Applying the rule of Debit and Credit under Traditional Approach, Furniture as an asset comes in the business and hence the Furniture A/C will be Debited. Also, applying the rule of Debit and Credit under Modern Approach, asset of the business increases when Furniture has been brought and hence the Furniture A/C will be debited.

➺ Cash is an Asset.

• ❖ According to the Traditional Approach of accounts classification, Cash A/C is a Real Account. Again, according to the Modern Approach of accounts classification, Cash A/C is an Asset Account.

Applying the rule of Debit and Credit under Traditional Approach, Cash as an asset goes from the business and hence the Cash A/C will be Credited. Also, applying the rule of Debit and Credit under Modern Approach, asset of the business decreases in the form of cash and hence the Cash A/C will be Credited.

➢ Therefore, the journal entry for the transaction "Furniture prchased for cash" will be :-

$:\mapsto: \: \: \sf{ \large{Furniture \: \: A/C \: \: \: \: \: \: \: \: \: Dr. \: \: }} \\ \: \: \: \: \: \: \: \: \: \: \: \sf{ \large{ To \: \: Cash \: \: A/C}}$