What is the double entry for cash lodgement into business bank account
Answers
Explanation:
Debit: The cash is deposited at the bank increasing the balance in the bank account. Credit: Physical cash held by the business reduces when deposited at the bank. It should be noted that the cash deposit bank journal entry simply transfers cash from one location to another, the asset the business has is always cash.
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Answer:
Yes, this is because we follow double-entry book keeping system, where we basically record both sides of any transaction.
For example, for a Cash Deposit transaction, the Customer Account is credited in the Bank’s books of accounts. Simultaneously, a posting or entry is made a debit to the Cash in Hand account, for the same amount. This now reflects that the Bank now holds the cash - it’s an Asset, and the Credit balance shows that the Bank owes the customer the same amount - so that is a Liability the Bank is carrying.
This may seem trivial or unnecessary in the context of 1 simple transaction but when we consider hundreds of thousands of transactions going through, and many hundreds of types of instruments (cash, bullion, checks, drafts, wires, transfers ….) used for transactions it becomes obvious that we need a double-entry book keeping system to ensure that the Bank always knows what it owes and what it is owed. The books must always balance. Otherwise the Bank will go out of business.
Explanation: