what will be the effect of commission received on accounting equation
Answers
Answer:
Explanation:
If a business firm receives any amount from any person in respect of any services rendered to help them for increasing the sale or helping in purchase of goods or any other business transaction, then this receipt will be treated as commission received.
Here, present the effects of the journal entry
In the books of Journal Entry
Particulars Amount Amount
cash A/C Dr. ****
To, the commission received A/C ****
[ Being commission received ]
NOTES: According to the Golden Rule, "Debit what comes in" so, cash A/C will be debited
Explanation:
Accounting equation is basic equation that propels all the accounting activities. It means that every financial transaction has debit and credit effect without which there can be no financial transaction.
Accounting equation = Assets + Liabilities + owners capital.
At any given point of time, this equation should match. In this case the commission received, it affects assets and the capital.
Hence, Commission amount received will be added to the asset (since cash is coming in) and liability will be added since the equal vent service has be performed.