Question

X start business with an amount of Rs 10,000
Bought goods from cash Rs 4000

Answer 1

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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1) X started business with cash

reason for debit and credit

Cash A/c - Real A/c , where money comes into the business therefore its debited

Capital A/c- personal A/c , where owner giver of cash and goods to business therefore its credited

Journal Entry

Cash A/c    Dr   10000

            To Capital A/c     10000

(being started a business and invested in business)

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2) Bought goods for cash 4000

reason for debit and credit

Purchases A/c - Real A/c , where goods comes into the business therefore its debited

Cash A/c - Real A/c , where money goes out of the company therefore its credited

journal entry

Purchases A/c  Dr  4000

           To Cash A/c             4000

(being goods purchased for cash)

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If the question for accounting equation

1) Increase in cash (asset ) by 10000 and Increase in capital by 10000

2)Increase in stock (asset ) by 4000 and decrease in cash (asset) by 4000

Answer 2

For capital brought in the form of cash:

Cash A/C. Dr. Rs.10,000

To Capital A/C. Rs.10,000

(Being capital brought in the form of cash )

For goods purchased for cash :

Purchases A/C. Dr. Rs.4,000

To Cash A/C. Rs.4,000

(Being goods purchased for cash)