Mr. Akbar provides you with the following information-(all the transactions are separate and independent of each other) Started business with cash Rs150000 Purchased goods for cash Rs 25000 Sold goods to C on credit Rs 20000 Paid salary for cash Rs15000 Deposited cash into the bank account Rs100000
a. Identify the accounts being affected in the monetary transaction and Identify the type of accounts identified - real, personal or nominal (5 Marks) b. Discuss the rule of passing the journal entry applicable here and pass the journal entry (Golden rule or transaction analysis, any of these rule/s can be taken as a base to justify the answer)
1) started business with cash 150,000
Accounts involved -> capital A/C = Personal Account
Cash A/C = Real Account
* Capital Account is a personal Account as it is related to a person, and Cash Account is real Account as it is related to Assets.
purchased goods far cash. RS 25,000
Accounts involved are,purchase A/C=Nominal,
cash are assets therefore, are real Account
purchase is an expense so, Nominal A/C.
Sold goods to C on credit Rs 20,000
Accounts involved are, sales A/C =nominal,
Debtor (i.e. C) A/C = personal.
Sales is an Income therefore nominal Account and debtor
(i.e. C) is related to person therefore, personal A/C.
paid salary for cash Rs 15,000
Accounts involved are Salary A/C = Nominal,
Cash A/C = Real
Salary is an expense therefore Nominal A/C & Cash is
an Asset therefore real account
Deposited cash into Bank A/C. 115.000
Cash A/C = Real Account
Bank A/C= personal account.
Real Account as it's asset and Bank account is personal Account as it relates to a person or organisation.
Rule for passing the Journal Entry as per golden Rule.
1) personal Account
Debit - Receiver
Credit - Giver
Debit - What comes in
credit - what goes out.
3) Nominal Account.
Debit - All Expenses & losses
Credit - All Income & profit.
1)started business with cash 15,000.
cash A/C(Debit) - 15000
To capital A/C (credit) - 15,000
2) purchased goods for cash Rs. 25,000
purchase A/C - Debit 25,000
TO cash A/C (credit)- 25,000
3) Sold goods to C on credit RS 20,000
Debtor A/C or C's A/C (Debit) - 20,000
To sales A/C(credit) - 20,000
4) paid salary for cash. Rs 15,000.
Salary A/C (debit) 15,000
To cash A/C (credit) 15,000
5) Deposited cash into Bank
Bank A/C (Debit) 15,000
To cash A/C (Credit) 15,000