Started business with Cash Journal entry
Started business with cash Journal entry- Under Traditional Approach
Example: On 1st April 2021 Mr. Sodi Started business with cash Rs. 5,00,000. Pass journal entry.
ANALYSIS-
Accounts Affected:
1.Cash Account
2.Capital Account.
Nature of Accounts :
Cash Account : Real Account ;
Capital Account : Personal Account.
Rules of Debit and Credit :
For real accounts : Debit what comes in and credit what goes out .
For personal accounts : Debit the receiver and credit the giver.
Applying the Rules :
Debit : Cash Account : Cash comes in business and rules of real account debit what comes in.
Credit : Capital Account : Represent Proprierors account, and here the Proprierors is giver and rules of personal account credit the giver.
Started business with cash Journal entry-
Started business with cash Journal entry- Under Modern Approach
Example: On 1st April 2021 Mr. Fadric Started business with cash Rs. 15,00,000.Pass journal entry.
ANALYSIS-
Accounts Affected:
1.Cash Account
2.Capital Account.
Nature of Accounts :
Cash Account : Assets Account ;
Capital Account : Capital Account.
Rules of Debit and Credit :
For assets accounts : Increases in assets are debits; decreases in assets are credits.
For capital accounts : Increases in capital are credits; decreases in capital are debits.
Applying the Rules :
Debit : Cash Account : Assets Increase in form of Cash and according to rules of assets account, Increases in assets are debit.
Credit : Capital Account : Capital Increase in form investment by owner, and according to rules of capital account, Increases in capital are credit.
Started business with cash Journal entry-
Also read : Golden Rules Of Accounting
Also read : Fictitious Assets
Also read : Accrued Income journal Entry
Also read : Interest on Capital journal entry
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