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