There are three types of businesses that can be commenced, they are sole proprietorship, partnership, and joint-stock company. As we all know, to start any business a certain sum of money has to be invested by the owner which is known as the capital of the business in terms of accounting. In companiRead more
There are three types of businesses that can be commenced, they are sole proprietorship, partnership, and joint-stock company. As we all know, to start any business a certain sum of money has to be invested by the owner which is known as the capital of the business in terms of accounting.
In companies, commencement is a declaration issued by the company’s directors with the registrar stating that the subscribers of the company have paid the amount agreed. In a sole proprietorship, the business can be commenced with the introduction of any asset such as cash, stock, furniture, etc.
Journal entry
In the journal entry, “Started business with Cash”
As per the golden rules of accounting, the cash a/c is debited because we bring in cash to the business, and as the rule says “debit what comes in, credit what goes out.” Whereas the capital a/c is credited because “debit all expenses and losses, credit all incomes and gains”
As per modern rules of accounting, cash a/c is debited as cash is a current asset, and assets are debited when they increase. Whereas, on the increment on liabilities, they are credited, therefore, capital a/c is credited.
Goods purchased for cash The purchasing of goods for cash is a business transaction and a vital business operation that is supposed to be recorded in the journal in order to keep a track of the business stock. A journal is a detailed account that records all the financial transactions in a businessRead more
Goods purchased for cash
The purchasing of goods for cash is a business transaction and a vital business operation that is supposed to be recorded in the journal in order to keep a track of the business stock.
A journal is a detailed account that records all the financial transactions in a business chronologically. It is used to keep a record of all the financial transactions occurring in a business and one of its primary motives is that it helps in the preparation of the ledger and trial balance statement.
Journal entry for goods purchased for cash
In the entry, goods purchased for cash, the cash a/c is credited and the purchases a/c is debited. It’s because of that golden rule in accounting, Dr. what comes in and Cr. what goes out.
Imagine, goods were purchased for cash on 1-Jan-2021. Then we’ll be passing the entry below:
Introduction Furniture is treated as a fixed asset of an enterprise unless it deals in the manufacturing or the trade of furniture. As stock in trade, it will be treated as current assets. In both cases, they are real accounts. Hence, the golden rule of accounting will be the same. But, when it coRead more
Introduction
Furniture is treated as a fixed asset of an enterprise unless it deals in the manufacturing or the trade of furniture. As stock in trade, it will be treated as current assets.
In both cases, they are real accounts. Hence, the golden rule of accounting will be the same.
But, when it comes to journal entries, Furniture A/c will appear only when it is treated as a fixed asset.
No journal entries are passed in the stock-in-trade account except for some balance transferring entries.
Journal Entries on taking Furniture as a fixed asset
Taking furniture as a fixed asset, we can pass various entries related to it. Since furniture is an asset, any increase is debited and the decrease is credited.
Also, furniture is a real account which means the golden rule of accounting applicable is, “Debit what comes in and credit what goes out”.
Following are the basic entries related to furniture.
Purchase of furniture
The most common entry related to furniture is the purchase of furniture:
Furniture A/c Dr.
Amt
To Cash / Bank A/c
Amt
Here Furniture A/c is increased, hence debited.
Cash or Bank being reduced is credited.
Sale of furniture
Cash / Bank A/c Dr.
Amt
Profit and Loss A/c * Dr.
Amt
To Furniture A/c
Amt
To Profit and Loss A/c **
Amt
*In case of loss
**In case of profit
On the sale of furniture, its balance gets reduced, hence credited.
Cash or Bank is debited as cash comes in hand or into the bank.
Also, profit or loss may arise due to the difference in sale value and the carrying amount of the furniture A/c.
The difference is debited to Profit and Loss A/c in case of loss and credited in case of profit.
Depreciation on Furniture
Depreciation A/c Dr.
Amt
To Furniture A/c
Amt
Here, furniture is credited as it is decreased by the amount of depreciation.
Depreciation being a non-cash expense, is debited.
Journal Entries on taking Furniture as stock in trade
When furniture is stock of trade of a business, the journal entries will be like normal purchase and sales entries as below:
Interest on capital Interest on capital is interest payable to the owner/partners for providing a firm with the required capital to commence the business. Normally, it is charged for a full year on the balance of capital at the beginning of the year unless some fresh capital is introduced during theRead more
Interest on capital
Interest on capital is interest payable to the owner/partners for providing a firm with the required capital to commence the business. Normally, it is charged for a full year on the balance of capital at the beginning of the year unless some fresh capital is introduced during the year.
When the business firm faces a loss, the interest on capital will not be provided. It is permitted only when the business earns a profit. Such payment of interest is generally observed in partnership firms. It is provided before the division of profits among the partners in a partnership firm.
If an owner or partner introduces additional capital to the business then, it is also taken into account for providing interest on capital.
Interest on capital in the accounting equations
Interest on capital is an expense from a business point of view, as it is payable to the owner and is not paid in cash. Being an income from the owner’s point of view, it is added to his capital account. And being a business expense from the business point of view, it is therefore deducted from the capital.
Hence, it further doesn’t create any change in the accounting equation mathematically but it’s mandatory to be shown as it plays a vital role in the profit and loss a/c and even helps the business save tax.
Example
Z started a business with cash and stock of ₹45,000 and ₹5,000 respectively. Further, he received interest on capital of ₹1,000. The accounting equation for the following transactions will be as follows:
Journal entry for commission earned but not received Commission earned but not received is called accrued income. As we know there are two types of accounting, cash basis of accounting, in which the transaction is recorded only when cash is received or paid, and accrual basis of accounting, in whichRead more
Journal entry for commission earned but not received
Commission earned but not received is called accrued income. As we know there are two types of accounting, cash basis of accounting, in which the transaction is recorded only when cash is received or paid, and accrual basis of accounting, in which even if money is yet to be accepted or paid, the transactions are still recorded.
E.g of accrual income- rent earned but not collected, interest on the investment earned but not received, etc.
Journal entry
The commission that is to be received is debited, indicating the increase in assets whereas, the commission account (which will be giving you the commission) is credited.
Later on, upon receiving the cash an entry is passed crediting the commission receivable as shown below:
These are adjusted while making the final accounts for the business.
Simplifying with an example
If the rent earned was $1,000 and it’s yet to be received, we’ll be passing this entry-
Changing a Ledger name in Tally is an easy process. The requirement of changing the name of a ledger may arise in three situations: Situation 1: When we need to change a ledger's name, right after its creation while being in the ledger creation menu Situation 2: When we realize the need to change aRead more
Changing a Ledger name in Tally is an easy process. The requirement of changing the name of a ledger may arise in three situations:
Situation 1: When we need to change a ledger’s name, right after its creation while being in the ledger creation menu
Situation 2: When we realize the need to change a ledger’s name during passing an entry in any voucher.
Situation 3: Other situations where we are not on the Voucher Creation window or ledger creation window.
In Tally, there are plenty of shortcut keys that can ease the way we work on it. My methods will be based on such shortcuts on Tally ERP 9.0.
Situation 1
Often just after ledger creation, we realize that we have made mistake in entering the name of the ledger.
Many opt to choose this long path to alter the ledger’s name.
Exiting Voucher creation menu → Gateway of Tally menu → Accounts Info → Ledger option → Alter option → Select the ledger → Ledger alteration window opens.
Instead of it, you can choose to use Page Up key while on the ledger creation window. Press the Page-up key till you reach that ledger. Then you can edit its name or any other details.
Pressing the page up key automatically opens the ledger alteration mode and lets the user scroll through the ledgers available.
The ledger alteration window looks like this:
Situation 2
Sometimes, while performing entries into vouchers, we feel the need to alter a ledger’s name.
This can be done by pressing Ctrl + Enter key with the cursor on the ledger’s name in the voucher creation menu.
On pressing Ctrl + Enter Key, the ledger alteration window will open, from where the user can alter the ledger name or any other details.
Situation 3
When the user is not either on the voucher creation menu or on the ledger creation menu, then the ledger’s name has to be altered by going through the following steps:
Gateway of Tally menu → Accounts Info → Ledger option → Alter option → Select the required ledger → ledger alteration window opens.
That’s it. These are different approaches to changing a ledger’s name.
One thing that is common among all approaches is the opening of the Ledger alteration window at the end. Hence, it is only through the Ledger alteration window we can change a ledger’s details including its name.
Bills Payable Book Bills payable book, also known as a B/P book is a subsidiary or secondary book of account in which transactions relating to bills of exchange are recorded. It includes the recording of bills that are payable by a business. In a business where the number of bills exchanging hands iRead more
Bills Payable Book
Bills payable book, also known as a B/P book is a subsidiary or secondary book of account in which transactions relating to bills of exchange are recorded. It includes the recording of bills that are payable by a business.
In a business where the number of bills exchanging hands is large in number, it is very useful, as it is tough to journalize all the bills drawn. A bills payable account generally has a credit balance as it is supposed to be paid at maturity and be a liability.
Format for B/P book
The person, who draws the bill of exchange, is called a “drawer”.
The customer, on whom it is drawn, is called a “drawee” or an “acceptor”.
Started business with cash 50000 entry?
There are three types of businesses that can be commenced, they are sole proprietorship, partnership, and joint-stock company. As we all know, to start any business a certain sum of money has to be invested by the owner which is known as the capital of the business in terms of accounting. In companiRead more
There are three types of businesses that can be commenced, they are sole proprietorship, partnership, and joint-stock company. As we all know, to start any business a certain sum of money has to be invested by the owner which is known as the capital of the business in terms of accounting.
In companies, commencement is a declaration issued by the company’s directors with the registrar stating that the subscribers of the company have paid the amount agreed. In a sole proprietorship, the business can be commenced with the introduction of any asset such as cash, stock, furniture, etc.
Journal entry
In the journal entry, “Started business with Cash”
As per the golden rules of accounting, the cash a/c is debited because we bring in cash to the business, and as the rule says “debit what comes in, credit what goes out.” Whereas the capital a/c is credited because “debit all expenses and losses, credit all incomes and gains”
As per modern rules of accounting, cash a/c is debited as cash is a current asset, and assets are debited when they increase. Whereas, on the increment on liabilities, they are credited, therefore, capital a/c is credited.
Therefore, the entry we’ll be passing is-
See lessWhat is purchased goods for cash journal entry?
Goods purchased for cash The purchasing of goods for cash is a business transaction and a vital business operation that is supposed to be recorded in the journal in order to keep a track of the business stock. A journal is a detailed account that records all the financial transactions in a businessRead more
Goods purchased for cash
The purchasing of goods for cash is a business transaction and a vital business operation that is supposed to be recorded in the journal in order to keep a track of the business stock.
A journal is a detailed account that records all the financial transactions in a business chronologically. It is used to keep a record of all the financial transactions occurring in a business and one of its primary motives is that it helps in the preparation of the ledger and trial balance statement.
Journal entry for goods purchased for cash
In the entry, goods purchased for cash, the cash a/c is credited and the purchases a/c is debited. It’s because of that golden rule in accounting, Dr. what comes in and Cr. what goes out.
Imagine, goods were purchased for cash on 1-Jan-2021. Then we’ll be passing the entry below:
See lessWhat is furniture journal entry?
Introduction Furniture is treated as a fixed asset of an enterprise unless it deals in the manufacturing or the trade of furniture. As stock in trade, it will be treated as current assets. In both cases, they are real accounts. Hence, the golden rule of accounting will be the same. But, when it coRead more
Introduction
Furniture is treated as a fixed asset of an enterprise unless it deals in the manufacturing or the trade of furniture. As stock in trade, it will be treated as current assets.
In both cases, they are real accounts. Hence, the golden rule of accounting will be the same.
But, when it comes to journal entries, Furniture A/c will appear only when it is treated as a fixed asset.
No journal entries are passed in the stock-in-trade account except for some balance transferring entries.
Journal Entries on taking Furniture as a fixed asset
Taking furniture as a fixed asset, we can pass various entries related to it. Since furniture is an asset, any increase is debited and the decrease is credited.
Also, furniture is a real account which means the golden rule of accounting applicable is, “Debit what comes in and credit what goes out”.
Following are the basic entries related to furniture.
Purchase of furniture
The most common entry related to furniture is the purchase of furniture:
Here Furniture A/c is increased, hence debited.
Cash or Bank being reduced is credited.
Sale of furniture
*In case of loss
**In case of profit
On the sale of furniture, its balance gets reduced, hence credited.
Cash or Bank is debited as cash comes in hand or into the bank.
Also, profit or loss may arise due to the difference in sale value and the carrying amount of the furniture A/c.
The difference is debited to Profit and Loss A/c in case of loss and credited in case of profit.
Depreciation on Furniture
Here, furniture is credited as it is decreased by the amount of depreciation.
Depreciation being a non-cash expense, is debited.
Journal Entries on taking Furniture as stock in trade
When furniture is stock of trade of a business, the journal entries will be like normal purchase and sales entries as below:
There will be no furniture account.
See lessWhat is the accounting equation for interest on capital?
Interest on capital Interest on capital is interest payable to the owner/partners for providing a firm with the required capital to commence the business. Normally, it is charged for a full year on the balance of capital at the beginning of the year unless some fresh capital is introduced during theRead more
Interest on capital
Interest on capital is interest payable to the owner/partners for providing a firm with the required capital to commence the business. Normally, it is charged for a full year on the balance of capital at the beginning of the year unless some fresh capital is introduced during the year.
When the business firm faces a loss, the interest on capital will not be provided. It is permitted only when the business earns a profit. Such payment of interest is generally observed in partnership firms. It is provided before the division of profits among the partners in a partnership firm.
If an owner or partner introduces additional capital to the business then, it is also taken into account for providing interest on capital.
Interest on capital in the accounting equations
Interest on capital is an expense from a business point of view, as it is payable to the owner and is not paid in cash. Being an income from the owner’s point of view, it is added to his capital account. And being a business expense from the business point of view, it is therefore deducted from the capital.
Hence, it further doesn’t create any change in the accounting equation mathematically but it’s mandatory to be shown as it plays a vital role in the profit and loss a/c and even helps the business save tax.
Example
Z started a business with cash and stock of ₹45,000 and ₹5,000 respectively. Further, he received interest on capital of ₹1,000. The accounting equation for the following transactions will be as follows:
Accounting Equation
See lessWhat is commission earned but not received journal entry?
Journal entry for commission earned but not received Commission earned but not received is called accrued income. As we know there are two types of accounting, cash basis of accounting, in which the transaction is recorded only when cash is received or paid, and accrual basis of accounting, in whichRead more
Journal entry for commission earned but not received
Commission earned but not received is called accrued income. As we know there are two types of accounting, cash basis of accounting, in which the transaction is recorded only when cash is received or paid, and accrual basis of accounting, in which even if money is yet to be accepted or paid, the transactions are still recorded.
E.g of accrual income- rent earned but not collected, interest on the investment earned but not received, etc.
Journal entry
Simplifying with an example
If the rent earned was $1,000 and it’s yet to be received, we’ll be passing this entry-
When it’s received, this entry is passed
See lessHow to change ledger name in tally?
Changing a Ledger name in Tally is an easy process. The requirement of changing the name of a ledger may arise in three situations: Situation 1: When we need to change a ledger's name, right after its creation while being in the ledger creation menu Situation 2: When we realize the need to change aRead more
Changing a Ledger name in Tally is an easy process. The requirement of changing the name of a ledger may arise in three situations:
In Tally, there are plenty of shortcut keys that can ease the way we work on it. My methods will be based on such shortcuts on Tally ERP 9.0.
Situation 1
Often just after ledger creation, we realize that we have made mistake in entering the name of the ledger.
Many opt to choose this long path to alter the ledger’s name.
Exiting Voucher creation menu → Gateway of Tally menu → Accounts Info → Ledger option → Alter option → Select the ledger → Ledger alteration window opens.
Instead of it, you can choose to use Page Up key while on the ledger creation window. Press the Page-up key till you reach that ledger. Then you can edit its name or any other details.
Pressing the page up key automatically opens the ledger alteration mode and lets the user scroll through the ledgers available.
The ledger alteration window looks like this:
Situation 2
Sometimes, while performing entries into vouchers, we feel the need to alter a ledger’s name.
This can be done by pressing Ctrl + Enter key with the cursor on the ledger’s name in the voucher creation menu.
On pressing Ctrl + Enter Key, the ledger alteration window will open, from where the user can alter the ledger name or any other details.
Situation 3
When the user is not either on the voucher creation menu or on the ledger creation menu, then the ledger’s name has to be altered by going through the following steps:
Gateway of Tally menu → Accounts Info → Ledger option → Alter option → Select the required ledger → ledger alteration window opens.
That’s it. These are different approaches to changing a ledger’s name.
One thing that is common among all approaches is the opening of the Ledger alteration window at the end. Hence, it is only through the Ledger alteration window we can change a ledger’s details including its name.
See lessCan you show bills payable book format?
Bills Payable Book Bills payable book, also known as a B/P book is a subsidiary or secondary book of account in which transactions relating to bills of exchange are recorded. It includes the recording of bills that are payable by a business. In a business where the number of bills exchanging hands iRead more
Bills Payable Book
Bills payable book, also known as a B/P book is a subsidiary or secondary book of account in which transactions relating to bills of exchange are recorded. It includes the recording of bills that are payable by a business.
In a business where the number of bills exchanging hands is large in number, it is very useful, as it is tough to journalize all the bills drawn. A bills payable account generally has a credit balance as it is supposed to be paid at maturity and be a liability.
Format for B/P book
Bills Payable A/c
See less