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In: 1. Financial Accounting > Journal Entries

What is the journal entry for started business with cash 60000?

What is the journal entry for started business with cash 60000?
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    1. GautamSaxena .
      2022-07-26T21:34:36+00:00Added an answer on July 26, 2022 at 9:34 pm
      This answer was edited.

      Starting of the business

      The starting of the business, in accounting terms, is called the commencement of the business. There are three types of businesses that can be commenced, they are, sole proprietorship, partnership, and joint-stock company.

      In order to start the business, 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 this entry, “Started business with cash $60,000”

      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.

       

       

       

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