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Journal Entries of Different Types of Transactions - Part 1

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Contents:
Types of Accounts
Types of Transactions
Debit & Credit Rules - Only 3
Transaction regarding Capitals & Drawings
Transaction regarding Goods and Assets

Published in: Economy & Finance, Technology
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  • very useful thanks
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  • Very helpful website.Thank you. Thanks a lot.
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  • slide 12 is wrong we should not use goods in entries the entry must be
    charity a/c dr
    to purchases a/c
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  • slide 12 is wrong we should not use goods in entries the entry must be
    charity a/c dr
    to purchases a/c
       Reply 
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    Your message goes here
  • About slide 7. If the goods are sold on credit to person B then the entry is correct or if the sale is a cash transaction then cash act will be debited. So the entry goes Cash A/c Debit to Sales Or Goods A/c.
    One simple suggestion: Per accounting rules always right the debit side first, may it be any account Persona, Real or Nominal.
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  • 1. Journal Entries of Different Types of Transactions Part 1 Rahul Guhathakurta Indian Institute of Planning & Management, Ahmedabad Rahul Guhathakurta © 2006 , http://www.slideshare.net/rahulogy
  • 2. Types of Economic Transaction Types of Economic Transactions Cash Transactions Transactions for Goods or Services Transactions Involving Receivables & payables
    • Asset Transaction
    • Goods Transaction
    • Service Transaction
    • Debt Transaction
    • Service Transaction
    • Asset Transaction
  • 3. Types of Accounts Types of Accounts Personal Accounts Impersonal Accounts Real Accounts Nominal Accounts
  • 4. Important Rules of Debit and Credit
    • Rule of Personal Account :
    • “Debit the receiver , Credit the giver”
    • Rule of Real Account :
    • “ Debit What Comes in, Credit what goes out”
    • Rule of Nominal Account :
    • “ Debit the Expenses and Losses, Credit the Incomes and Gains”
  • 5. Regarding Capital & Drawings
    • Owner brings in “capital” to business:
    • Cash a/c debited (<<< money in)
    • Capital a/c credited (>>> money out)
    • Incase of Drawings, Owner of business take away cash or goods in any form
    • Drawing a/c debited (<<< money in)
    • Cash/ Goods a/c credited (>>> money out)
  • 6. Regarding Transactions Relating to Goods and Assets
    • Goods are bought in
    • Goods/ purchase a/c debited (<<< debit what comes in)
    • Cash a/c credited (>>> credit what goes out) or
    • A’s Personal a/c credited (>>> money out) -> if goods purchased from the particular person A
  • 7. Cont’d…
    • When goods are sold, Goods are out of the business, so by rule no:2
    • Good Sales a/c credited (>>> credit what goes out)
    • B’s Personal a/c debited (<<< debit what comes in)
    • [Being goods sold to Person B ]
  • 8. Cont’d…
    • When goods are purchased are defective or damaged, they are returned back to the trader.
    • Purchase Return a/c credited (>>> credit what goes out)
    • C’s Personal a/c debited (<<< what comes in) -> [ Being goods returned to Person C]
  • 9.
    • When goods are defective and the customer returns them, by rule no: 2
    • Sales Return a/c debited (<<< what comes in)
    • D’s personal a/c credited (>>> what goes out)->[ Being goods returned by Person D]
  • 10. Note 1:
    • Hence only one goods account is not maintained in a business, in that case information on:
    • Purchases
    • Sales
    • Purchase Return
    • Sales Returns, etc
    • has to be maintained separately
  • 11.
    • Goods withdrawn for personal use:
    • when owner of the business takes away goods for personal use, it becomes necessary to pass an entry for an amount to the cost price of the goods.
    • Drawings a/c debited (<<< what comes in)
    • “ goods gone as drawings” a/c credited (>>>>what goes out)
  • 12.
    • Goods given in Charity:
    • Charity a/c debited (<<< what comes in)
    • Goods given for charity a/c credited (>>> what goes out)
    • Goods distributed as Samples for Advertisement
    • Advertisement a/c debited (<<< what comes in)
    • Goods gone for advertisement a/c credited (>>> what goes out)
  • 13.
    • Goods destroyed by fire:
    • “loss by fire” a/c debited (<<< what comes in)
    • “goods destroyed by fire” a/c credited (>>> what goes out)
    • Note: If goods are insured,
    • Insurance company a/c debited (<<<)
    • “goods destroyed by fire” a/c credited (>>>)
  • 14.
    • THANK YOU

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