By Y P Singh
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Extra info for Accounting and Financial Management for I. T. Professionals
Dr. F. Dr. ) 5,000 900 2,000 2,000 Sales Return A/c or Return inward A/c To Shyam A/c (being goods returned by Shyam) 200 5 Salary A/c …Dr. To Outstanding salary A/c (being salaries remaining unpaid) 2,500 2,500 6 Prepaid Insurance A/c …Dr. To Insurance A/c (being insurance paid in advance) 1,500 Drawing A/c …Dr. To Cash A/c (being amount withdrawn by the proprietor) 2,000 Drawing A/c …Dr. ) 200 1,500 2,000 1,000 Charity A/c To Purchase A/c (being goods given as charity) …Dr. 800 Cash A/c …Dr. 800 Discount allowed A/c …Dr.
11,000 To M/s Chowdhry and Co. 11,000 (being purchase of goods from M/s Chowdhry and Co. on credit) March 10 Telephone Rent A/c …Dr. 500 To Bank A/c 500 (being telephone expenses paid by cheque) March 11 Typewriter A/c …Dr. 2,100 To Universal Typewriter Co. A/c 2,100 (being purchase of typewriter on credit) March 15 Ram A/c …Dr. To Sales A/c 12,000 12,000 (being goods sold to Ram on credit) Contd... T. F. …Dr. ) 2,000 To Sales A/c 2,000 (being sale of goods for cash) March 19 Drawing A/c …Dr. 1,500 To Bank A/c 1,500 (being withdrawal of cash for personal use by the owner) March 21 Cash A/c …Dr.
Thus accounts involved in given transaction are (i) Salary A/c and (ii) Cash Account Salary A/c is a nominal A/c and Cash A/c is a real A/c According to the rules of nominal A/c “Debit all expenses and losses, credit all income and gains”. For the business it is an expense, so debit it. Dr According to the rules of real A/c “Debit what comes in, Credit what goes out”. In this transaction, cash is going out from the business, so it should be credited. Cr Write first the name of account, which is debiting followed by name of account, which is crediting with prefix ‘To’.
Accounting and Financial Management for I. T. Professionals by Y P Singh