Podcast
Questions and Answers
Chinti returns goods worth ₹6,000. Which of the following journal entries correctly reflects this transaction?
Chinti returns goods worth ₹6,000. Which of the following journal entries correctly reflects this transaction?
After Chinti returns goods worth ₹6,000, a cash payment of ₹4,000 is made to Chinti. Which journal entry accurately records this cash payment?
After Chinti returns goods worth ₹6,000, a cash payment of ₹4,000 is made to Chinti. Which journal entry accurately records this cash payment?
Chintu starts a business by investing ₹100,000 in cash. What is the correct journal entry to record this transaction?
Chintu starts a business by investing ₹100,000 in cash. What is the correct journal entry to record this transaction?
Chintu withdraws ₹2,000 in cash for personal use. How should this transaction be recorded in the journal?
Chintu withdraws ₹2,000 in cash for personal use. How should this transaction be recorded in the journal?
Signup and view all the answers
What is the fundamental accounting equation that underlies all double-entry bookkeeping transactions?
What is the fundamental accounting equation that underlies all double-entry bookkeeping transactions?
Signup and view all the answers
A company purchases raw materials on credit from a supplier. How would this transaction be recorded, according to accounting principles?
A company purchases raw materials on credit from a supplier. How would this transaction be recorded, according to accounting principles?
Signup and view all the answers
A business sells goods for cash. Which accounts are affected and how?
A business sells goods for cash. Which accounts are affected and how?
Signup and view all the answers
What is the correct journal entry when a customer returns goods that were initially sold to them on credit?
What is the correct journal entry when a customer returns goods that were initially sold to them on credit?
Signup and view all the answers
A company returns goods to its supplier that were initially purchased on credit. Which journal entry correctly reflects this transaction?
A company returns goods to its supplier that were initially purchased on credit. Which journal entry correctly reflects this transaction?
Signup and view all the answers
Which of the following best describes the fundamental accounting equation?
Which of the following best describes the fundamental accounting equation?
Signup and view all the answers
What is the correct accounting equation when goods are purchased for cash?
What is the correct accounting equation when goods are purchased for cash?
Signup and view all the answers
A business initially sold goods to a customer for ₹10,000 on credit. The customer later returned ₹3,000 worth of goods. Finally, the customer paid the remaining balance. What is the final debit entry when the cash is received?
A business initially sold goods to a customer for ₹10,000 on credit. The customer later returned ₹3,000 worth of goods. Finally, the customer paid the remaining balance. What is the final debit entry when the cash is received?
Signup and view all the answers
Which of the following is true regarding 'Return Inward'?
Which of the following is true regarding 'Return Inward'?
Signup and view all the answers
Flashcards
Debit
Debit
What comes into the business and indicates the receiver.
Credit
Credit
What goes out of the business and indicates the giver.
Purchases
Purchases
Buying goods for resale purposes in a business.
Sales
Sales
Signup and view all the flashcards
Goods Purchased for Cash
Goods Purchased for Cash
Signup and view all the flashcards
Goods Sold for Cash
Goods Sold for Cash
Signup and view all the flashcards
Sales Return
Sales Return
Signup and view all the flashcards
Purchase Return
Purchase Return
Signup and view all the flashcards
Goods Returned to Chinti
Goods Returned to Chinti
Signup and view all the flashcards
Cash Payment to Chinti
Cash Payment to Chinti
Signup and view all the flashcards
Starting a Business Entry
Starting a Business Entry
Signup and view all the flashcards
Withdrawing Money for Personal Use
Withdrawing Money for Personal Use
Signup and view all the flashcards
Debit vs Credit Concept
Debit vs Credit Concept
Signup and view all the flashcards
Study Notes
Journal Entries - The Basics
- Debit represents inflows or increases in account balances.
- Credit represents outflows or decreases in account balances.
- Debit records the receiver.
- Credit records the giver.
- Debit accounts for expenses and losses.
- Credit accounts for income and gains.
Goods
- Goods are items a business uses to generate revenue.
- Purchases refer to buying goods for resale.
- Sales refer to selling goods.
Goods Purchased for Cash
- Debit the Purchases account (expense).
- Credit the Cash account (asset).
- Example: Purchasing ₹10,000 worth of goods in cash: Debit Purchases ₹10,000, Credit Cash ₹10,000.
Goods Sold for Cash
- Debit the Cash account (asset).
- Credit the Sales account (income).
- Example: Selling ₹12,000 worth of goods in cash: Debit Cash ₹12,000, Credit Sales ₹12,000.
Goods Purchased on Credit
- Debit the Purchases account (expense).
- Credit the account of the supplier (liability).
- Example: Purchasing ₹10,000 worth of goods on credit from Priya: Debit Purchases ₹10,000, Credit Priya ₹10,000.
Goods Sold on Credit
- Debit the account of the customer (asset).
- Credit the Sales account (income).
- Example: Selling ₹12,000 worth of goods on credit to Priya: Debit Priya ₹12,000, Credit Sales ₹12,000.
Returns
- Purchase Return: Goods returned to the supplier.
- Sales Return: Goods returned by a customer.
- Return Outward: Goods going out (purchase return).
- Return Inward: Goods coming back (sale return).
Example: Goods Sold and Returned
- Transaction 1: Goods sold to Chintu for ₹10,000: Debit Chintu ₹10,000, Credit Sales ₹10,000.
- Transaction 2: Chintu returns ₹4,000 worth of goods: Debit Sales Return ₹4,000, Credit Chintu ₹4,000.
- Transaction 3: Cash received from Chintu for the remaining ₹6,000: Debit Cash ₹6,000, Credit Chintu ₹6,000.
Example: Goods Purchased and Returned
- Transaction 1: Goods purchased from Chinti for ₹10,000: Debit Purchases ₹10,000, Credit Chinti ₹10,000.
- Transaction 2: Goods returned to Chinti worth ₹6,000: Debit Chinti ₹6,000, Credit Purchase Return ₹6,000.
- Transaction 3: Cash payment to Chinti for the remaining ₹4,000: Debit Chinti ₹4,000, Credit Cash ₹4,000.
Starting a business
- Debit the Cash account (asset).
- Credit the Capital account (owner's equity).
- Example: Chintu starts a business with ₹100,000 in cash: Debit Cash ₹100,000, Credit Capital ₹100,000.
Withdrawing money for personal use
- Debit the Drawings account (owner's equity).
- Credit the Cash account (asset).
- Example: Chintu withdraws ₹2,000 for personal use: Debit Drawings ₹2,000, Credit Cash ₹2,000.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Learn the fundamental concepts of journal entries in accounting. Understand the debit and credit rules for assets, liabilities, and equity. Explore examples of recording cash and credit transactions for goods purchased and sold.
