This type of the transaction is mainly governed by one important principle that future relationship. It major focus on the maintenance of future relationship among the parties involved, till the realization of the transaction is over.
Goods sold to Gopal Rs.15,000.
Meaning: The goods were sold on credit to Gopal amounted Rs.15,000.
First, what are the various A/cs involved in the transaction ?
There are two different A/cs viz Real A/c and Personal A/c
How Real A/c and Personal A/c are considered for journalizing the entries?
During the sales, irrespective of nature, Goods are moving out of the firm, which finally will reach the individual Gopal. The goods, which are sold out to Gopal led to movement of goods out of the firm. Any movement of asset should be referred only to the tune of Real A/c. The goods which are going out of the firm could be recorded as transaction under the Real A/c i.e."Credit what goes out". While recording the transaction, it should not be entered as Goods A/c, Why ? Instead of recording as Goods A/c, which are going out of the firm should be mentioned only with reason of going out. The reason for goods going out of the firm is only due to sales; has to registered in the books of accounts at the time of entering the journal entries.
The second account which gets affected is the personal A/c of representations. The goods sold out on credit led to register the receiver of goods who has not paid at the moment of sale. Gopal is the individual received the goods on credit during the sales expected to make the payment as per the terms of credit period. Till the maturity of the credit period agreed, the firm should wait and collect the amount from the individual who is nothing but the receiver of goods.
Next step is to record the journal entry
Gopal A/c Dr Rs.15,000
To Sales A/c Cr Rs.15,000
(Being goods sold on credit to Gopal)
What are the two different accounts involved in the above illustrated transaction?
First one is the Rent A/c and another is Cash A/c only due to cash payment at the moment of making the payment of rent.
What is the nature of Rent A/c?
The Rent which is paid to the owner is an expense out of the benefits derived out of the asset during the previous month. In accordance with the Nominal A/c all the expenses are to be recorded, i.e. "Debit all the expenses and losses."
The second is in relevance with the cash payment which finally led to the movement of cash resources from the firm to the owner of the Asset. This mobility of the assets leads to movement - out which in connection with the Real A/c is the account for the assets.
Pass the following various journal entries.
Classification of transactions is being done only on the basis of preparing the ledger accounts. The accounts are classified on the basis of nature and characteristics.
How the account transactions are classified ?
The accounts are classified through the preparation of ledger.
What is meant by Ledger?
Ledger is nothing but preliminary book of accounting transactions at which, each account is separately maintained through the allotment of various pages for exclusive recording. The exclusive allotment of pages for every account to finalize their balances. Finally, ledger can be understood that is a document of grouping the transactions under one heading .
It is a fundamental book of accounts which mainly highlights the status of the accounts.
Example: Plant & Machinery’s ledger A/c should reveal the transactions of the sale & purchase of the plant and machinery.
How the transactions are recorded in the ledger ?
The journal entries which are recorded nothing but posting of the entries in the ledger book of accounts. Posting / entering the journal entries are routinely carried out immediately after the transactions.
Prior to discuss the posting of journal entries into the ledger accounts, every body should know the contents of the ledger. The ledger is segmented into two different categories.
Proforma of the Ledger Account Financial Account
Journal entries are divided into two categories viz
Once the journal entries are identified for classification, the entries should be recorded in accordance with the date order of the transactions in the respective pages.
While recording a transaction, normally a journal entry has got an impact on two or even three different accounts.
It is a process of recording the transactions under one group from the early process of journalizing. Without journalizing, ledgering is not meaningful. The process of ledgering involves with various steps. The process commences from only at the completion of journalizing and ends at the end of balancing of journal accounts.
Next step is to Balance the individual Ledger A/c:
How to balance the ledger A/c?
The individual ledger A/c may have more than two transactions during the specified period.
Post the journal entries into respective ledger accounts. And list out their accounting balances.
List out the various accounts which are involved in the enterprise during the year?
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