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Previously, we already studied about, “ Journal Entries For Liabilities ” but, here we will study about Assets Accounting Journal Entries in the Book or Journal of the business of Company. Assets are resources of the business and these provide probable future economic benefits to the business. Asset are of two types: 1. Current Assets having one or less than one year life. Examples are Accounts Receivable , Cash , Inventory , Prepaid Rent , Accrued Revenue, Short-Term Investment, etc. Fixed Assets / Long Term Assets / Non Current Assets having life more tha n one year. These include Land & Buildings, Plant & Machinery, Furniture & Fixtures, Office Equipment like Mobile Phones Computers, Laptops, Chairs,etc, Long-Term Investments, etc. Before giving the example, you must understand the General Rule For Assets that is When Assets increases, we debit it and these decrease we credit it. However, the Normal or Favourable or Positive B...

Liabilities are the debts due payable by the business to outsiders, i.e., Suppliers, Bank, Financial Institutions, etc. There are two kinds of Liabilities: 1. Current Liabilities :- Examples include Accounts Payable / Creditors , Outstanding Salaries, Unearned Revenue, etc. and 2. Long-term Liabilities / Non Current Liabilities that include Bank Loans, Mortgage Loans, etc. If Your Are Interested In “ How To Enter Accounting Journal Entries For Assets ”, then you can Read it in order to get Information about this topic. The Accounting Journal Entries in respect of Current Liabilities and Non Current Liabilities are the same and the General Rule is that when Liabilities increase, we debit these one and when these decrease, we credit these one. Remember that, the Normal Balance or Favourable Balance of Liabilities is Credit and Unfavourable or Negative Balance is Debit. Now, let us consider an example in order to record Accounting Journal...

It is an Estimation either o n Sales (Income Statement-Approach) or  on Accounts Receivable  (Bala nce Sheet-Approach)  that some percentage of Accounts Receivable / Debtors or Sales may not be recovered from our customers in future. For More Details, You Ca n Study,  " How To Write Off An Uncollectible Accounts Receivable ". It is also called Provision for Doubtful Debts or Reserve For Doubtful Debts under British Accounting System. Do You K now  What Kind / Type of Account is Allowance For Doubtful Accounts? It is a Contra Asset Account which is deducted from the Closing Balance of Accounts Receivable on Balance Sheet . How To Calculate Allowance For Doubtful Accounts Or Estimated Bad Debts Expe nse / Doubtful Debts? For Example, if we sold goods to our Customers for Rs. 60000 on Credit Basis, then there are possibilities that some percentage of unpaid amount may not be recovered from Accounts Receivable, so as a precautiona...

Those Assets which are depreciated and these assets have Limited Useful due to the constant use in the daily business operations. Examples, are Furniture, Motor Vehicles, Machinery, Office Equipment Like Computers, Telephones / Mobile Phones, Fans etc., Explanation:   Depreciating Assets have Limited Useful Life i.e., 1 To 2 Years or withi n 5 Years Depending upon the Nature of the Assets, e.g., Furniture may have more Useful Life as compare to Motor Vehicles. These Assets are separated from Land, Property And Buildings as these are not so much used, so having Long Useful Life as compared to Furniture, Motor Vehicles, etc. You Can Also Read Out, “ Disposable of Depreciable Assets ” For Example, If the Motor Vehicle Costing Rs. 6200, having Residual Value 200 Useful Life of 2 Years, then, the Straight Line Depreciation on Motor Vehicle is recorded in the Journal / Book of Entrepreneur as shown below: Depreciation Expense - Mot...

A Non Current Asset / Fixed Asset may be disposed off at any time time during its Useful Life. When Assets disposed off, The disposal of Fixed Assets results in Gains, Loss and No Gains No Loss for the business. If the Book Value is more than the Cash Received, there is Gains / Profit On Sale of Assets. But, If Books Value is lesser than the amount of Cash Received, then Loss is the result on the sale of Fixed Assets. Sometimes, the Book Value is Equal to the amount of Cash Received, then Entrepreneur neither gains nor losses but, in fact, the Entrepreneur is at the Break Even Point on the Sale of Fixed Assets. The Entrepreneur may also sale the Fixed Assets in the market or exchange with new Fixed Assets in the market. This is called Exchanging or Traded In of Assets or Sale of Old Assets And Buying  New Assets of the Same  Nature, i.e., Selling Old Machinery and Buying New Machinery, etc. 1. There are three Cases When Fixed Assets Are Sold In The Market...

Now we are in a position to study about Prepaid Rent T Account which is a form of Ledger . Previously, we already studied about, “ Prepaid Rent Journal Entry ”. The Normal Balance of Prepaid Rent Account is Debit, however, when it increases, we Debit it and when it decreases, we Credit it. Now, Let us prepare T account of Prepaid Rent by considering a simple example. Suppose, an entrepreneur acquired a Office Building on Rental Basis. The entrepreneur paid Rent Rs. 20000 on monthly basis. The entrepreneur paid Rent for 18 Months. Now, during the Current Accounting Period, the entrepreneur has used the benefits for 12 Months but for remaining 6 Months, the benefits are still not received by the business, so these 6 Months’s Rent is Prepaid Rent. We Record the following Accounting Journal Entries, when entrepreneur paid Rent For 18 Months as shown below: (Assuming That The Prepaid Rent Initially Recorded As An Asset) When Rent Paid:   ...

It is the process of Recording Business Transaction Chronologically (Date-Wise) in the Book or Journal of business. There are Different Types / Kinds of Journal Entries  used in accounting.  In a Journal Entry, one side is called Debit and other side is named as Credit. Both sides are equal in monetary value but shows different Nature of Accounts / Kinds of Accounts . For Example, if Mr. A invested Rs. 700000 into the business. This is a Business Transaction in which two accounts are involved. One account is Cash and other account is Capital. Cash is increasing by Rs. 700000, as it is brought into the business, so it is debited while Capital is also increasing as it is the right of owner that is invested into the business, so it will increase the Cash as a Current Asset ( Rs. 70000) of the business.   The following Accounting Journal Entry is passed in The Book / Journal of Business as shown below:         ...

A Contra Asset is the reversal of an Asset Account  or  Negative Assets Accou nt  because it is deducted from its closing balance in the Balance Sheet . Best Examples for Co ntra Asset Accou nts or  Negative Assets Accou nts are   Allowance For Doubtful Debts Accounts And Accumulated Depreciation. It is created to adjust the balance of An Asset on the happening of an event. For Example, the debts due from few customers may be recoverable or not. So, a provision / allowance for doubtful debts is created in order to provide true information related to collectibles and uncollectibles of the business. Contra Asset Account provides fair and true information to the Users of Financial Statements as they get the Net Value of Assets that actually an entrepreneur or a company owns and controls to provide probable future benefits to the business. What happens if Contra Asset Account is not Reported on Income Statement Or Balace Sheet? ...

We already studied about Depreciation Definition in our previous article, but here we will record the Accounting Journal Entry For Depreciation in book of Entrepreneur. When Fixed Assets / Non Current Assets  are purchased by the business for Cash or on Credit Basis, then Assets need to be depreciated in order to find its usefulness in the business. So, depreciation method is decided and depreciation is charged on assets per annum within the useful life of assets. For Example, An Office Equipment bought by the business for Rs. 82000, residual value is Rs. 2000, useful life is 5 years, then by applying straight line depreciation method, we get the following Depreciation Expense in the current year as shown below: Depreciation Expense - Equipment a/c 16000                                                         Ac...

Depreciation Schedule is the part of Fixed Assets schedule which shows detailed information about Fixed Assets / Non Current Assets i.e., Name of Assets, Date of Purchase, Cost, Written Down Value, Useful Life. a nd Depreciation like  Depreciation Methods, Depreciation Expense and Accumulated Depreciation deducted within the Useful Life of Fixed Assets. Depreciatio n Schedule shows the Depreciation Expense for various Fixed Assets / Non Current Assets over the Useful Life of Assets. You Can Also Check Out This Useful Article, “ How To Calculate Depreciation ” The Format of Fixed Assets And Depreciation Schedule Note: The Original Cost For Furniture is Rs. 53000, For Equipment = Rs. 72000, For Machinery = Rs. 95400 and For Buildings = Rs. 710000. Residual Value For Furniture = Rs. 3000, For Equipment is Rs. 2000, For Machinery Rs. = 5400, and salvage value for Building = Rs. 10000. The Rate of Deprciation is calculated as: 1...