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As Rent Paid In Advance / Prepaid Rent is an example of Prepaid Expenses which are Current Assets so, it affects asset side of Accounting Equation . Moreover, it also depends upon accounting systems which are followed by a business. 1. On Accrual Basis of Accounting System                               (Assuming That Prepaid Rent Initially recorded as an Asset)                                                    Prepaid Rent a/c  5000                                                                               Cash a/c  5000 ...

Furniture & Fixtures (which are Fixed Assets /   N on Current Assets ) are purchased and sold journal entries depend upon the use of these Assets whether these are purchased to use in the office or purchased for resale purpose as it is the main business’s product to sell on daily basis to its customers. These  are debits in trial balance as these have favorable balance on debit side of T-Account. 1. When Furniture & Fixtures Purchased or Sold for Office Use In that case, we purchase furniture & fixtures for use in the office as a fixed asset to carry on the daily routine of the business’days. The journal entry for purchase of new furniture & fixtures of Rs. 500000 is shown below:                                               Furniture & Fixtures a/c  500000           ...

Under the Allowance Method , estimated uncollectible accou nts receivables are credited to Allowance for Doubtful Accounts / Provision for Doubtful Debts as it is an estimation of total amount of sales made to customers that may be unpaid or remain uncollectible sales amount due to Bad Debt Expense as the customers may fail to pay on time or unable to pay due to insolvency. Allowance for doubtful accounts is a contra asset account which is deducted from Accounts Receivable / Debtors on balance Sheet in order to calculate the net realizable value of accounts receivable.

Basically, there are two types of Journal Entries related to the sale of Computer (C) or Laptop (L). 1. When Computer or Laptop Sale that was previously used in the office. In that case, we record the entry as in the case of Sale of Fixed Assets / N on Current Assets . In such a case, two types of business transactions are considered as shown below: (i) When the computer / laptop sold for cash / check or cheque, then either there is a gai n, loss or no gain no loss situation. Here we consider a situation of gain, then the entry would be as shown below:            Accumulated Depreciation - Computer / Laptop a/c  XXX Cash a/c /  B ank a/c  XXX                                                        Computer a/c / Laptop a/c  XXX    ...

Here we will study a bout the Journal Entry for the purchase of computer or laptop which is a Fixed Asset / N on Current Asset  (recorded as an asset in chart of account) and recorded on the balance sheet (Statement of Financial Position) in Accounting. There are two types of accounting journal entries related to the purchase of computer / laptop from the point view of business. 1. Purchase Computer / Laptop For Office Use Journal Entry If the purpose of purchasing computer / laptop is to use these in the office, then these become fixed assets / non current assets of the business. When the business purchased for cash / cheque or check, then following entry is recorded as shown below:                                      Computer a/c / Laptop a/c  XXX                        ...

Temporary And Permanent Accounts / Temporary Accounts VS Permanent Accounts Temporary Accou nt s are closed to Income Summary Accoun t  at the end of the accounting period / accounting cycle while Permanent Account s are transferred to Post-Closing Trial Balance and then to balance sheet and closed only on the Liquidation of the business. Temporary accounts show the profitable or earning activities of the owners of the business for the period while permanent accounts show the financial position of the business on particular time. Examples of temporary accounts are Revenues, Expenses, Gains, Losses while examples of Permanent accounts are Assets, Liabilities and Equity. Temporary accounts are shown only in A djusted Trial Balance while permanent accounts are also shown in P ost-Closing Trial Balance . Similarities B etween Temporary Accounts And Permanent Accounts B oth are the parts of Financial Statement s .   ...

Positive And Negative Balance / Amount In Accounting Part 1 - How To Show A Positive Balance In Accounting The positive balance of an Account is shown on the favorable side in the Ledger Account . Assets  such as your bank account shows positive balance on credit side as when you deposit cash into your bank account then it is an asset for you to pay bills and repays loan but it is a Liability for your bank as the bank has liable to pay you for the deposited money, and Expenses have usual / positive debit balance, so these are always show on the debit side in the ledger account while Revenues , Liabilities and Equity are shown on favorable credit side in the ledger account. We do not add any plus sign but it is understood that the account balance has a positive balance as it is recorded in its favorable side in the ledger account. For Example, Cash (a Current Asset ) is shown in the Trial balance in the Debit Column shows that cash has positive balance as cas...

A Positive (Plus or +) or N egative (Minus or -) mean that there is an increase in an Account or a decrease in an account. In other words, if there is a debit or credit favourable side for an account, then the amount of such account will be increased and if there is a debit or credit unfavourable side for an account, then the amount of such account will be decreased. Positive Sign shows that we add two or more debit amounts or two more credit amounts of Different Types of Accounts in a ledger account while negative sign shows we subtract two or more debit and credit amounts of different types of accounts. For example, the positive side for an Asset Account is debit, so when we add some debit amount in it , then, the resulted amount will increase the balance on debit side and it shows a positive sign in asset. It means that the amount is positive and also it will surely increase the value of asset on B alance Sheet . Example:- ...