Leaning Online

A Transaction Should Be Journalized Only At The Time Of What? A Transaction should be Journalized only if it actually occurs i.e. at a time when it is actually occurred. All transactions are recorded in support of Source Documents such as Voucher, Invoice, Receipts, etc., which provides evidence of a transaction taken place between two or among more than two parties involved in a business transaction. For Example, On 13 th June, 2021, the ABC company received cash of Rs. 50000 for investment made in a Project of an Investment company, XYZ Company. Then the company issued a receipt, as an evidence of cash receipt, then this transaction is journalized on 13 th January, 2021 as it took place on that particular date. So, we record a business transaction at a time when it takes place and journalized it either in the Special Journal or in the Journal Proper / General Journal .

Journal Entry For Travelling Expenses Paid To Salesman / Sales Manager A salesman promotes company’s products through launching different campaigns and giving offers to buyers during his visit to different places. For meeting travelling expenses of salesman, who needs to go to these places and running these campaigns, the company paid travelling expenses to salesman. The journal entry to record for travelling expenses of Rs. 25000 paid to salesman for the period is shown below:                                                         Travelling Expenses a/c  25000                                                                                                 Cash a/c / Bank a/c  25000                                                                  (Travelling Expenses Paid To Salesman) Travelling expense is recorded in Income Statement as it is a Temporary Account . So, we can conclude that the entry to record travelling expense is made by a debit to travelling exp

Journal Entry For Cash Withdrawn By Owners From Business For Personal Use As Well As For Office Use Here, we record Journal Entries related to two aspects which are explained below: (i) Cash Withdrew From Business For Private Expenses / Personal Uses When the sole owners withdraws cash from business for their own personal use or private use, then Drawings Account is created for such transaction in order to treat this separately from business as it is related with the owners own personal use. Suppose, Mr. A withdrew Cash Rs. 50000 from his business for his own private expenses, then the entry to record is given below:                                                                     Drawings a/c  50000                                                                                              Cash a/c  50000                                                                 (Cash Withdrawn For Personal Use)   This transaction has no concern with business matter, so it

Cash Withdrew From Business For Private Expenses / Personal Use There may be, from time to time, the owners need to withdraws cash from business for their own personal use or private expenses. Such withdrawal is called Drawings in accounting. The entry to record for cash (e.g. Rs. 80000) withdrew from business for private expenses is shown below:                                                                           Drawings a/c  80000                                                                                                      Cash a/c  80000                                                          (Cash Withdrew From Business For Private Use) This type of transaction is treated as separate from business matters. So, we deduct the amount of drawings account from capital account. So, we can say that cash withdrew by sole proprietor, business owners or partners from business for any private or personal expenses are treated as separate from business matters

Journal Entry For The Payment Of Tuition Fees From Student’s Parents To Educational Institution When the parents paid tuition fees (e.g. Rs. 70000) to school, college, university or any educational institution for their students, then from the point view of parents, following entry is recorded as shown below:                                                                     Tuition Fees Expense a/c  70000                                                                                                                 Cash a/c / Bank a/c  70000                                                                                      (Tuition Fees Paid)   From the point view of education institution, it is a direct revenue. So, these institutions record the following journal entry as shown below:                                                                         Cash a/c / Bank a/c  70000                                                                                  

Is It Possible To Show Capital On Asset Side Of A Balance Sheet? Usually, the Capital Account Is Shown On Liabilities & Equity Side of a balance sheet. However, there are possibilities due to which  Capital Account is appeared on asset side of balance sheet. In that case, the capital account is called a negative capital account and it is not a good sign for the Stability of A Business as it has less capital to invest, to meet daily obligations and ultimately the business will surely face a heavy loss or even may be closed at the end. Such possibilities are shown below: (i) Due To Net Loss As the business suffered a Loss during the accounting period, so we get negative capital. In such case, the owners of the business must do serious steps to stabilize their businesses. For example, Mr. A is a sole proprietor has negative capital during the period. From his financial statements, we get the following information:                                                  Closing

Journal Entry For Tuition Fess Received / Earned And Deposited Into Bank Here, we will study about, ” Received Tuition Fees, which is an example of Service Revenue Account , by Educational Institutions i.e., Schools, Colleges, Universities, Academies, etc., From Students And Then Deposited Tuition Fees Into The Bank Accounts Of these Educational Institutions” . Tuition Fees Received On Account / On Credit At the start of the accounting period i.e., on 1 st September, 2020, when the educational institution started to provide educational services to students on account of Rs. 50000 and the students did not pay the tuition fees, then a Fees Receivable or Accounts Receivable account is created for school or education institution, as still the payment has not been received from students and it is a Current Asset for school institution. So, from the point view of school, following entry is recorded: (i) (Assuming Accrual Basis of Accounting System )                       Tuition

Are Adjusting Entries Affect Only Real Accounts Or Nominal Accounts? Adjusting Entries affect at least one Income Statement Account and one Balance Sheet Account. Income statement accounts include both revenues and expenses while balance sheet accounts consist of assets and liabilities. Adjusting Entries always affect revenues and expenses i.e., to match revenues with relevant expenses incurred in producing these revenues, and assets and liabilities to update balances of these types of permanent accounts. There are basically two types of adjusting entries i.e., Deferrals And Accruals . Deferrals are related with Prepaid Expenses and Unearned Revenues while Accruals are concerned with Accrued Expenses and Accrued Revenues. Example: Rent Expenses Paid in advance of Rs. 5000 for 5 months (Rs. 1000 paid for each month) on 1 st December, 2020, (Accounting Period Ended On 31 st December) is an example of prepaid expense, e.g., Prepaid Rent . We record the following adjusting en

Marketing Expense Is Which Type Of Account In Accounting No, Marketing Expense is neither a real account nor a personal account. Actually, marketing expense is a Nominal Account as it is an expense which is studied under nominal accounts (revenues & expenses). Real accounts are related with assets and liabilities’ accounts such as Cash, Accounts Receivable, Accounts Payable, etc., while personal accounts are related with natural or living persons such as Capital Account, Drawings Account, Mr. A Account (Personal Account of Sole Owner, Mr. A), etc. So, we can say that Marketing Expense is a nominal account but not a real or a personal account.

Here, we will study that whether the Advertising Expense is a Nominal Account A Real Account Or A Personal Account In Accounting. Since Advertising Expense is an expense recorded in Income Statement, so it is a Nominal Account whic h deals with revenues and expenses. For example, advertisement expense of Rs. 30000 paid for the promotion of business’ products or services is a nominal account. Advertising expense is not a real account as it is not related with assets and liabilities accounts. Advertising expense is also not a personal account as it does not belong to natural or living persons. So, advertising expense is a nominal account but not a real or a personal account. It is also a temporary account and An Income Statement Account as it is closed at the end of the accounting period.

Is Purchases Allowance A Nominal Account, Real Account And A Personal Account? In Accounting, Purchases Allowance is not a real account as in real accounts, assets and liabilities are studied i.e., Balance Sheet Accounts . Purchases allowance is also not a Personal Account . Actually, personal accounts are related with natural or living persons such as Mr. A’s account, capital account, equity account, etc. So, sales allowance is not related with personal account. Purchases allowance is related with nominal accounts, (theses a ccounts are related with revenue, gains, expenses and losses), as it is a Contra Expense Account which is deducted from Gross / Total Purchases in Income Statement. So, we can conclude that the purchases allowance is a nominal account but not a real account and personal account.

Sales Allowance Is Which Type Of Account? Sales Allowance is not a real account as it is not related with assets and liabilities accounts as these types of accounts are permanent accounts and recorded in Balance Sheet. Sales allowance is also not a personal account as it is not related with natural or living persons. Sales allowance is a Nominal Account as it is a Contra Revenue Account which reduces Gross Sales in Income Statement. So, sales allowance is a nominal account but not a real account and a personal account.