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A Business Transaction Affects How Many Accounts Involved In It? When a Business Transaction takes place, it affects atleat two Accounts involved in a transaction. This is due to the fact that every transaction must have accounts on debit and credit in equal amounts. So, this is due to the Dual Aspect Concept applied in Accounting otherwise Accounting Equation can’t be equalized.

When Cash Is Received On Account / Credit, The Amount Is Recorded In Cash Debit Column And General Credit Column. As cash transactions are occurred frequently, so the amount of Cash Account is recorded specifically in cash debit column while another account is Accounts Payable which has fewer transactions in an accounting period, so the amount related to it is recorded in General Credit Column and it is a general amount column for the amounts of those accounts which occurs fewer times during the accounting period.

When Cash Is Received From Sales Then? When Cash is received from Sales , the amount is recorded in cash debit column and sales credit column. As cash transaction is frequently occurred, so the amount related to cash account is recorded in cash debit column, which is a special amount column. Similarly sales transactions are also occurred in large, so the amount of sales account is recorded in sales credit column and it is also a special amount column.

If an amount is recorded om the side of a T-Account or an Account depends upon two sides, i.e., either recorded on right side or left side of an account or a t-Account. (i) An Amount Recorded On The Right Side Of An Account An amount recorded on the right side of an Account is called credit side. For Liabilities , Owner’s Equity and Revenue , credit side is a normal balance side for these accounts but for Assets and Expenses , credit side is not a normal balance side and on such side these accounts’s balances decrease. Account balances of liabilities, owner’s equity and revenue increase on credit side. (ii) An Amount Recorded On The Left Side Of An Account An amount recorded on the left side of an account is called debit side. For Assets and Expenses, debit side is a normal balance side for these accounts but for liabilities, owner’s equity and revenue, it is a negative or unfavorable balance side i.e., opposite to normal balance side. Assets and expense account bala...

The Balance Of An Account Is Determined By Adding All Of The Debits, Adding All Of The Credits, And Then Subtracting The Smaller Sum From The Larger Sum The balance of an account is determined / found out / calculated by adding all of the debit amounts, adding all of the credit amounts and then subtracting the smaller sum from the larger sum. If the total of debits exceed the total of credits, then an Account is said to have a debit balance. Similarly, if the total of credits is greater than the total of debits, then an account is said to have a credit balance.

Office Supplies becomes Expense when these are consumed / used by the business during the accounting period. The adjusting entry to expense out office supplies is recorded by a debit to office supplies expense account and a credit to office supplies account as shown below:                                                              Office Supplies Expense a/c  XXX                                                                                                                  Office Supplies a/c  XXX         ...

If A Business Pays Cash / Bank On Account Then A Liability Account Is Decreased By A Debit When a business pays cash / bank on account / credit, then a Liability Account is decreased by a debit. For example, Mr. A is a sole proprietor of his own business. He paid cash of Rs. 10000 to supplier or vendor for merchandise purchased on account. What is the journal entry to show decrease in liability account. When, goods purchased on account, we debit Purchases Account and credit Accounts Payable Account . As the business pays cash for goods purchased on account, so we record the following entry as shown below:                                                          Accounts Payable a/c  10000                                        ...

Received And Paid Bill For Telephone Service Journal Entry When the company or corporation received bill for telephone service from supplier of telephone services, then it creates a Current Liability ( Utilities Payable Account ) for the corporation as the corporation still not paid to supplier of telephone services. Telephone Expense which is an example of Utilities Expense Account is also created. To make journal entry for received and paid telephone bill, we can record either one single entry or two journal entries i.e., One for received and other for paid telephone bill but the result will be the same under both ways. Example, A corporation received and paid telephone bill of Rs. 10000 for telephone services. What is the journal entry? Single Journal Entry Method:                                                     Telephone Expense a/c ...