ACCOUNTING FUNDAMENTALS
Q.1,2) WHAT IS DEBIT AND CREDIT EXPLAIN WITH EXAMPLE?
ANS: In accounting double entry was devloped LUCAPACIOLI of italy .Every accounting transaction has two aspects both of which are recoreded.
Every transaction has two sides
1)DEBIT
2)CREDIT
DEBIT: It is one of the aspect in a transaction ,which arises in the following Situations.
• Reciept of cash: cash must be debited..
• expenses must be debited.
• increase in assets:assest must be debited.
CREDIT: It is another part of the transaction ,which arises in the following Situations.
• Payment of cash:cash must be credited
• Incomes must be credited
• Increases in liability:liability has to be credited.
EXAMPLE:
1)CASH PAID TO Mr.X
Mr.X a/c…………DR xxxxx …………
TO cash a/c …….. xxxxxx
[here cash account is credited for payment]
2)ASSEST PURCHASED FOR 5000000
ASSEST a/c…………..DR 5000000 ……………
TO cash a/c ……………. 5000000
[here assest a/c is debited for increasing it is value]
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