Recording of Transactions - I

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A business transaction is an exchange of economic consideration between parties that has a two-fold effect (Give and Take aspect). Example: Purchase of a computer for ₹35,000 cash - involves giving ca…

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A source document or voucher is a document that provides evidence of a business transaction and forms the basis for recording in books of accounts. Examples: 1) Cash memo, 2) Invoice, 3) Sales bill, 4…

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Basic Accounting Equation: A = L + C (Assets = Liabilities + Capital). Derivative forms: 1) A - L = C (Assets - Liabilities = Capital), 2) A - C = L (Assets - Capital = Liabilities). This equation sho…

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The five categories of accounts are: 1) Assets, 2) Liabilities, 3) Capital, 4) Expenses/Losses, 5) Revenues/Gains. Each category follows specific debit and credit rules for recording increases and dec…

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For Asset Accounts: DEBIT = Increase in assets, CREDIT = Decrease in assets. Example: When cash is received, Cash A/c is debited (increase in asset). When cash is paid, Cash A/c is credited (decrease …

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For Liability and Capital Accounts: DEBIT = Decrease in liabilities/capital, CREDIT = Increase in liabilities/capital. Example: When capital is introduced, Capital A/c is credited (increase). When dra…

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For Revenue/Gains: DEBIT = Decrease in revenue/gains, CREDIT = Increase in revenue/gains. For Expenses/Losses: DEBIT = Increase in expenses/losses, CREDIT = Decrease in expenses/losses. Example: Sales…

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A T-account is the simplest form of an account that looks like the letter 'T'. Structure: Account Title with left side labeled 'Dr.' (Debit) and right side labeled 'Cr.' (Credit). It helps in recordin…