Capital Account

Details of certain accounts


1. Capital Account
The cash, property, and stock which is put into the trade at the time of starting the business by the owner of the business are called the owner's capital. This account is a personal account. According to Concept, the separate existence of business is considered as an Entity. Based on this concept, a separate capital account of the proprietor is opened in the books of trade. A capital account is considered an obligation of trade.

Example: Mukesh 55. Rs 500 Cash, Rs. 30,000 Furniture and Rs. 15,000 Started trading with the goods of Owner in business here. Total Capital 1. 00, 500 Rs. Therefore, the capital account will be credited from Rs.1, 00, 500.


Capital Account


2. Drawings Account 
The cash or goods withdrawn from the business by the owner of the business for his personal use are called withdrawals. Accounting for A separate withdrawal account is opened in books.

Example: Mukesh (Swami) Rs. 23,500 to buy a motorcycle for his personal use from business. Remove it.

3. Goods Account
Goods that a trader trades (buy and sell) are called Goods. Those items in the goods account. Are included which are purchased for the purpose of selling.

For example: If a computer trader purchases a computer, then it will be called goods for it and for this, a purchasing account will be opened. Conversely, if a computer trader buys furniture for business, do not write it in the purchasing account and in the furniture account. The property will be debited as the furniture has not been purchased for resale by the merchant.

 The 'goods' account can be divided into the following five parts:.

1. Purchase account

2. Sales account

3. Purchases Return account

4. Sales Return account

5. Stock account
(I) Opening Stock
(II) Closing Stock

4. Bad Debts
When a customer is declared insolvent, some amount of loan is not received from him. The amount that is not received is called Ashodhya or Debut debt. This is a loss for the business. This bad debt account will be debited as a nominal account and credited to the debtor account.

If some portion of this sinking amount is received later, it will be the profit of the business and this amount received is called Bad Debts Recovered. It is worth mentioning here that Bad Debts Recovered A / C will be deposited on receipt of the amount of bad debt, not the account of the debtor because the debtor's account is closed after sinking the amount.

5. Discount

There are two types of discount:

(I) TradeDiscount and

(II) Cash Discount

(1) Trade Discount: When the seller gives a discount to his customer at a fixed percentage rate on the list price of goods, it is called a trade discount. No separate journal entry is made of this discount. The amount of such discount is reduced from the actual value of the goods in the invoice or cash memo. This discount The main objective is to increase sales of goods.

(II) Cash Discount: For the purpose of getting fast payment, the discount is given by the trader to his debtors. It is called 'cash discount'. This account is a nominal account. When cash discount is received it is credited as income and when the discount is given to the debtors it is debited to the extent of the loss.

Difference between Trade Discount and Cash Discount



Difference basis
Trade discount
Cash discount
1
Meaning
This discount is given at the time of sale of the goods at the time of payment of the discount. A fixed percentage on the list is given.
This discount is given at the time of payment.
2
 Objective
Its purpose is to increase sales and its purpose is to get quick payment. it happens. it happens.
The aim is to get paid early.
3
Journal  entry
Indra accounting books for this discount. This discount is entered in the books of account as loss or gain.
This discount is entered in the books of account as loss or gain.


6. Sales Tax
When the merchant collects sales tax in addition to the sales amount at the time of sale of goods from its customers, the following entry is made:

Cash A / c Dr

To Sales A / c
To Sales Tax A / c
The amount received as sales tax is the obligation of the business, as the amount of sales tax received from the customers has to be deposited by the merchant in the government fund. Till this amount is deposited in the government fund, it is shown in the liability side of the letter as a liability for trade.

Casting totaling and Carry Forward

When one page of the Janel is filled, then both the mines of the money should be added and a straight line should be drawn. Add it It is called Lagana. Total car carried forward) is written in the description field in front of this pair. This means that the joint was moved forward. Total / r (brought forward) is written in the description field on the next page and names the amount in front of it. The name of the deposit and the amount of the deposit are written in the field of the deposit. This means that the previous page pair was brought forward.

When the entries for all transactions are finished, the Grand Total is written in the description field there and the amount is added to the fields. One line should be drawn above the total amount and two lines should be drawn below. This is called Casting.

Compound Entries: 
In the earlier pages, only two accounts have been affected in the journal entries which have been discussed, in which one account has been named and the other has been credited. Such an entry is called a general journal entry. If more than two accounts are named and credited in a transaction. Such an entry is called a mixed entry. Mixed entries are made under the following circumstances:

(1) When there has been more than one behavior on the same day, in which an account is equally affected (name or deposit) and. If the second account is affected differently, a mixed entry is made to save time and labor.

Such as: (a) Goods Purchased
1. 2,000 from Akhil. Of (FromAkhil Rs. 20000), 2. 2 by earning Rs 500 (From Arjun Rs. 2. 500, 3. From Jagdish to Rs. 1, 200) (From Jagdish Rs. 1, 200).

In this behavior, the accounts of Mal Khata, Ram, Rahim, and Albert have been affected. Goods account is a commodity account. Go according to the rule of this account. Name the item that comes in the trade. In this practice, Rs. 500 respectively from three different persons. 1, 500 And Rs. 2,000 The goods were purchased. is. Therefore, the goods (purchase) account is Rs.4,000. Is named from The accounts of Ram, Rahim and Albert are personal accounts. Of the rules of personal account. They collect the grain. In this practice, all three people are going to deliver the goods, so the accounts of Ram, Rahim and Albert have been deposited.

(B) Goods Sold
1. 2,000 to Avish. Of (To Avish Rs. 2, 000)
2. Rs. 3,000 to Dipesh Of (To Deepesh Rs. 3, 000)
3. 4, 000 to Trilok. Of (To Trilok Rs. 4, 000)

In this behavior, Avish, Deepesh and Trilok's account and goods account have been affected. Avish, Deepesh and Trilok accounts. Personal accounts. The recipient is named according to the rule of personal account. In this practice Avish, Deepeshand Trilok goods. These three persons are named by different zodiac. Goods account is a commodity account. According to the rule of objective account, the goods that go into business are deposited. In this practice goods have been sold, the goods have gone out of business, so the sales account has been credited.

(2) Practices in which more than two different accounts of nature are affected even if mixed entry is made. Eg: (A) Rs 950 in full payment to Piyush. Pay Rs 950 to Piyush Pay and 50 Received discount:

Piyush's account, cash account, and Batata account have been affected in this behavior. Piyush's account is a personal account. Name the recipient according to the rule of this account. In this practice, Ram is going to get cash, so Piyush's account has been named. A cash account is an objective account. According to the rule of this account, the goods go out of business. In this practice the cash amount is going out of business, so the cash account has been deposited. Bata khata is nominal account. According to the rule of this account, all the benefits and earnings are deposited. In this behavior, the discount is obtained. Hence the Batata account has been credited.

(B) Mayank went bankrupt 8. 00 Rs Only received and the remaining Rs. 2,00. Drowned -

Three accounts are affected in this behavior. The nature of the three accounts is also uneven. A cash account is an objective account. According to the rule of this account. Let's name the item that comes in the trade. In this practice, cash is coming into business. Hence the cash account is named. A bad debt account is a nominal account. According to the rule of this account, all the expenses and losses are named. There are bad credit losses in this practice, therefore. The bad debt account is named. Mayank's account is a personal account. According to the rule of this account, the person who gives the payer in this practice is the person giving the Mayank, so Mayank's account is deposited.

(C) Rs. 2,950 from Sandeep 50 and received Rs. Discounted:

In this behavior, the cash account, the Batta account, and the Sandeep account have been affected. The cash account is an objective account. Of objective account. According to the rule, the goods that come in the trade are named. In this practice, cash is coming into the business. Hence the name of the cash account. has gone. The discount account is a nominal account. According to the rule of this account, all the expenses and losses are named. has gone. This is a loss for the business. Hence the divided account is named. Sandeep's account is a personal account. According to the rule of this account. They submit to the giver. In this practice, Sandeep is about to give the amount. So the account of Sandeep has been deposited. '

Illustration (example) 1: Enter the following compound transaction into journal (with the following behavior in the journal. Make mixed entries.

2005
April 1 Anand started business with cash Rs. 40, 000, Furniture 5, 000 and Goods Rs. 3500.

April 10 Purchased goods from Sarvesh Rs. 11, 000 and from Vineet Rs. 7, 500.

April 15 Paid Salary Rs. 6, 000, Rent Rs. 1, 800, Wages 1, 500. .

April20 Cash Rs. 1, 500 and goods Rs. 1, 600 withdrew for personal use from business.

April 30 Paid to Sarvesh Rs. 10, 800 in full settlement.

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