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Category Archives: Accountancy

A business may allow or receive a discount at the time of full and final settlement of the accounts of debtors or creditors.  Journal Entry: … Read More
Transactions related to the purchase and sale of goods can be of two types, Cash or Credit.  A. Cash Transactions: Cash transactions are those transactions… Read More
After closing all the books at the end of a financial year, every business starts its new books at the beginning of each year. Closing… Read More
Assets (Machinery, Building, Land, etc.) can also be purchased or sold in cash or on credit. Assets purchased are not represented through Purchases but with… Read More
Outstanding expenses are those expenses that are related to the same accounting period in which accounts are being made but are not yet paid. Journal… Read More
The proprietor can charge interest on the amount invested by him/her in the business as capital, which is shown as Interest on Capital. Journal Entry: … Read More
An income that has been earned but not yet received in the current financial year is called Accrued Income. Journal Entry:    Example 1: Commission… Read More
Such expenses which are concerned with the next financial year but have been paid in the current year are called prepaid expenses. Journal Entry:   … Read More
Any expenditure incurred in the erection or installation of any building or machinery or any type of asset is considered to be capital expenditure and… Read More
The amount withdrawn from the capital by the proprietor for personal use is called drawings. Businesses can charge interest on the amount of drawings. Journal… Read More
Bad Debts: When the goods are sold to customers on credit, there can be a situation where a few of them fail to pay the… Read More
A business can take an amount of money as a loan from a bank or outsider. In return, the business has to pay interest.  A.… Read More
Businesses can also provide loans to any person or entity. A. Loan is given to a person: Journal Entry:    Example: A loan of ₹5,000… Read More
Depreciation is the decrease in the value of assets due to use or normal wear and tear.  Journal Entry:    Example: Depreciation charged on machinery… Read More
Withdrawal of any amount in cash or kind from the enterprise for personal use by the proprietor is termed as Drawings. The Drawings account will… Read More

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