On which side the decrease in the following accounts will be recorded? Also mention the nature of account: 1. Cash 2. Bank Overdraft 3. Rent Paid 4. Salary Paid 5. Outstanding Rent 6. Prepaid Insurance 7. Manoj, Proprietor of the business.

Accounts Decrease Recorded at Side Nature i. Cash Credit Asset ii. Bank Overdraft Debit Liability iii. Rent Paid Credit Expense iv. Outstanding Rent Debit Liability v. Prepaid Insurance Credit Asset vi. Manoj, Proprietor of the business Debit Capital

On which side the decrease in the following accounts will be reco…

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Question

On which side the decrease in the following accounts will be recorded? Also mention the nature of account:

Cash
Bank Overdraft
Rent Paid
Salary Paid
Outstanding Rent
Prepaid Insurance
Manoj, Proprietor of the business.

✓

Answer

	Accounts	Decrease Recorded at Side	Nature
i.	Cash	Credit	Asset
ii.	Bank Overdraft	Debit	Liability
iii.	Rent Paid	Credit	Expense
iv.	Outstanding Rent	Debit	Liability
v.	Prepaid Insurance	Credit	Asset
vi.	Manoj, Proprietor of the business	Debit	Capital

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Show the effect of following transaction on the accounting equation:

a.	Manoj started business with (i) Cash (ii) Goods (iii) Building	₹ 2,30,000 ₹ 1,00,000 ₹ 2,00,000
b.	He purchased goods for cash	₹ 50,000
c.	He sold goods (costing ₹ 20,000)	₹ 35,000
d.	He purchased goods from Rahul	₹ 55,000
e.	He sold goods to Varun (Costing ₹ 52,000)	₹ 60,000
f.	He paid cash to Rahul in full settlement	₹ 53,000
g.	Salary paid by him	₹ 20,000
h.	Received cash from Varun in full settlement	₹ 59,000
i.	Rent outstanding	₹ 3,000
j.	Prepaid Insurance	₹ 2,000
k.	Commission received by him	₹ 13,000
l.	Amount withdrawn by him for personal use	₹ 20,000
m.	Depreciation charge on building	₹ 10,000
n.	Fresh capital invested	₹ 50,000
o.	Purchased goods from Rakhi	₹ 10,000

(Ans: Assets = Cash ₹ 2,42,000 + Goods ₹ 1,43,000 + Building ₹ 1,90,000 + Prepaid Insurouce ₹ 2,000 = ₹ 5,77,000; Liabilities = Outstanding Rent ₹ 3,000 + Creditor ₹ 10,000 + Capital ₹ 5,64,000 = ₹ 5,77,000)

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Explain how the following transactions would be recorded in a Cash Book with Cash and Bank Columns?
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On 31st March, 2019, the balance as per the Bank Statement was ₹ 10,000 debit. On the same date, outstanding cheques amounted to ₹ 30,000 and outstanding deposits amounted to ₹ 50,000. Also, there was a dishonoured cheque from a customer of ₹ 5,000 recorded in the Bank Statement but not in the Cash Book. On the basis of the above information, determine the balance as per the Cash Book.

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While trying to close his books for the year ended $31^{\text {st }}$ March, 2014, Mahesh found that the Trial Balance did not agree. He traced the following errors:
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Record the following transaction in the Purchases Book of Modern Furniture House, New Delhi assuming CGST @ 6% and SGST @ 6% and post it into Ledger:

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