Question
What is an Opening Entry? Give an example.
✓
Answer
Enterprises close their books of account at the end of each year. In this process nominal accounts are closed by transferring them to Profit and Loss Account. The balances of Personal and Real Accounts (under Traditional Approach for classification of accounts) and Asset, liability and Capital Accounts (under Modern Approach for classification of accounts) are carried forward to the next year. These balances become the opening balances of the next year. The first entry in the Journal is passed to record closing balances of the previous year. It is called Opening Entry. Following example will make it more clear:
Based on the above Balance Sheet, the Opening Entry will be:
Based on the above Balance Sheet, the Opening Entry will be:
Need a full question paper?
Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.
Explore more
Similar questions
Rectify the following errors assuming that suspension account was opened. Ascertain the difference in trial balance.
- Furniture purchased for ₹ 10,000 wrongly debited to purchase account as ₹ 4,000.
- Machinery purchased on credit from Raman for ₹ 20,000 recorded through Purchases Book as ₹ 6,000.
- Repairs on machinery ₹ 1,400 debited to Machinery account as ₹ 2,400.
- Repairs on overhauling of second hand machinery purchased Rs. 2,000 was debited to Repairs account as ₹ 200.
- Sale of old machinery at book value ₹ 3,000 was credited to sales account as ₹ 5,000.
Prove that the accounting equation is satisfied in the following transactions:
→| (₹) | ||
| i. | Brij Mohan commenced business with Cash | 1,00,000 |
| ii. | Bought goods for Cash | 60,000 |
| iii. | $\frac{1}{3}\text{rd}$ of the above goods sold at a profit of 20% on cost. Half the payment recieved in Cash | |
| iv. | Purchased typewritter for office use | 15,000 |
| v. | Purchased goods on Credit from X | 25,000 |
| vi. | Paid to X | 15,000 |
| vii. | Paid Salary | 3,000 |
| viii. | Received commission | 500 |
| ix. | Sold goods for Cash (Cost ₹ 50,000) | 60,000 |
Enter the following transactions in the Cash Book with Cash and Bank Columns∶
|
2016
|
|
|
June 1
|
Balance of Cash in Hand ₹ 12,000; Overdraft at Bank ₹ 1,500
|
|
June 2
|
Deposited into Bank ₹ 10,000
|
|
Sold goods for Cash ₹ 28,000 and paid half the proceeds into Bank
|
|
|
June 3
|
Purchased goods for ₹ 7,000 from Manoj & Co. on Credit
|
|
June 5
|
Received a Money Order from Suresh ₹ 500
|
|
June 8
|
Received ₹ 2,800 from Govind. Paid ₹ 1,000 into Bank
|
|
June 10
|
Received a cheque for ₹ 7,600 from Subhash in full settlement of ₹ 8,000 due from him
|
|
June 12
|
Settled the account of Manoj & Co. by payment of ₹ 6,600
|
|
half Cash and half by cheque
|
|
|
June 13
|
Cheque received from Subhash deposited into Bank
|
|
June 15
|
Paid for purchase of Machinery by cheque ₹ 20,000
|
|
June 16
|
Paid wages for the erection of above Machinery ₹ 1,000
|
|
June 17
|
Cheque issued for ₹ 6,000 in favour of Sachdeva & Co. for purchase of furniture
|
|
June 20
|
Purchased goods from Kalpna Garments for ₹ 10,500 on credit
|
|
Received a Bank Draft for ₹ 4,800 from Damodar & Co. in full settlement of ₹ 5,000 due from them. Sent the draft to bank
|
|
|
June 24
|
Bank issued a draft for ₹ 10,000 in favour of Kalpna Garments on our request. Bank charged ₹ 25 for issuing the draft. Account of Kalpna Garments was fully settled
|
|
June 26
|
Drew from bank for petty cash ₹ 100
|
|
June 28
|
Paid salary by cheque ₹ 6,000
|
|
June 30
|
Bank Charges ₹ 50 and Interest ₹ 1,620 charged by bank
|
|
Deposited into bank the entire balance after retaining ₹ 4,000 at office
|
Enter the following transactions in the Journal of Govind:
| 2023 | ₹ | |
| June-01 | Govind invested capital in cash | 1,00,000 |
| June-3 | Purchased goods from Harsh | 10,000 |
| June-5 | Purchased goods for cash | 8,000 |
| June-8 | Purchased goods from Manoj for cash | 7,000 |
| June-10 | Sold goods to Kunal on credit. | 2,000 |
| June-12 | Sold goods to Neeraj for cash | 1,500 |
| June-14 | Goods returned by Kunal | 500 |
| June-16 | Goods returned to Harsh | 360 |
| June-18 | Machinery purchased from Sonu | 8,000 |
| June-19 | Paid to Harsh on account | 5,000 |
| June-25 | Cash withdrawn for Personal use | 5,000 |
| June-30 | Old newspapers sold | 200 |
| June-30 | Received loan from Manish and deposited in bank | 50,000 |
Enter the following transactions in Two-column Cash Book of Gaurav, Delhi:
| 2019 | ₹ | |||
| April 1 | Opening Balance of Cash in Hand | 1,00,000 | ||
| Opening Balance of Bank Overdraft | 5,00,000 | |||
| April 2 | Sold goods for cash, including CGST and SGST @ 6% each | 4,48,000 | ||
| April 3 | Sold goods including CGST and SGST @ 6% each against cheque and paid into bank the same day | 3,36,000 | ||
| April 5 | Sold goods to Reema, including IGST @ 12% | 1,12,000 | ||
| April 6 | Ram paid by cheque | 78,000 | ||
| Discount allowed | 2,000 | |||
| April 7 | Bought goods from Rahul, Gurugram for ₹ 40,000 plus CGST and SGST @ 6% each and paid him by cheque | 44,800 | ||
| Salary paid to staff by cheque | 2,20,000 | |||
| April 10 | Deposited into bank | 3,10,000 | ||
| April 11 | Received a cheque from Suresh and paid into bank | 1,28,500 | ||
| Discount allowed | 1,500 | |||
| April 15 | Received from R. Kumar a cheque for a full settlement of his account for ₹ 1,95,000 | 1,87,500 | ||
| April 18 | Paid wages in cash | 30,000 | ||
| April 20 | Bank charges, including CGST and SGST @ 6% each | 5,600 | ||
| April 22 | Withdrew from bank for office use | 1,00,000 | ||
| Withdrew from Bank for personal use | 1,20,000 | |||
| April 25 | Paid electricity bill by cheque | 31,500 | ||
| Issued a cheque in favour of Sudha as advance for purchase of house of Gaurav | 2,00,000 | |||
| April 26 | Received a cheque from Amar | 58,200 | ||
| Allowed discount to him | 1,800 | |||
| April 28 | Cheque received from Amar sent to bank | |||
| April 30 | Bank collected interest received on investments | 15,000 | ||
| Paid rent for the month of May, 2019, including CGST and SGST @ 6% each | 22,400 | |||
Prepare Bank Reconciliation Statement from the following particulars and show balance as per Cash Book:
- Balance as per Pass Book on 31st March, 2019 overdrawn ₹ 10,000.
- Cheques drawn in the last week of March, 2019 but not cleared till 3rd April, 2019 ₹ 20,000.
- Interest on bank overdraft not entered in the Cash Book ₹ 1,500.
- Cheques of ₹ 20,000 deposited in the bank in March, 2019 but not collected and credited till 3rd April, 2019.
- ₹ 100 Insurance Premium paid by the bank under a standing order has not been entered in the Cash Book.
- A draft of ₹ 10,000 favouring Atul & Co. was issued by the bank charging commission of ₹ 200. However, in the Cash Book entry was passed by ₹ 10,000.
What are types of Accounting?
On Checking Ram's Cash Book with the bank statement of his overdraft current account for the month of November 2014, you find the following:
- Cash Book showed an overdraft of ₹ 16,200.
- The payment side of the Cash Book had been undercast by ₹ 500.
- A cheque for ₹ 13,600 drawn on his saving deposit account has been wrongly recorded as drawn on current account in the Cash Book.
- Cheques amounting to ₹ 18,800 drawn and entered in the Cash Book had not been presented.
- Cheques amounting to ₹ 7,500 sent to the bank for collection though entered in the Cash Book, had not been credited by the bank.
- Bank charge of ₹ 150 as per bank statement of account had not been taken in the Cash Book.
- Dividend of the amount of ₹ 420 had been paid direct to the bank and not entered in the Cash Book.
Briefly explain the effects of dishonour and noting of a bill of exchange.
Prove that the Accounting Equation is satisfied in all the following transactions of Rajaram. Also prepare a Balance Sheet:
- Started business with Cash ₹ 1,20,000.
- Purchased a typewriter for Cash for ₹ 8,000 for office use.
- Purchased goods for ₹ 50,000 for cash.
- Purchased goods for ₹ 40,000 on credit.
- Goods costing ₹ 60,000 sold for ₹ 80,000 on credit.
- Paid for Rent ₹ 1,500 and for salaries ₹ 2,000.
- Received ₹ 800 for Commission.
- Withdrew for private use ₹ 5,000 in cash.