Page 59 - DCOM101_FINANCIAL_ACCOUNTING_I

Unit 6: Preparation of Journal

During the purchase, the plant & machinery worth of ` 15,000/- is coming into the firm, in turn Notes

` 15,000/- worth of cash resources are going out of the firm. During the cash purchase, the assets
are moving from one entity to another viz. from business enterprise to supplier and vice versa.
6.3 Journal Entries in between the Accounts of two
different Categories

Transactions are in between the Real A/c and Personal A/c

This type of the transaction is mainly governed by one important principle that future relationship.
It major focuses on the maintenance of future relationship among the parities involved, till the
realization of the transaction is over.

Example: Goods sold to Gopal ` 15,000/-

Meaning: The goods were sold on credit to Gopal amounted ` 15,000.
In the given transaction, there are two different A/cs, viz. Real A/c and Personal A/c
During the sales, irrespective of nature, goods are moving out of the fi rm, which finally will reach

the individual Gopal. The goods, which are sold out to Gopal led to movement of goods out of

the firm. Any movement of asset should be referred only to the tune of Real A/c. The goods

which are going out of the firm could be recorded as transaction under the Real A/c, i.e. “Credit
what goes out”.
While recording the transaction, it should not be entered as Goods A/c. The reason for goods

going out of the firm is only due to sales which have to be registered in the books of accounts at
the time of entering the journal entries.
The second account which gets affected is the personal A/c of representations. The goods sold
out on credit led to register the receiver of goods who has not paid at the moment of sale. Gopal
is the individual received the goods on credit during the sales expected to make the payment as

per the terms of credit period. Till the maturity of the credit period agreed, the firm should wait
and collect the amount from the individual who is nothing but the receiver of goods.
Movement-out – Goods are moving out of the fi rm Credit what goes out
Real A/c Sales A/c
Receiver of benefi ts- Per- Receiver of the goods on credit with Debit the receiver
sonal A/c future relationship Gopal A/c
Next step is to record the journal entry
Gopal A/c Dr ` 15,000

To Sales A/c ` 15,000
(Being goods sold on credit to Gopal)

Transaction in between the Real A/c and Nominal A/c

Example: Office Rent paid ` 10,000
The two different accounts involved in the above illustrated transaction are the Rent A/c and
Cash A/c. It is because of the cash payment at the moment of making the payment of rent.

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