During a financial year, a business may experience thousands of transactions. It is the responsibility of an accountant to classify and record these transactions as well as to summarize the data in these transactions to create useful information. Every business transaction has two aspects. One aspect is debited while the other is credited. Both of the aspects have to be recorded in accounts appropriately. Accountants use the term debit for the entry to be placed on left side of an account and the term credit for entry on the right side of the same account.
Being a student of accounting, you are required to:
1) Recognize business transactions from the following mentioned events.
2) Analyze the business transactions thoroughly and determine its increasing or decreasing effects on the assets, liabilities, equity,revenues, or expenses of the business.
3) Explain these increasing or decreasing effects into debits and credits
Report on Business and non-business events of ABC Company
During XXX financial year
|1||ABC company sold goods of RS.10, 000 on account, agreeing to receive payment within 10 days after delivering the items.|
|2||Expenses incurred for the renovation of the new office of Rs.2, 000|
|3||Paid Rs.1,000 for the office equipment purchased on account|
|4||Expenses incurred by partner A on birthday party of his son worth Rs.20, 000|
|5||Laundry expenses by wife of partner B for Rs.1,500|
|6||The company borrowed Rs.60,000 from Partner A’s father and promised to repay the amount borrowed within one year|
|7||company issued shares of capital stock for Rs.30,000 cash to Partner B, his wife and son|
|8||Rs.95,900 is a revenue earned by the business during the year|
|9||Paid Rs.4, 000 cash for office rent.|
|10||Expenses incurred on foreign official trip by partner A Rs.35,000|
Note: It is compulsory to follow the given format for answering the discussion questions (one is done for you):
|Purchased office equipment of RS.10, 000 on account||Business transaction||Increased assets (office equipment) and liabilities (accounts payable||Dr. Asset and Cr. Liabilities|