QUERY ABOUT ACCOUNTS

This query is : Resolved

umesh kumar (Querist)
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29 March 2023 HELLO SIR/MADAM MY FIRM IS PARTNERSHIP FIRM AND FOUR PARTNER IN THE FIRM ENCLUDING ME. SIR/MADAM FEW DAYS BACK I BOUGHT A NEW CAR AND FOR THIS SOME PAYMENT I PAID FROM FIRM ACCOUNT THROUGH CHEQUE AND SOME PAYMENT I PAID THROUGH CASH AND BALANCE PAYMENT I PAID THROUGH FINANCE WHICH I BORROWED FROM BANK WITH MY PERSONAL NAME BUT THE LOAN EMI IS DEDUCTING FROM MY FIRM ACCOUNT. PLEASE TELL ME HOW WE DO MAKE ENTERY IN OUR FIRM ACCOUNTS BOOK ?
KINDLY RESOLVE MY ISSUE EARLY AS POSSIBLE.

Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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10 July 2024 To record the purchase of the car in your partnership firm's accounts where some payments were made through firm account, cash, and personal finance, you can follow these steps:

1. **Payment from Firm Account (Cheque)**:
- Debit the "Car" account (Fixed Assets) with the total amount paid through the firm's account (cheque).
- Credit the firm's bank account for the same amount.

Example:
```
Car Account Dr. XXXX
To Bank Account (Firm) Cr. XXXX
```

2. **Payment in Cash**:
- Debit the "Car" account (Fixed Assets) with the amount paid in cash.
- Credit the petty cash or cash account of the firm for the same amount.

Example:
```
Car Account Dr. XXXX
To Cash Account (Firm) Cr. XXXX
```

3. **Payment through Personal Finance (Loan EMI)**:
Since the loan EMI is deducted from the firm's account, you should treat this as a personal expense initially paid by you and then reimbursed by the firm.

- Debit your personal loan account (representing the finance borrowed) for the EMI amount.
- Credit the firm's bank account for the EMI amount.

Example:
```
Personal Loan Account (Your Name) Dr. XXXX
To Bank Account (Firm) Cr. XXXX
```

4. **Record the Total Purchase Cost**:
Ensure that the total cost of the car (sum of all payments made) is properly recorded in the "Car" account under Fixed Assets.

5. **Partner's Capital Account Adjustment**:
- If the car is used for business purposes, it may affect the distribution of profits or losses among partners depending on the partnership agreement.
- Adjust the partners' capital accounts accordingly to reflect any personal contributions or expenses related to the car purchase.

**GST Implications** (if applicable):
- If GST is applicable on the purchase of the car, ensure to account for it correctly based on the GST rules applicable to your firm.

It's advisable to consult with your accountant or tax advisor to ensure compliance with accounting standards and tax regulations specific to your jurisdiction and business type. Keeping accurate records will help in maintaining transparency and compliance in your firm's financial reporting.