Savita (CA Final) (141 Points)
31 August 2010Please explain on what basis the entries are passed in account current, if possible from the point of view of both the parties i.e., one who renders the account and the other to whom the account is rendered.
Reasons for how the debit and credit is given ?
Thank you.
Faiz Ahmed
( Article Trainee)
(1731 Points)
Replied 31 August 2010
See all Account Current transactions are like normal debtor and creditor transactions. Remember one thing that Account Current is prepared by one party(Creditor for you) and contains transactions meant for you(so you are debtor for him).
Suppose there is a balance which is brought down (opening date) Rs 500 on Dr. side, it means that in Account Current(Prepared by your creditor) shows that you are debtor for Rs 500 on Dr side of statement. Similarly if any sales or interest becomes due on you, it will be shown on Dr. side of Account Current.
Now suppose if you make any sales, the party rendering the account will become debtor for you , since he is rendering the Account Current, he will show the transaction as purchases on Cr. Side. Similarly if any B/R is accepted by your opposite party,Dr. balance in the Account Current will come down. This B/R will be shown on Cr. Side to bring down your balance in the Account Current.
Suppose you are X and the opposite party is Y(he renders you Account Current , which is nothing but your A/c details in his books)
Main heading ---- X in Account Current with Y as at…….(date)
If sales is made by Y,
Shown as To sales in Account Current Statement( it means in Y’s books X’s Account shows debit balance with a opposite credit to sales A/c. Personal A/c rule is followed in debiting X’s A/c and Nominal A/c rule is followed in Crediting Sales A/c)
Similarly think on Credit side transactions of Account Current.
Hope you have understood. In case of any problem ask without any hesitation…
Santhosh Poojary
(SIEMPRE AHÍ PARA TI)
(15607 Points)
Replied 04 September 2010
| Originally posted by : Faiz Ahmed | ||
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See all Account Current transactions are like normal debtor and creditor transactions. Remember one thing that Account Current is prepared by one party(Creditor for you) and contains transactions meant for you(so you are debtor for him). Suppose there is a balance which is brought down (opening date) Rs 500 on Dr. side, it means that in Account Current(Prepared by your creditor) shows that you are debtor for Rs 500 on Dr side of statement. Similarly if any sales or interest becomes due on you, it will be shown on Dr. side of Account Current. Now suppose if you make any sales, the party rendering the account will become debtor for you , since he is rendering the Account Current, he will show the transaction as purchases on Cr. Side. Similarly if any B/R is accepted by your opposite party,Dr. balance in the Account Current will come down. This B/R will be shown on Cr. Side to bring down your balance in the Account Current. Suppose you are X and the opposite party is Y(he renders you Account Current , which is nothing but your A/c details in his books) Main heading ---- X in Account Current with Y as at…….(date) If sales is made by Y, Shown as To sales in Account Current Statement( it means in Y’s books X’s Account shows debit balance with a opposite credit to sales A/c. Personal A/c rule is followed in debiting X’s A/c and Nominal A/c rule is followed in Crediting Sales A/c) Similarly think on Credit side transactions of Account Current. Hope you have understood. In case of any problem ask without any hesitation… |
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Very Well Explained Bro...Thanks
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