Harish Kumar (IPCC) (475 Points)
18 October 2012
Why we Show Sale A/c in Cr. Side of Trial Balance
&
Purchase A/C in Dr. Side of Trial Balance
What are the logic behind on it......??
Pls explain it.......??
Jairam J
(CA, B.COM(Hons.))
(382 Points)
Replied 18 October 2012
This is not logic.. This is a Golden rule in Accounting..
Debit what comes in..Purchases - Goods comes in
Another way to look at it is debit all expenses.. when u r purchasing u incur expense
Credit what goes out..Sales -Goods goes out
Likewise Sales means income.. so u credit it..
Its like traffic rules..Ride on the left of the road..
Harish Kumar
(IPCC)
(475 Points)
Replied 18 October 2012
| Originally posted by : Jairam J | ||
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This is not logic.. This is a Golden rule in Accounting.. Debit what comes in..Purchases - Goods comes in Another way to look at it is debit all expenses.. when u r purchasing u incur expense Credit what goes out..Sales -Goods goes out Likewise Sales means income.. so u credit it.. Its like traffic rules..Ride on the left of the road.. |
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ok fine....
you giving me the information about the golden rule of accountancy it is applicable on Journal entry question like Purchases goods........Sold goods and so on......
but in case of Trial Balance question not mention as journal entry type......
In trial balance question we have given (nothing mention about DR. or Cr.)
Purchases Rs. 5400
Carriage Rs. 2000
Debtors Rs. 5000
Drawings Rs. 1000 & so on........
Now my question to you in such type of question how we can apply the golden rule of Accountancy
Prachi Srivastava
(Finance)
(368 Points)
Replied 18 October 2012
Ok my question to you on this query of yours.What is the meaning of purchases.Dont think of where it is asked. Just literal meaning of Purchases.
Anand Luhar
(Entrepreneur(CA/CWA Gold Medal))
(254 Points)
Replied 18 October 2012
there logic for it u should have know it at 11 class itself , no if u dont knwo it then its waste to study commerce and accounts further if i tell u know then it will spoon feeding open the book again and learn why ? how ? what ? all this be know to u
Deepak kumar sharma
(Govt. job)
(2946 Points)
Replied 19 October 2012
Logic is here
Debit = Credit
Assets = Liabilities
or Assets = equity+external liabilities
or Expenses+losses+Assets=Incomes+Gains+Liabilities
Trail balance is based on above equation. Trail balance is a statement which shows balance of different Accounts.
Assets and expenses shown at debit side and liabilities are shown at credit side. If both total does not tally then their is some mistake in ledger accounts.
Or
Purchase a/c shows debit balance so it shown in Dr. side of trail balance and sales a/c shows credit balance so its shown on credit side of trail balance
Same like Cash A/c is shown at debit side of trail balance because it always show debit balance.
Hope you satisfied
@VaibhavJ
(Believe!! Live your dreams!)
(33516 Points)
Replied 19 October 2012
Hi,
This is method of groupong all debits & credits under one head.
In Trail Balance we shows Debit at left side & Crdeits at right side.
You only think how it would look if we mix debits & credits.
Its jut way of organised presentation..
Hope you are cleared now..
Rgds//vaibhav
sandeep
(student)
(21 Points)
Replied 19 October 2012
I am also a cpt student,here is a question from mercantile law that.
What will happen to the contract which comes into existence on 30th sep 1932,as the indian contract law comes into operation on 1st oct 1932 ??? is it valid or not.....enforceable or not.??
Manjunatha M K
(Manager - Accounts)
(318 Points)
Replied 19 October 2012
Hi Harish,
Logic is like this:
At the end of the year you close all the your ledger accounts. At that time you find that some ledger shows Credit closing Balance (i.e.Credit Side is more) and some account shows Debit closing Balance (Debit side is more).
In Trail Balance the ledger account closing balance will be written on Debit column if it shows debit balance and vis a vis.
Shortcut:
All Income shows Credit Balance
All Expenses shows Debit Balance
All Assets shows Debit Balance
All liabilities shows Credit Balance
santosh sharma
(services)
(134 Points)
Replied 19 October 2012
| Originally posted by : sunitha balachandar | ||
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agreed with sunitha, this forum has been innovate to exchange the knowledge, whatever be its standard.
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Friend’s categorizations of golden rules are as under
Real A/c:
Dr what comes in and Credit what goes out
Personal A/c:
Debit the receiver and credit the giver
Nominal A/c
Debit all the expenses and losses and Credit all incomes and gains
If u wants to journalese any entry then, first think what type of a/c it is, then apply the golden rules
Hope this will benefit to you.
santosh sharma
(services)
(134 Points)
Replied 19 October 2012
| Originally posted by : sunitha balachandar | ||
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agreed with sunitha, this forum has been innovate to exchange the knowledge, whatever be its standard.
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KARANDEEP,CA,B.Com,CS FNL
(JOB)
(457 Points)
Replied 19 October 2012
| Originally posted by : Rakesh Mishra | ||
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Friend’s categorizations of golden rules are as under Real A/c: Dr what comes in and Credit what goes out Personal A/c: Debit the receiver and credit the giver Nominal A/c Debit all the expenses and losses and Credit all incomes and gains If u wants to journalese any entry then, first think what type of a/c it is, then apply the golden rules Hope this will benefit to you. |
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Good Answer Rakesh Ji,
One More think i would like to Add is that.....we get the closing balance of all the ledger and from there we prepare the final account.
Vijayalakshmi.K
(ICWA Final )
(324 Points)
Replied 19 October 2012
Harish Kumar, are you from commerce background or non-commerce..
CAclubindia
