Common Types of Journal Entries :
There are the basic or essential
types of Journal entries and it is
usually used in Accounting. First entry
is called the Single entry and the other one is called the Double Entry and the
third one is Compound entry system then contra entry. I will discuss them one by one :
1.
Single Entry System :
It is that system in which business transactions are recorded as a single
instead of using Double entry . it is not an appropriate way for recording the
economic events because if we record transactions according to this system then
it is impossible for us to make trail balance. This system is usually focus on
cash receipt and cash payments. The perfect instance / example of single entry
system is Cash Book. This system does not consider Assets and liabilities. Using
Double entry system is more valuable or accurate for recording them rather than
single entry system.
1.
Double Entry System :
Furniture Account Debited with RS/-
3,000
Cash Account Credited with RS/-
3,000
Rims pay rent for RS/-7,000
Rent Account Debit with RS/-7,000
Cash Account Credit with RS/-7,000
In this entry assets is
increased in the form of furniture and assets
is decreased in the form of cash so it is a single entry.
3.
Compound Entry:
It is that type of entry which have more than one debit account and
more than one credit account. For instance we purchased building of RS/-4,000
and pay RS/-2,000 in cash and promise to pay the rest of the amount on next
day.
Building Account
Debit with RS/-4,000
Cash Account Credit with
RS/- 2,000
Creditor
Account Credit
with RS/-2,000
Another example of Compound entry is that supposed that Abdullah
had purchased computer of RS/- 8,000 in
which Marry has give him a concession/Discount of RS/-600 which he previously
billed.
Cash Account Debit with
RS/-7,400
Discount Allowed Account Debit with RS/-600
Abdullah
Account Credit with RS/-
8,000
So, in compound entry we will have more than one debit or credit
accounts.
4.
Contra Entry:
Contra entry is the entry which has two accounts named Bank Account and Cash Account or which
has impact on both accounts . it is write down for the purpose of
reversing the entry. If we recorded entry on debit side then we will
reversed this by recording it on credit side and if we recorded entry on credit
side and wants to reverse it then we will record it on debit side . For instance
Cash is withdraw from bank for personal expenses:
Cash Account
Bank Account
So, this is the contra entry
in which cash account has a impact on bank account. It is most commonly used in
cash book. It usually tell us withdraws from bank and deposits into bank.
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