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Analysis of Transaction by applying rules of Debit and Credit (Traditional Approach)

\begin{tabular}{|l|l|l|l|l|}
\hline
\textbf{S.No.} & \textbf{Transaction} & \textbf{Two aspects/Effects} & \textbf{Accounts Involved} & \textbf{Classification of Accounts} & \textbf{Rules Applied} \\
\hline
1 & Commenced business with cash 90,000 Rs & & & & \\
\hline
\end{tabular}



Answer :

GinnyAnswer
To analyze the transaction "Business commenced with cash 90,000 Rs" using the traditional approach of Debit and Credit, we can follow a step-by-step process:

1. Identify the Two Aspects/Effects:
- When the business starts with cash 90,000 Rs, two aspects are affected:
1. Cash increases.
2. Owner's Equity (Capital) increases.

2. Identify the Accounts Involved:
- The accounts involved in this transaction are:
1. Cash Account.
2. Capital Account.

3. Classification of Accounts:
- Each account needs to be classified to apply the correct rules of debit and credit:
1. Cash Account: This is an Asset account.
2. Capital Account: This is an Owner's Equity account.

4. Apply the Rules of Debit and Credit:
- According to the traditional rules:
1. For Asset accounts: Debit the increase, Credit the decrease.
2. For Owner's Equity accounts: Credit the increase, Debit the decrease.

- Applying these rules to the transaction:
- Cash Account will be debited because it increases (Debit the increase in an Asset account).
- Capital Account will be credited because Owner's Equity increases (Credit the increase in an Owner's Equity account).

Completing these steps in a tabular format:

[tex]\[ \begin{array}{|l|l|l|l|l|} \hline \text{S8. Transaction} & \text{Two aspects/Effects} & \text{Accounts Involved} & \text{Classification of Accounts} & \text{Rules Applied} \\ \hline \text{1. Commenced} & \text{Cash Increases} & \text{Cash Account} & \text{Asset Account} & \text{Debit the increase} \\ \hline \text{business with} & \text{Owner's Equity increases} & \text{Capital Account} & \text{Owner's Equity Account} & \text{Credit the increase} \\ \hline \text{cash 90,000 Rs} & & & & \\ \hline \end{array} \][/tex]

From the analysis, we have the following entry for the transaction:
- Debit: Cash Account
- Credit: Capital Account
- Amount: 90,000 Rs

So, the final journal entry for the transaction "Business commenced with cash 90,000 Rs" is:
```
Debit: Cash Account 90,000 Rs
Credit: Capital Account 90,000 Rs
```

This detailed analysis outlines the process of identifying the different aspects of the transaction, the involved accounts, their classifications, and the rules of debit and credit applied to arrive at the final result.