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

| Sr. | Transaction | Two aspects/ Accounts Involved | Classification of Accounts | Rules Applied | Effects |
|----|---------------------------------------------------|---------------------------------|-----------------------------|---------------|---------|
| 1 | Commenced business with ₹90,000 cash | Cash A/C, Capital A/C | Asset A/C, Owner's equity | Debit increases, Credit increases | Cash increases, Owner's equity increases |
| 2 | Deposited ₹9,000 cash into Dena Bank | Cash A/C, Bank A/C | Asset A/C, Asset A/C | Debit increases, Credit decreases | Cash decreases, Bank balance increases |



Answer :

GinnyAnswer
Certainly! Let's analyze the transactions step-by-step using the traditional approach to accounting rules of debit and credit:

### Step-by-Step Analysis:

#### Transaction 1: Commenced business with 90,000 Rs cash

Two aspects/accounts involved:
1. Cash Account
2. Capital Account

Classification of Accounts:
- Cash Account: Asset
- Capital Account: Owner's Equity

Rules Applied:
- Increase in an asset account (Cash): Debit
- Increase in owner's equity account (Capital): Credit

Effects:
- Cash account increases by 90,000 Rs (Debit)
- Capital account increases by 90,000 Rs (Credit)

Journal Entry:
```
Cash A/C Dr. 90,000
To Capital A/C 90,000
(Being business commenced with cash)
```

After this transaction:
- Cash: 90,000 Rs
- Capital: 90,000 Rs

#### Transaction 2: Deposited 9,000 Rs cash into Dena Bank

Two aspects/accounts involved:
1. Cash Account
2. Bank Account (Dena Bank)

Classification of Accounts:
- Cash Account: Asset
- Bank Account: Asset

Rules Applied:
- Decrease in an asset account (Cash): Credit
- Increase in an asset account (Bank): Debit

Effects:
- Cash account decreases by 9,000 Rs (Credit)
- Bank account increases by 9,000 Rs (Debit)

Journal Entry:
```
Bank A/C (Dena Bank) Dr. 9,000
To Cash A/C 9,000
(Being cash deposited into Dena Bank)
```

After this transaction:
- Cash: 81,000 Rs (initial 90,000 Rs - 9,000 Rs deposited)
- Bank: 9,000 Rs
- Capital: 90,000 Rs (unchanged)

### Final Summary:
- Cash Account: 81,000 Rs
- Bank Account: 9,000 Rs
- Capital Account: 90,000 Rs

These balances represent the current financial position after both transactions have taken place.

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