Cash account. Dr Discount allowed. Dr To person's account Preparation ...
**Cash Account**
The cash account is a ledger account that records all transactions related to cash inflows and outflows. It is an asset account and is usually presented in the balance sheet. The cash account is used to track the movements of cash in the business, including cash received from customers, cash payments made to suppliers, and other cash transactions.
**Discount Allowed**
Discount allowed is a contra-revenue account that is used to record the amount of discount given to customers for early payment or other reasons. When a business offers a discount to its customers, it reduces the amount of revenue earned from the sale. This reduction is recorded in the discount allowed account.
**To Person's Account**
"To person's account" is a general term used to represent any individual or entity with whom the business has a financial transaction. It could refer to a customer, supplier, employee, or any other party. When a transaction occurs with a specific person or entity, a separate account is created in the ledger to record the details of that transaction.
**Preparation of Ledger**
To prepare the ledger for the cash account, discount allowed account, and person's account, follow these steps:
1. **Create a Cash Account Ledger**: Start by creating a separate ledger for the cash account. Write the account name "Cash Account" at the top of the ledger page.
2. **Record Cash Inflows**: Whenever cash is received, enter the details in the cash account ledger. Record the date, description of the transaction, and the amount received. Ensure that the cash inflow is recorded on the debit side of the cash account.
3. **Record Cash Outflows**: When cash is paid out, record the details in the cash account ledger. Write the date, description of the transaction, and the amount paid. The cash outflow should be entered on the credit side of the cash account.
4. **Create a Discount Allowed Account Ledger**: Next, create a separate ledger for the discount allowed account. Write the account name "Discount Allowed" at the top of the ledger page.
5. **Record Discount Allowed**: Whenever a discount is given to a customer, record the details in the discount allowed ledger. Write the date, customer's name, description of the transaction, and the amount of discount allowed. The discount allowed should be entered on the debit side of the ledger.
6. **Create a Person's Account Ledger**: Finally, create a separate ledger for the person's account. Write the name of the person or entity at the top of the ledger page.
7. **Record Transactions with the Person**: For each transaction involving the person, record the details in their respective ledger. Write the date, description of the transaction, and the amount involved. Depending on the nature of the transaction, it may be recorded on either the debit or credit side of the ledger.
By following these steps, you can prepare the ledger for the cash account, discount allowed account, and person's account. The ledger provides a detailed record of all transactions related to cash, discounts, and individual entities. It helps in tracking the financial position of the business and facilitates the preparation of financial statements.
Cash account. Dr Discount allowed. Dr To person's account Preparation ...
Cash a/c
Dr. Cr.
Date Particular J.F Amount Date Particular J.F Amount
To person
Discount allowed a/c
Dr. Cr.
Date Particular J.F Amount Date Particular J.F Amount
To person
Person a/c
Dr Cr.
Date Particular J.F Amount Date Particular J.F Amount
By cash A/C
By disc.all.a/c
please note that only real and personal accounts are balanced i.e. person A/C and cash A/C .
nominal account are not balanced i.e. discount allowed A/C.
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