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Identify the account to be debited and credited respectively for the following transaction. Raag commenced business with cash ₹ 1,00,000.?
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Identify the account to be debited and credited respectively for the f...
Accounting for Raag's Commencement of Business:

1. Introduction:
When Raag commenced his business with cash ₹ 1,00,000, it is necessary to record this transaction in the books of accounts. This transaction involves two accounts: Cash and Capital. The Cash account will be debited, and the Capital account will be credited.

2. Debit and Credit:
- Debit: An entry on the left side of an account is called a debit. It represents an increase in assets or expenses and a decrease in liabilities, equity, or revenue.
- Credit: An entry on the right side of an account is called a credit. It represents an increase in liabilities, equity, or revenue and a decrease in assets or expenses.

3. Account to be Debited:
The account to be debited is Cash. Cash is an asset account, and when Raag commences his business with cash, the Cash account will increase. This increase in cash will be recorded as a debit entry.

4. Account to be Credited:
The account to be credited is Capital. Capital represents the owner's investment in the business. When Raag commences his business, the Capital account will increase as he invests ₹ 1,00,000. This increase in capital will be recorded as a credit entry.

5. Journal Entry:
The journal entry to record Raag's commencement of business with cash ₹ 1,00,000 would be as follows:

Debit:
Cash ₹ 1,00,000

Credit:
Capital ₹ 1,00,000

6. Explanation:
The journal entry above debits the Cash account with ₹ 1,00,000, representing the increase in cash due to Raag's investment. The credit entry of ₹ 1,00,000 is recorded in the Capital account, representing Raag's capital contribution to the business.

The journal entry ensures that the accounting equation (Assets = Liabilities + Equity) remains in balance. The increase in assets (Cash) is balanced by an increase in equity (Capital).

This transaction establishes the initial capital of the business and records Raag's investment in the business. It is important to accurately record such transactions to maintain proper financial records and to track the owner's capital.
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Identify the account to be debited and credited respectively for the following transaction. Raag commenced business with cash ₹ 1,00,000.?
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