Identify the account to be debited and credited respectively for the following transaction. Raag commenced business with cash ₹ 1,00,000. (a) Cash account debited with ₹ 1,00,000 and Raag account credited with ₹ 1,00,000. (b) Cash account debited with ₹ 1,00,000 and Capital account credited with ₹ 1,00,000. (c) Capital account debited with ₹ 1,00,000 and Cash account credited with ₹ 1,00,000. (d) None of the above?

Question

Answer

Debit and Credit Accounts in Business Transactions

Introduction:
In accounting, every transaction has two aspects - debit and credit. Debit means to record an entry on the left-hand side of an account, while credit means to record an entry on the right-hand side of an account.

Debit and Credit Accounts for Raag's Business Transaction:
Raag commenced business with cash ₹ 1,00,000.

The correct account to be debited and credited for this transaction is:

- (c) Capital account debited with ₹ 1,00,000 and Cash account credited with ₹ 1,00,000.

Explanation:
When Raag commenced his business with cash of ₹ 1,00,000, he invested his own money in the business. Hence, the account to be debited is Capital account, which represents the owner's investment in the business. On the other hand, the account to be credited is Cash account, which represents the increase in cash balance due to the investment made by the owner.

Conclusion:
In business transactions, it is essential to identify the correct accounts to be debited and credited to ensure accurate recording of financial data. The proper use of debit and credit accounts helps in maintaining the accounting equation, which states that assets equal liabilities plus owner's equity.

Answer

Option B because when we make a journal of this statement, we write cash Account -dr-1,00,000
To capital account-1,00,000
because here cash is an asset for raag so cash Iis debited and capital is credited because raag invest the capital to company as we know that company is separate from the person so here capital is credited .....

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