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What will be the accounting equation for receive a cheque from amit 6200 in full settlement of 6400 check deposited on the same date?
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What will be the accounting equation for receive a cheque from amit 62...
Understanding the Accounting Transaction
When receiving a cheque from Amit for ₹6200 in full settlement of a ₹6400 cheque deposited on the same date, we need to analyze the accounting equation and record the transaction appropriately.
Accounting Equation Overview
The accounting equation is expressed as:
Assets = Liabilities + Equity
This equation must always remain balanced.
Transaction Breakdown
- Cheques and Cash Flow:
- Received Cheque: You received ₹6200 from Amit.
- Deposited Cheque: A cheque worth ₹6400 was previously deposited.
- Settlement Difference:
- The difference of ₹200 indicates that the cheque from Amit represents a discount or a reduction in the original receivable.
Journal Entry
The journal entries to reflect this transaction will be as follows:
- Debit: Cash/Bank Account ₹6200 (increasing assets)
- Debit: Discount Allowed ₹200 (reducing equity)
- Credit: Accounts Receivable ₹6400 (decreasing assets)
Final Accounting Equation
After recording the entries, the accounting equation adjusts as follows:
- Assets:
- Cash/Bank increases by ₹6200
- Accounts Receivable decreases by ₹6400
- Equity:
- Discount Allowed decreases equity by ₹200
The equation remains balanced:
(6200 - 6400 + 200) = 0
Assets (Net Effect) = Liabilities + Equity remains intact.
Conclusion
This transaction reflects proper accounting practices, showcasing how to manage settlements and the impact on financial statements effectively.
When receiving a cheque from Amit for ₹6200 in full settlement of a ₹6400 cheque deposited on the same date, we need to analyze the accounting equation and record the transaction appropriately.
Accounting Equation Overview
The accounting equation is expressed as:
Assets = Liabilities + Equity
This equation must always remain balanced.
Transaction Breakdown
- Cheques and Cash Flow:
- Received Cheque: You received ₹6200 from Amit.
- Deposited Cheque: A cheque worth ₹6400 was previously deposited.
- Settlement Difference:
- The difference of ₹200 indicates that the cheque from Amit represents a discount or a reduction in the original receivable.
Journal Entry
The journal entries to reflect this transaction will be as follows:
- Debit: Cash/Bank Account ₹6200 (increasing assets)
- Debit: Discount Allowed ₹200 (reducing equity)
- Credit: Accounts Receivable ₹6400 (decreasing assets)
Final Accounting Equation
After recording the entries, the accounting equation adjusts as follows:
- Assets:
- Cash/Bank increases by ₹6200
- Accounts Receivable decreases by ₹6400
- Equity:
- Discount Allowed decreases equity by ₹200
The equation remains balanced:
(6200 - 6400 + 200) = 0
Assets (Net Effect) = Liabilities + Equity remains intact.
Conclusion
This transaction reflects proper accounting practices, showcasing how to manage settlements and the impact on financial statements effectively.
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What will be the accounting equation for receive a cheque from amit 6200 in full settlement of 6400 check deposited on the same date?
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What will be the accounting equation for receive a cheque from amit 6200 in full settlement of 6400 check deposited on the same date? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about What will be the accounting equation for receive a cheque from amit 6200 in full settlement of 6400 check deposited on the same date? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What will be the accounting equation for receive a cheque from amit 6200 in full settlement of 6400 check deposited on the same date?.
What will be the accounting equation for receive a cheque from amit 6200 in full settlement of 6400 check deposited on the same date? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about What will be the accounting equation for receive a cheque from amit 6200 in full settlement of 6400 check deposited on the same date? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What will be the accounting equation for receive a cheque from amit 6200 in full settlement of 6400 check deposited on the same date?.
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