Dual Entity Conceptm Types/Kinds of Accounts/Elements :: Problems and Solutions

Problem : 1

Which two elements/accounts are effected by the following transactions. Also state the nature/kind/type of the elements
  1. Started business with capital 75,000
  2. Bought furniture 10,000
  3. Bought goods for cash 20,000
  4. Bought goods from Ram on Credit 10,000
  5. Sold goods for cash 15,000
  6. Sold goods to Shyam on credit 5,000
  7. Returned goods to Ram 1,000
  8. Goods Returned from Shyam 500
  9. Goods taken by Proprietor for his personal use 1,000

Solution »

  1. Capital a/c

    Person
    Cash a/c

    Tangible aspect/Asset
  2. Furniture a/c

    Tangible aspect/Asset
    Cash a/c

    Tangible aspect/Asset
  3. Goods a/c

    Tangible aspect/Asset
    Cash a/c

    Tangible aspect/Asset
  4. Goods a/c

    Tangible aspect/Asset
    Ram a/c

    Person
  5. Cash a/c

    Tangible aspect/Asset
    Goods a/c

    Tangible aspect/Asset
  6. Goods a/c

    Tangible aspect/Asset
    Shyam a/c

    Person
  7. Goods a/c

    Tangible aspect/Asset
    Ram a/c

    Person
  8. Goods a/c

    Tangible aspect/Asset
    Shyam a/c

    Person
  9. Goods a/c

    Tangible aspect/Asset
    Drawings a/c

    Person

Problem : 2

Name the two elements/accounts effected by the following transactions. Also state the nature/kind/type of the elements
  1. Paid cash to Ram 5,000
  2. Received cash from Shyam 3,000
  3. Wages Paid 750
  4. Rent Received 2,000
  5. Cash taken by proprietor for his personal use 2,500
  6. Purchased stationery 300
  7. Received interest 800

Solution »

  1. Ram a/c

    Person
    Cash a/c

    Tangible aspect/Asset
  2. Cash a/c

    Tangible aspect/Asset
    Shyam a/c

    Person
  3. Wages a/c

    Expense
    Cash a/c

    Tangible aspect/Asset
  4. Cash a/c

    Tangible aspect/Asset
    Rent Received a/c

    Income
  5. Cash a/c

    Tangible aspect/Asset
    Drawings a/c

    Person
  6. Cash a/c

    Tangible aspect/Asset
    Stationery a/c

    Expense
  7. Cash a/c

    Tangible aspect/Asset
    Interest Received a/c

    Income
To avoid ambiguity regarding what information the account head provides, it is always appropriate to use additional words to specify the nature of information. Note such usage in case of the following above
  • Rent may indicate either rent received or rent paid
  • Interest may indicate either interest received or interest paid
Where we do not specify by using a suffix, we assume that account head to represent an expenditure. This is just a convention and not a rule.

Problem : 3

What are the two elements/accounts effected by the following transactions. Also state the nature/kind/type of the elements
  1. Paid Cash into Bank 25,000
  2. Withdrawn from bank 5,000
  3. Paid to Ram by Cheque 3,500
  4. Received a cheque from Shyam 2,700
  5. Purchased Machinery and paid by cheque 12,000
  6. Salary paid by cheque 4,500
  7. Commission received by Cheque 7,200
  8. Withdrawn from bank for office expenses 5,000
  9. Withdrawn from bank for personal use 3,000
  10. Advertisement expenses paid by cheque 5,000

Solution »

  1. Bank a/c

    Organisation
    Cash a/c

    Tangible aspect/Asset
  2. Cash a/c

    Tangible aspect/Asset
    Bank a/c

    Organisation
  3. Bank a/c

    Organisation
    Ram a/c

    Person
  4. Bank a/c

    Organisation
    Shyam a/c

    Person
  5. Machinery a/c

    Tangible aspect/Asset
    Bank a/c

    Organisation
  6. Bank

    Organisation
    Salary a/c

    Expense
  7. Bank a/c

    Organisation
    Commission Received a/c

    Income
  8. Bank a/c

    Organisation
    Office Expenses a/c

    Expenditure
  9. Drawings a/c

    Person
    Bank a/c

    Organisation
  10. Bank a/c

    Organisation
    Advertisement a/c

    Expense
To avoid ambiguity regarding what information the account head provides, it is always appropriate to use additional words to specify the nature of information.

Note such usage in case of the following above

  • Rent may indicate either rent received or rent paid
  • Interest may indicate either interest received or interest paid
Where we do not specify by using a suffix, we assume that account head to represent an expenditure. This is just a convention and not a rule.
  • Advertisement, since not specified is treated as an expenditure.