Bought Plant and Machinery from Ramjee lal for the business for – ₹ 1,25,000 and an advance of ₹ 10,000 in cash is given.
Analysis of Transaction :
- increases plant and machinery (assets) by ₹ 1,25,000,
- decreases cash by₹ 10,000 and
- increases liabilities (M/s Ramjee Lal as creditor) by ₹ 1,15,000.
- Increases in assets are debited whereas
- decreases in assets are credited.
- increases in liabilities are credited.
debit to furniture account and with credit to Cash and Ramjee Lal’s account.
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