There are two types of Journal Entries. These are as under : –
(i) Simple Journal Entry : A Journal entry in which only two accounts are affected, i.e. one account is debited and the other account is credited , is known as simple entry.
For e.g. Raj started a business with cash of Rs. 50,000. In this transaction, the journal entry would be:
Cash A/c Dr 50,000
To Raj’s Capital A/c 50,000
In this journal entry only two accounts are affected, i.e. Cash A/c is debited and Raj’s Capital A/c is credited
(ii) Compound Journal Entry: Compound Journal Entry is a type of journal entry in which two or more account are debited & one or more account are credited or two or more account are credited & one or more account are debited
For e.g. ” Paid Rs. 7,000 to Suraj in full settlement of his account of Rs. 10,000″ . The journal entry for the transaction would be:
Suraj’s A/c Dr 10,000
To Cash A/c 7,000
To Discount Received A/c 3,000
In this journal entry Suraj’s A/c is debited while two accounts i.e. Cash A/c and discount received A/c are credited
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