Debit and Credit Ledger selection on Cash Deposit into Bank

Each and every Business uses Cash or Bank transaction for their Receipt and Payment activity.

Let's discuss,which Debit and Credit Ledger Accounts are involved in a transaction of Cash Deposit into Bank.

For an example,

Mr.Sanjay Gupta opened a Current Account with Indian Bank and deposited Cash for ₹5,00,000/- on dated.01/04/2020

Steps and Procedures for Decision making for Debiting and Crediting of Ledger Accounts of the above transaction.

Step - 1

At first,our work is to search for the Ledger Accounts involved in the above transaction.

As a result two Ledger Accounts are identified.

One is Indian Bank Current A/c,and another is Cash A/c

Step - 2

In second step, we have to find out the Type of Ledger Accounts involved by using either one of the Accounting Approach.

The above two Ledger Accounts mentioned in step-1 are related to type

Real Account(Indian Bank Current A/c) and Real Account(Cash A/c) in Traditional Approach.

Asset Account(Indian Bank Current A/c) and Asset Account(Cash A/c) in Modern Approach.
Step - 3

In third step,we have to look at the nature or flow of the Ledger Accounts involved by using either one of the Accounting Approach.

Indian Bank Current A/c comes in,to the business and Cash A/c goes out from the business in Traditional Approach.

Indian Bank Current A/c(Asset Account) increases and Cash A/c(Asset Account) decreases in Modern Approach.

 Step - 4

In fourth and final step,now it is time to place the Ledger Accounts in their respective column, i.e Debit Column or Credit Column by applying the Debit and Credit Rule using either one of the Accounting Approach.

Debit and Credit Rule
 As a result,Indian Bank Current A/c shows a Debit effect for ₹5,00,000/- and 

Cash A/c shows a Credit effect for ₹5,00,000/-

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