Quick Reference Guide - Purchase of Fixed Assets through Cash Payment

Now let's come to a discussion on Journal Entry, Ledger Posting and related Reports/Statements in Final Accounts, when Fixed Assets are purchased by payment of Cash.

Affected Ledger Accounts :

  • Fixed Assets A/c - Debit

  • Cash A/c - Credit

Journal Entry :

Purchase of Fixed Assets by Cash Payment - Journal Entry

Ledger Posting :

  • Cash A/c - Credit Column

Purchase of Fixed Assets by payment of Cash - Posting in Cash Ledger

  • Fixed Assets A/c - Debit Column 

Purchase of Fixed Assets by Cash Payment - Posting in Fixed Assets Ledger
 Trial Balance :

  • Cash A/c - Debit column of Trial Balance.

    Debit column of Trial Balance(Cash A/c) will be decreased by the transaction amount.

  • Fixed Assets A/c - Debit column of Trial Balance.

    Debit column of Trial Balance(Fixed Assets A/c) will be increased by the transaction amount.

Purchase of Fixed Assets by Payment of Cash - effect on Trial Balance
Profit & Loss Account :

  • No effect on Profit & Loss Account.

Balance Sheet :

  • Cash A/c - under Current Assets in Assets side of Balance Sheet. 

    Cash A/c under Current Assets will be decreased by the transaction amount.

  • Fixed Assets A/c - under Fixed Assets in Assets side of Balance Sheet.

    Fixed Assets A/c will be increased by the transaction amount

Purchase of Fixed Assets by Payment of Cash - effect on Balance Sheet

Location: Cuttack, Odisha, India

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