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 :

Ledger Posting :

• Cash A/c - Credit Column

• Fixed Assets A/c - Debit Column 

 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.

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

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