loan taken and bank overdraft are not cash transactions, then why are they recorded in cash book..??
Dear Student,
We believe that your query concerns Simple Cash Book.
1) If a person raises loan from Bank, he is given money either in Cash or it is directly deposited in his Bank Account. The Journal entry for raising loan is:
Cash/Bank A/c Dr.
To Bank Loan A/c
2) Payment of Bank Overdraft results in decrease in cash in the office. The Journal entry for paying off bank o/d is:
Bank Overdraft A/c Dr. (Liability being reduced)
To Cash A/c
Hope this answers your query.
Keep posting for further doubts!!
We believe that your query concerns Simple Cash Book.
1) If a person raises loan from Bank, he is given money either in Cash or it is directly deposited in his Bank Account. The Journal entry for raising loan is:
Cash/Bank A/c Dr.
To Bank Loan A/c
2) Payment of Bank Overdraft results in decrease in cash in the office. The Journal entry for paying off bank o/d is:
Bank Overdraft A/c Dr. (Liability being reduced)
To Cash A/c
Hope this answers your query.
Keep posting for further doubts!!