IndigoLearn
Advance paid in advance
Sir when we pay rent or other expense 1000 in advance it going to dr of p/l acc so it is a net loss it will be transfer to balance sheet capital-net loss then asset side becomes rent advance and cash then how it will be tally sir its not tallying
Answers (5)
For instance, let's assume that Mr.X started a business with cash in hand of Rs.2,000, and as there is no liability at the beginning then according to accounting equation, Assets = Liabilities + Capital. So, Capital = Rs.2,000. When rent is paid of Rs.2,000, then cash in hand would be zero, then we will get it as shown in this attachment:
Its tallying on capital and liabilities side sir
Jashwanth S
CA Foundation
★ 2K+
26-Apr-20 10:59
In your example, if you had taken cash Rs.2,000 then you need to take capital too Rs.2,000 only then your answer would be right.
