Answer to Question #182420 in Accounting for Milan

Question

Debit Cash

Credit Other Financing Sources

• What does this journal entry mean?

Debit Expenditure

Credit Voucher Payable

• What does this journal entry mean?

Debit Cash

Credit Deferred Inflow of Resources

• What does this journal entry mean?

Debit Cash

Credit Tax Anticipating Note

• What does this journal entry mean?

Answer 1

The meanings of different journal entries are presented hereunder :

When funds are raised through financing resources like equity, debt or debentures, term loans etc, Cash is debited as it comes into the organization and the relevant financing resources are credited as they represent a liability.

 

When cash is not paid immediately towards an expenditure, a voucher payable can be issued. Expenditure, being a nominal account is debited and voucher payable is credited as it represents a liability. 

When cash is received against deferred inflow of resources, Cash is debited as it comes into the organization and Deferred Inflow of Resources is credited as it represents a liability. 

When funds are raised through the issuance of Tax anticipating notes, Cash is debited as it comes into the organization and Tax anticipating note is credited as it represents a liability.