Answer to Question #230035 in Management for ricky

Question

Mahesh wants to start his business and for that he decides that he will take loan for Rupees 7 Lakhs from the Bank of Baroda. He also decides to use his saving worth 3 lakhs in the bank account to start the business. Discuss how these two transactions will be recorded in the books of accounts by passing the relevant journal entries? How these transactions will be reflected in the Books of accounts (that’ is in the financial statements)? Lastly, conclude your answer by stating the applicability of which accounting assumption/s you did the above mentioned accounting treatment/ recognition and presentation in 

Answer 1

The loan acquired from the Baroda bank will be recorded in creditors ledger because it indicates how much the business owes to the bank. On the other hand, the savings used in the business will be recorded in tye general ledgers account because it's a fine of injection into tye business