Mr Ram purchased an asset for his business in cash. He is of the view that cash account shall be recorded on the left side, as cash is an asset while asset account should be recorded on the right side as there is an increase in the asset. Which of the following is incorrect in this transaction?

Asset shall be recorded on the right side of the asset account.

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Cash shall be recorded on left side of cash account

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Asset account shall be debited

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Both a and b

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Solution

The correct option is D
Both a and b

Cash is always credited when cash is paid and asset is always debited when it is purchased.

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1. Total of payments side can be greater than total of receipts side in case of bank column.
2. Purchase of asset or stationery on credit is recorded in purchase book.
3. When goods are returned by buyer to seller, buyer sends a debit note.
4. Cheque received and deposited into bank on the same day is a contra entry.
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6. Interest on overdraft charged by bank is recorded in the cash column.
7. It is not necessary to record dishonor of cheques in the cash book.
8. Cheque book facility is available for fixed deposit account.
9. Businessman generally operates savings bank account.
10. A cash book is both a journal as well as ledger.
11. Cash book is a book of original entry.
12. Cash discount allowed is recorded on the debit side of cash book
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Mr Ram purchased an asset for his business in cash. He is of the view that cash account shall be recorded on the left side, as cash is an asset while asset account should be recorded on the right side as there is an increase in the asset. Which of the following is incorrect in this transaction?

The correct option is D Both a and b Cash is always credited when cash is paid and asset is always debited when it is purchased.

The correct option is D
Both a and b

Cash is always credited when cash is paid and asset is always debited when it is purchased.