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Golden accounting rules application in sinking fund method

2527 views 1 replies

Hi,

I have been a basic finance professional but I am now appearing for CWA and find myself trying to read all journal entries in the light of the 3 golden accounting rules and get confused and can't step ahead. Please help me relate to the bigger concepts so that I don't have to cram up all the JEs.

For example, in the Sinking Fund depreciation method I should be

Debiting the P& L a/c and crediting the Depreciation a/c (i suppose i am taking out the money from the P & L a/c and allocating it to the depr. a/c), in that case should i not be debiting the Depr. a/c (Dr. the receiver) and crediting the P& L a/c (Cr. the giver)

Again, in the same method, i will be transferring the interest earned on investment to the Sinking fund a/c so I should be:

Debiting the Sinking fund a/c (Dr. the receiver) however, the text books actually show it differently:

Interest on Investment a/c  Dr.

       To sinking fund a/c

Please help me understand these entries, should i really be enforcing the 3 golden rules here??

Appreciate a detailed reply

I am also enclosing the complete workout of Sinking fund depreciation method.

Thanks,

seeker

 

 

 

 

 


Attached File : 829807 982104 depreciation fund method or sinking fund method of depreciation.doc downloaded: 236 times
Replies (1)

Being a student i can reply only this far.. check the attached file.. everything matches accordingly with the books...


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