From the following transactions, briefly explain the dual aspects of each transaction:

  1. Capital introduced Rs. 5,00,000
  2. Loan taken Rs. 3,00,000

Asked by Topperlearning User | 9th Jun, 2016, 12:29: PM

Expert Answer:

  1. Capital introduced Rs. 5,00,000
  2. Here, the business is receiving cash, and therefore cash is debited. On the other hand, capital is a liability for the business, and hence it is credited. 
  3. Loan taken Rs. 3,00,000
  4. Here, the business is receiving cash by taking loan, and therefore cash is debited. On the other hand, loan taken will stand in the book as a liability because it has to be repaid on certain future date, and hence loan account (i.e. loan taken) will be credited.

Answered by  | 9th Jun, 2016, 02:29: PM