Which of the following transactions would be recorded using a compound entry?
A compound journal entry is the journal entry in the accounting system where more than one account is debited or credited, i.e., when a transaction affects more than the three accounting heads. Show
Compound Journal Entry DefinitionA compound journal entry means a combination of two or more debits and credits in a single accounting entry Accounting EntryAccounting Entry is a summary of all the business transactions in the accounting books, including the debit & credit entry. It has 3 major types, i.e., Transaction Entry, Adjusting Entry, & Closing Entry. read more. It means it is a journal entry with the following combinations: –
As per the debits Debits Debit represents either an increase in a company’s expenses or a decline in its revenue. read more & credits, the rules include having a minimum of 2 accounts (1debit & at least 1 credit), listing debits before credits, & debit amounts always being equivalent to credit amounts. Professionals can merge different journal entries based on their professional judgment and experience. Combination journal entries may include depreciationDepreciationDepreciation is a systematic allocation method used to account for the costs of any physical or tangible asset throughout its useful life. Its value indicates how much of an asset’s worth has been utilized. Depreciation enables companies to generate revenue from their assets while only charging a fraction of the cost of the asset in use each year. read more, payroll, various items in a particular invoice, bank reconciliation ReconciliationReconciliation is the process of comparing account balances to identify any financial inconsistencies, discrepancies, omissions, or even fraud. At the end of any accounting period, reconciliation involves matching balances and ensuring that debits (credits) from one account for one transaction is same as the credit (debits) to another account for the same transaction.read more, a single transaction involving multiple components, etc. Table of contents
Key Takeaways
You are free to use this image on your website, templates, etc., Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked Compound Journal Entry ExamplesLet us understand the compound entry with examples: – Example #1ABC Ltd., on 31st March, has the following list of assets with depreciation amount to be charged in the books of account: Please pass the compound journal entry individually and in a compound format. Solution: The above data shows that compound entry saves time and energy, as more data can be presented concisely with better presentation. Example #2Mr. ABC admitted his son to a B-school for management studies and paid $90,000, including all the components. The list of the element of the same are as given below: – Please pass compound journal entries in the books of B-school individually and compounded ones. Solution: Advantages
Disadvantages
ConclusionCompound entry is a more efficient form of accountancy, enhancing the accountant’s productivity and leading to a better accounting presentation. Moreover, according to the standard and guidelines in a particular nation, the accountant can frame compound journal entries and optimize time and effort. Frequently Asked Questions (FAQs)What are the compound entry accounting examples? Credit card transactions, multiple petty cash purchases, business loan payments, payroll, and sales tax are some compound journal entry examples. What are the compound journal entry requirements? One must fulfill the two conditions to record a compound journal entry: the compounded transaction date must be the same, and the nature of these transactions must also be the same. What is the simple vs compound journal entry? In the accounting system, in a simple journal entry, one needs a debit account and the corresponding account to credit. In contrast, a compound journal entry includes more than two accounts. Recommended ArticlesThis article is a guide to Compound Journal Entry. Here, we discuss the Compound Journal Entry examples and their meaning, advantages, and disadvantages. You can learn more about financing from the following articles: – Which of the following transactions require a compound journal entry?To record collection of accounts receivable when a cash discount is taken. This is the correct option.
Which of the following is an example of a compound entry?Example of a Compound Entry
An example of a compound journal entry is a payroll entry, where there is a debit to salaries expense, another debit to payroll taxes expense, and credits to cash and a variety of deduction accounts.
What is the compound entry?A compound journal entry is an accounting entry in which there is more than one debit, more than one credit, or more than one of both debits and credits. It is essentially a combination of several simple journal entries.
Which of the following would require a compound journal entry quizlet?Which of the following would require a compound journal entry? To record collection of accounts receivable when a cash discount is taken.
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