Journal Entry for Depositing Rs. 5000 in Business Bank Account

In accounting, a journal entry is a record of a financial transaction in the accounting books. When you deposit Rs. 5000 into your business bank account, it reflects an increase in assets (bank account) and an increase in equity (owner's capital).

Standard Journal Entry

Date: YYYY-MM-DD

Account TitleDebit Rs. Bank Account 5000 Owners Capital/Equity 5000

Explanation:

Debit Bank Account: This increases your asset because you have more cash in your bank account. Credit Owners Capital/Equity: This increases your equity as it represents your investment in the business.

Alternative Journal Entries

If the Rs. 5000 is from personal savings and is being deposited into a business bank account, the journal entry would be:

Alternative 1

Account TitleDebit Rs. Bank Account 5000 Capital 5000

Explanation: This increases the bank account (an asset) and increases the capital (equity).

If the Rs. 5000 is business cash being deposited into a bank account, the journal entry would be:

Alternative 2

Account TitleDebit Rs. Bank Account 5000 Cash 5000

Explanation: This increases the bank account (an asset) and decreases the cash (an asset).

Another Perspective on Journal Entries

For a new investment or addition, the journal entry might be written as:

Bank a/c Dr. Rs 5000

To Capital a/c

Rs. 5000 deposited in business bank account as addition to capital

Another Way to Write It:

Bank A/c Dr. 5000

To Cash A/c 5000

Being cash deposited into the bank.

Reasoning Behind Traditional and Modern Approaches:

Traditional Approach: Cash and bank are tangible assets. The traditional approach considers both under the real account.

Rule of Real Account: Dr. what comes in, Cr. what goes out.

Modern Approach: The modern approach considers both under the asset account.

Rule of Asset Account: Dr. the increases, Cr. the decreases.

Understanding these different perspectives and approaches can help in accurately recording financial transactions in the accounting books.

For more detailed information on journal entries and accounting practices, refer to related resources.