AccountingBLOCK

I am a beginner and don't quite understand the logic of when an item is credited or debited.

I ran into a question in a book where it says:
A company purchases a land for 10,000

And then the book displays the T-account, where the left side is debited and the right side is credited.


T - CASH
__________________
| 10000



T - LAND
__________________
10000 |

How does this make sense? Since you are spending 10,000 how does Cash get credited and how is land debited 10,000?

Any help is appreciated. thanks in advance

__________________
Sean

Cash is a cuurent Assets. Every Assets will have debit balance, which means the balance brought down is on the debit side.

If the company Sold anything for Cash . The cash will increase. So it will have to record in the debit side of the cash book.

1) For Example if the company sold it's fixed asset, for example a computer for $1000 than the journal entry for this transection is

DR... Cash
CR... Computer or Fixed assets

In T accounts this transection will record like i mention in below

T- Cash
dr________________________cr_
Computer 1000|


T- Computer
dr________________________cr__
|Cash 1000




If the company purchase anything paying by cash that means the company is loosing cash, so that the cash will decrease because they are paying buy cash. So that the cash account sould be Credited.

2) For an example the company buy A new fixed asset for $2000 ,paying by cash. Than the journal entry for this is

DR... Fixed assets a/c
CR... Cash a/c

In the T accounts this transection will be recorded in the following way..

T- Fixed Assets
dr____________________________cr
Cash 2000 |


T- Cash
dr____________________________cr
|Fixed assets 2000



This is how the cash Purchase and Cash sales are to be recorded.


Lets assume that the both the transection 1 and 2 are occurd in th same year in the same company.
So lets record this two trasnection in the accounts

Lets assume that the Company has a cash balance of $4680 and Fixed Assets balance of $16000


T - Cash
dr______________________________________cr
Balance b/d 4680 |
|
Fixed Assets 1000 | Fixed Assets 2000
|
| Balance c/f 3680
_____ | ______
5680 | 5680
==== | ======
Balance b/f 3680 |


T - Fixed Assets
dr______________________________________cr
Balance b/d 16000 |
|
Cash 2000 | Cash 1000
|
|Balance c/f 17000
______ | _______
18000 | 18000
=====| ======
Balance b/f 17000 |


Why i have writtent all the balances in debit side is that these two accounts are related to Assets and every Assets have debit balances.

I think this will be enough for your question..

Thank you...