Examples of Double Entry

Q: A fleet owner purchases delivery trucks on credit. The total credit purchase is of Rs. 50,00,000/-. All new trucks will be used in daily business operations and will not be sold for the next 10 years. The estimated life of trucks is 10 years. Explain in respect to the Double Entry System.

Ans: This is a credit purchase of trucks. For the transaction, there are two activities, one is credit purchase of the trucks and another is an addition in new inventory. Entries are in respective accounting ledgers.