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Compound Entries

A Compound Entry consolidates multiple debits and/or credits into a single journal entry, affecting three or more accounts. It is convenient for recording group transactions, reduces repetition, and maintains the same date and explanation for all accounts involved. Common uses include payments for salaries, rent, utilities, and receipts from multiple debtors.

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Gurpreet Singh
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375 views2 pages

Compound Entries

A Compound Entry consolidates multiple debits and/or credits into a single journal entry, affecting three or more accounts. It is convenient for recording group transactions, reduces repetition, and maintains the same date and explanation for all accounts involved. Common uses include payments for salaries, rent, utilities, and receipts from multiple debtors.

Uploaded by

Gurpreet Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

✅ Features of Compound Entry

A Compound Entry combines multiple debits or credits (or both) into a single journal entry.
Here are its main features:

🔹 1. Involves More Than Two Accounts

Unlike simple entries (with one debit and one credit), compound entries affect three or more
accounts.

🔹 2. Combination of Debits and Credits

It may have:

• Multiple debits, one credit


• One debit, multiple credits
• Multiple debits and multiple credits

🔹 3. Single Journal Entry

Despite involving several accounts, it is recorded as one entry in the journal.

🔹 4. Convenient for Group Transactions

Used when multiple similar transactions happen at the same time—like paying multiple
expenses together, or receiving money from different customers.

🔹 5. Reduces Repetition

Avoids writing multiple simple entries for each item, making the journal more concise and
easier to read.
🔹 6. Same Date and Explanation

All accounts in a compound entry share the same transaction date and a common narration
(explanation).

🔹 7. Used in Day-to-Day Accounting

Frequently used for:

• Salary, rent, and utility payments together


• Receipts from multiple debtors
• Monthly expense payments

Would you like a table comparing Simple Entry vs Compound Entry?

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