# Fixed Deposit Journal Entry

When a business has surplus cash it might chose to place it on deposit for a period of time in order to earn interest. The movement of cash from the bank current account to a fixed deposit account needs to be recorded using a fixed deposit journal entry.

For example, if a business owner has surplus cash of 4,000 and places this on deposit with a bank, then the bookkeeping journal entry would be as follows:

## Fixed Deposit Journal Entry

The accounting records will show the following bookkeeping entries for the fixed deposit.

Fixed deposit journal entry
Account Debit Credit
Fixed deposit account 4,000
Cash 4,000
Total 4,000 4,000

## Fixed Deposit Journal Entry Bookkeeping Entries Explained

Debit
The surplus cash placed in the deposit account is an asset, and is reflected in the accounting records by the debit entry.

Credit
The cash is removed from the cash account which is reduced by the credit entry.

## The Accounting Equation

The accounting equation, Assets = Liabilities + Owners Equity means that the total assets of the business are always equal to the total liabilities plus equity of the business. This is true at any time and applies to each transaction. For this transaction the accounting equation is shown in the following table.

Fixed Deposit Journal Entry and the Accounting Equation
Assets = Liabilities + Owners Equity
-Cash + Deposit =  None + None
-4,000 + 4,000 = 0 + 0

In this case, one asset (cash in the current account), is reduced by the credit entry as the cash is transferred to the deposit account. This is balanced by the debit entry, which increases another asset (cash in the fixed deposit account), to reflect the cash transferred from the current account.

The fixed deposit account is an asset and will be shown on the balance sheet as either current or non-current, depending on whether the term of the deposit is less than or more than one year from the balance sheet date.

## Popular mdct.ru Examples

The fixed deposit journal entry is one of many accounting journals, discover another mdct.ru example at the links below:

Fixed Deposit Journal Entry November 6th, 2016

## Related pages

accounting two column journalbasics of accounting for interviewbookkeeping basicsmeaning of operating cycledouble entry for accounts receivableexample of contra entryjournal entries for depreciationexcel annuityfreight expense accountingmaterial variances formulashow to calculate ddb depreciationdepreciation charges on fixed assetscash cover ratiois deferred revenue the same as unearned revenuecapital lease accounting journal entriescalculate gross margin formulagross profit formula calculatordepreciation reducing balance method exampleannuity formula proofinterest expense journal entryadjusting entries example problemssample excel accounting spreadsheetjournal entries for fixed assets accountingfair value journal entriesaccounts spreadsheet templatecost of goods manufactured equationdisposal of fixed assets definitionmarkup percentage equationwhat is discount allowed and discount receivedannuity tables present valuedefine accrued interestcommon size balance sheet formulacash vs accrual basis of accountingreorder point formulabookkeeping accounts payable and receivableje dividendfv calculator exceltvm equationcommon size income statementseffective interest amortizationperpetual inventory method definitionlc irrevocablecommon size income statement templatecontribution margin income statementcogs gross profitamortization calculator in excelentry of prepaid expensesformula for reducing balance depreciationcapital lease journal entries examplehow to depreciate fixed assetsfinancial ratios formulas excelis prepaid insurance an asset or liabilityproduct costing systemssalaries expense debit or creditcash flow balance sheet templatesuspense account and errorsdefinition of shrinkagecash count spreadsheethow do you prepare a trial balancejournal entries for accrualspartnership accounting journal entriescalculate ending work in process inventorypresent value annuity excelhow to calculate margin vs markupaccounting spreadsheet excelaccrude expensecalculate mirr onlinefinding payback periodfixed asset register exampleaccounting general journal examplescoupon rate bond calculatoraverage accounting rate of returnwhat is consignment in accounting