Q.Journalise the following: 'Paid rent ₹15,000 and salary ₹22,000 by a single cheque of ₹37,000.' Explain why this needs a compound entry.

Two different expenses are settled by one single payment on one date — the textbook example of when a compound entry, not two separate entries, is used.

Since both Rent and Salary are being paid together, on the same date, out of the same single cheque, they are combined into one compound journal entry rather than being written as two separate journal entries for the same bank payment:

Reasoning: Rent A/c and Salary A/c are both Nominal Accounts representing expenses (debit all expenses); Bank A/c is a Real Account from which the amount goes out (credit what goes out). The entry has two debit accounts and one credit account — one valid form of a compound entry.

Check: Total debit (15,000 + 22,000) = ₹37,000 = Total credit — the compound entry balances exactly as a simple entry would.

Writing this as two separate journal entries (Rent Dr./To Bank, then Salary Dr./To Bank) instead of one compound entry — while not mathematically wrong, it misrepresents the transaction as two separate payments when it was actually one single cheque.