1- What do you mean by compound journal entry?

A compound journal entry is an accounting entry which effects more than two account heads. A simple
journal entry has one debit and one credit whereas a compound journal entries includes one or more
debits and/or credits than a simple journal entry. A compound journal entry may combine two or more
debits and a credit, or a debit and two or more credits, or two or more of both debits and credits

A compound entry is simply a combination of two or more simple journal entries but instead of
recording numerous simple journal entries it is better to record journal entries of single accounting
event as a compound entry because it saves time and keeps related debits and credits in one place.

Example
The following examples illustrate the format of a compound journal entry:

Example 1: On Jan 1, 2018 Company T purchased a computer costing 1,000 to a supplier and issued
a check of 3,400. The excess amount fully settles a previous amount owned by the company to the
supplier. This will be recorded as shown below:

Date Account Debit Credit

Jan 1, 2018 Purchases 1,000
Accounts Payable 2,400
Cash 3,400
Example 2: FGH Company obtained a loan of 10,000 @12% interest on July 1, 2012. The loan was
repaid on Dec 31, 2012, the year-end of FGH Company.

Interest expense on load = 10,000 × 6/12 × 12% = 600.

The repayment can be recorded using the following compound journal entry:

Date Account Debit Credit

Dec 31, 2012 Loan Payable 10,000
Interest Expense 600
Cash 10,600

2- State the Importance of Accounting Standards

Accounting standards are Designed to harmonized diverse accounting practices and are Issued from
time to time by professional accounting bodies such as Institute of Chartered accountant

Accounts standards codify the generally accepted Principles