Suppose an earthquake occurs in dhaka, bangladesh, and inflicts massive damages on the city. you raise money to send to aid the victims of the tragedy. how would this transaction be recorded?

This will result in a decrease in the current account in the bank. As the transaction will have to be shown as debiting the current account and crediting the agency's account in which this payment was made. The amount that has been made can also be shown as a deduction from the amount calculated for tax purposes.

According to the golden rule of accountancy, we need to debit what goes out so as money is going out of the current account from the bank it will be debited. The agency's account will be credited as according to the rules we are required to credit the receiver. As the agency is the receiver the agency's account should be credited.

The transaction will be recorded as Current A/c Dr.

To, Agency A/c

This amount can be later shown as deductions under 80G of the Income Tax Act provided the required forms are attached.