Table of Contents
Types of accounts in Accounting
- Real Account:- Real accounts are related to asset account which can be touched felt, eg building account, machinery account ,stock,furniture etc
- Personal Account:- Personal accounts are related to persons , institutions companies. examples are bank account, creditors a/c etc. Personal accounts are sub-divided into natural persons and artificial persons. Natural persons are individuals or human .Where are artificial persons are the organizations created by law like companies, trusts, firms etc.
- Nominal Account:- Nominal accounts are related to income and expenses or losses and gains , examples are rent, commission, salary etc

What is Dual Aspect
- Car is coming in to business
- Cash going out from the business
Rules For Debit And Credit
The rules of debit and credit is popularly known as golden rules of accounting in India.These rules are the pillars of accounting.All Financial statements are based on these rules.
Real Account
The Rules for Real Account in accounting is
Debit What Comes In
Credit What Goes Out
Particulars | Debit(Dr) | Credit(Cr) |
Furniture | 2500.00 | 0.00 |
Cash | 0.00 | 2500.00 |
Personal Account
The Rule for Personal account is
Debit The Receiver
Credit The Giver
now take the rules for personal account “Credit the giver” who is giving the furniture ? SO credit is given to “Mozart furnitures”.
Particulars | Debit(Dr) | Credit(Cr) |
Furniture | 3000.00 | 0.00 |
Mozart Furnitures | 0.00 | 3000.00 |
Nominal Account
Debit All Expenses or Losses
Credit All Incomes or gains
, then account type , salary is expense to the company, so salary comes under nominal account .as per nominal account “Debit all expenses or losses” So Debit Salary & Cash is going out of the Business,Hence Credit Cash which is real account.
Particulars | Debit(Dr) | Credit(Cr) |
Salary | 100000.00 | 0.00 |
cash | 0.00 | 100000.00 |
Balance of Real Account
Real accounts are relate to assets.When assets are received in the business the particular asset accounts are debited.When assets are sold or otherwise disposed of, the particular assets accounts are credited.So if an asset account has a balance it must be a debit balance.It indicates the value of asset in the possession of business.
Balance of Personal Account
The debit balance of a personal account indicates debts owing by the person and credit balance indicates debts owing to the person concerned.For the business the first one is account receivable or asset ,while the second is account payable or liability. The debit balance of all personal accounts on a certain date put together will make sundry debtors and the credit balances of all personal accounts put together will make “Sundry creditors”Sundry debtors are assets and Sundry creditors are liabilities.Where as asset accounts have debit balances liability accounts have credit balances.
Closing of Nominal Accounts
Only accounts relating to assets and liabilities ,that is real account and personal accounts are balanced periodically.Nominal accounts are accounts of expenses and Incomes.They are not balanced;They are closed at the end of the trading period by transferring the amounts to the debit and credit of a Profit and loss account.Before a nominal account is closed it will either show a debit balance ( Expense) or a credit balance ( Income).
Do it your self
Find out the debit and credit aspects of the following transactions
- 01-07-2016 Purchased land for 105000.00
- 02-07-2016 Purchased Goods from S.K creation on credit 200000.00
- 03-07-2016 Stationery purchased for 1000.00
- 03-07-2016 Goods sold to Indian cotton for Credit 45000.00
- 05-07-2016 Rent paid to building owner 1500.00
- 06-07-2016 Cash withdrawn for personal use 5000.00
- 07-07-2016 Tea expenses incurred for staff 100.00
- 08-07-2016 Computer purchased from computer solutions 30000.00
- 15-07-2016 Paid commission 500.00
- 20-07-2016 Deposit cash in to SBI 15000.00
- 20-07-2016 cash sales 25000.00
- 21-07-2016 Cheque Received from Indian cotton 25000.00
- 22-07-2016 Goods returned by Indian cotton 2500.00
- 28-07-2016 Cash withdrawn from SBI 10000.00
- 31-07-2016 Goods returned to S.K creation 5000.00
Click on below Link TO KNOW THE ANSWERS
Click Here for AnswersJournal | |||||
Sr No | Date | Particulars | Ledger Folio( LF ) | Debit Amount | Credit Amount |
1 | 1/7/2016 | Land A/c ………Dr | 105000.00 | ||
To ; Cash | 105000 | ||||
(Being purchase land) | |||||
2 | 2/7/2016 | Purchase A/c …..Dr | 200000 | ||
To; S.K Creation | 200000 | ||||
(Goods purchased from SK Creation on credit) | |||||
3 | 3/7/2016 | Printing & Stationery A/c ….Dr | 1000 | ||
To; Cash | 1000 | ||||
Being stationery purchased as per bill noxxxx | |||||
4 | 3/7/2016 | Indian Cottons A/c ……..Dr | 45000 | ||
To; sales | 45000 | ||||
(Being credit sales to Indian Cotton) | |||||
5 | 5/7/2016 | Rent A/c …………….Dr | 1500 | ||
To;Cash /Ac | 1500 | ||||
(Rent paid for the month of june) | |||||
6 | 6/7/2016 | Drawings A/c ………Dr | 5000 | ||
To; Cash | 5000 | ||||
( cash drawn for personal use) | |||||
7 | 7/7/2016 | Staff welfare A/c……. Dr | 100 | ||
To; cash | 100 | ||||
(Tea expense for staff ) | |||||
8 | 8/7/2016 | Computer A/c ……Dr | 30000 | ||
To; Computer solutions | 30000 | ||||
( being computer purchased from computer solutions for credit) | |||||
9 | 15/07/2016 | commision A/c …………..Dr | 500 | ||
To; cash | 500 | ||||
( Paid commission) | |||||
10 | 20/7/2016 | SBI A/c …………..Dr | 15000 | ||
To; Cash | 15000 | ||||
( cash deposited in SBI) | |||||
11 | 20/7/2016 | Cash ……………………Dr | 25000 | ||
To; Sales | 25000 | ||||
( cash sales) | |||||
12 | 21/7/2016 | SBI ( BANK A/C) ….Dr | 25000 | ||
To; Indian Cotton | 25000 | ||||
(being cheque received from indian cotton) | |||||
13 | 22/7/2016 | Sales retrun A/c ………Dr | 2500 | ||
To; Indian cotton | 2500 | ||||
( being goods returned by indian cotton) | |||||
14 | 28/07/2016 | Cash A/c ……………..Dr | 10000 | ||
To; SBI A/c | 10000 | ||||
( being cash withdrwan for business use) | |||||
15 | 31/7/2016 | S.K Creation …………Dr | 5000 | ||
To; Purchase return | 5000 | ||||
( goods returned to sk creation) |
first of all you have to write the journal entrys as for business transaction you can divided in to ledger performer if it is case transaction you should enter the cash ledger
Sir
In Accounts Tea Expenses made sum of Rs 200, For cash payment what account head i want to account?
You can create account like ” Staff welfare expense” “Tea Expense” etc
thanx a tonne… 🙂
it was so simple
single ledger-create or add any ledger under any parent group.. aftr tht display the list of ledger u have created then u want to changes usinf alter-delete or modification in ledger..
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