Complete accounts information

1. Accounts
Three Golden Rules of
Accounting

2. Systems of Accounting
• Single entry system :
Only personal accounts and cash
account are maintained
• Double entry system :
Double entry system of accounting
adheres to the rule that for each
transaction the debit amount must
equal to the credit amount

3. Advantages of Double entry system
• Keeps complete record.
• Check on arithmetical errors.
• Check on accounting errors.
• Tells the financial position at a point of time.
• Comparison of current year with previous years .

4. Classification of accounts
and rules of debit and credit
based on such classification
( in double entry system)

5. Accounts
Personal Impersonal
Real Nominal

6. Personal Accounts
• Accounts recording transactions
related to firms, individuals or
companies .

7. • Natural person’s personal account:
Individuals accounts
Examples: Ram’s Account, Rohit’s Account
• Artificial person’s personal account :
Accounts of banks ,limited companies
, firms , institutions and clubs
Examples : M/s Sahu & Sahu or S B I Theog account
• Representative Personal accounts :
Income & expenses payable to an
Individual or receivable from
an individual on a particular date
( for matching of accounts )
Example : Interest Prepaid Account or Rent paid
in advance account.

8. Real accounts
The accounts recording
transactions related to assets
are called real accounts

9. • Tangible real accounts :
Which can be seen or touched
Example : Cash account , Building account
or Furniture account
• Intangible real accounts :
Which can not be seen or
touched
Example : Goodwill account , patents &
copyrights

10. Nominal accounts
The accounts recording
transactions relating to the losses ,
gains , expenses and incomes.
Example :
Rent account , Salaries account or
Interest account

11. Rules of Debit and Credit
• Personal Accounts: Debit the receiver
Credit the giver
• Real accounts : Debit what comes in
Credit what goes out
• Nominal accounts : Debit all expenses and
losses
Credit all the incomes and
gains

12. Journalising
The process of recording the
transactions into journal is
called Journalising

13. Journal
Date Particulars L.F. Amount
Dr Cr

14. Steps of journalising
• Ascertain What accounts are involved in a
transaction .
• Ascertain what is the nature of accounts involved .
• Ascertain which rule of debit and credit is applicable
.
• Ascertain which account is to be debited or which is
to be credited .
• Record the entry in the journal.
• Draw a line below the entry to separate it from
another entry.

15. Illustration 1

16. • 1 Mohan started business with cash
Rs70000.00
• 2 Purchased goods on credit from Sohan
Rs 14000.00
• 3 Paid wages Rs 500.00
• 4 Paid to Sohan Rs 10000.00
• 5 Purchased furniture Rs 1000.00
• 6 Received commission Rs 100.00

17. Mohan started business with cash
Rs70000.00
• Accounts involved
• 1) Capital A/c 2) Cash a/c
• Nature of accounts involved
• 1) Personal A/c 2) Real A/c
• Rules of debit and credit
• 1) Credit : the giver
• 2)Debit : what comes in

18. Journal entry
Date Particulars L.F. Amount
Dr Cr
(1) Cash A/c Dr.
To Capital A/c
( Being business started with Rs
70000.00)
70000.00
70000.00

19. Purchased goods on credit from Sohan
Rs 14000.00
• Accounts involved
• 1) Goods A/c 2) Sohan’s A/c
• Nature of accounts involved
• 1) Real A/c 2) Personal A/c
• Rules of debit and credit
• 1)Debit : what comes in
• 2) Credit : the giver

20. Journal entry
Date Particulars L.F. Amount
Dr Cr
(2) Goods A/c Dr.
To Sohan’s A/c
( Being goods purchased from
Sohan worth Rs 14000.00)
14000.00
14000.00

21. Paid wages Rs 500.00
• Accounts involved
• 1)Cash A/c 2) Wages A/c
• Nature of accounts involved
• 1) Real A/c 2) Nominal A/c
• Rules of debit and credit
• 1)Credit : what goes out
• 2) Debit : All the expenses & losses

22. Journal entry
Date Particulars L.F. Amount
Dr Cr
(3) Wages A/c Dr.
To Cash A/c
( Being wages paid worth Rs
500.00)
500.00
500.00

23. Paid to Sohan Rs 10000.00
• Accounts involved
• 1)Cash A/c 2) Sohan’s A/c
• Nature of accounts involved
• 1) Real A/c 2) Personal A/c
• Rules of debit and credit
• 1)Credit : what goes out
• 2) Debit : the receiver

24. Journal entry
Date Particulars L.F. Amount
Dr Cr
(2) Sohan’s A/c Dr.
To Cash A/c
( Being cash paid to Sohan)
10000.00
10000.00

25. Purchased furniture Rs 1000.00
• Accounts involved
• 1)Cash A/c 2) Furniture A/c
• Nature of accounts involved
• 1) Real A/c 2) Real A/c
• Rules of debit and credit
• 1)Credit : what goes out
• 2) Debit : what comes in

26. Journal entry
Date Particulars L.F. Amount
Dr Cr
(2) Furniture A/c Dr.
To Cash A/c
( Being furniture purchased)
1000.00
1000.00

27. Received commission Rs 100.00
• Accounts involved
• 1)Cash A/c 2) Commission A/c
• Nature of accounts involved
• 1) Real A/c 2) Nominal A/c
• Rules of debit and credit
• 1) Debit : what comes in
• 2) Credit : All the incomes & gains

28. Journal entry
Date Particulars L.F. Amount
Dr Cr
(2) Cash A/c Dr.
To Commission A/c
( Being commission received )
100.00
100.00

29. Illustration 2

30. • 1 Started business with cash Rs10000.00
• 2 Paid into bank Rs 5000.00
• 3 Bought furniture Rs 900.00
• 4 Purchased goods from Mohan & Co. for cash
Rs 4000.00
• 5 Sold goods Rs 1700.00
• 6 Paid telephone rent Rs 400.00
• 7 Purchased goods from Bir & Co. Rs 1000.00
• 8 Paid for advertisement by cheque Rs 160.00
• 9 Bought typewriter from Universal Typewriter
Rs 750.00

31. • 10 Sold goods for Bedi & Co. Rs 2900.00
• 11 withdrew from bank for private use
Rs 350.00
• 12 Sold goods to Omega & co. for cashRs 650.00
• 13 Received cash from Bedi & Co. Rs 2900.00
• 14 Deposited in bank Rs 2500.00
• 15 Rent paid by cheque Rs 500.00
• 16 Paid salaries Rs 600.00
• 17 Issued cheque in favour of Bir & co Rs 1000.00

32. Solution

33. Entry no Account involved
Nature of
accounts
Rules
1 Cash Real What Comes in Debit
Capital Personal The Giver Credit
2
Bank Personal The Receiver Debit
Cash Real What goes out Credit
3
Furniture Real What Comes in Debit
Cash Real What goes out Credit
4
Purchase ( goods) Real What Comes in Debit
Cash Real What goes out Credit
5
Cash Real What Comes in Debit
Sales (goods) Real What goes out Credit
6
Telephone rent Nominal Expennses and losses Debit
Cash Real What goes out Credit
7
Purchase ( goods) Real What Comes in Debit
Bir & Co Personal The Giver Credit
8
Advertisement exp. Nominal Expennses and losses Debit
Bank Personal The Giver Credit

34. Entry
no
Account involved
Nature of
accounts
Rules
9
Office equipment Nominal Expennses and losses Debit
Universal Co. Personal The Giver Credit
10
Bedi & Co Personal The Receiver Debit
Sales (goods) Real What goes out Credit
11
Drawings Personal The Receiver Debit
Bank Personal The Giver Credit
12
Cash Real What Comes in Debit
Sales (goods) Real What goes out Credit
13
Cash Real What Comes in Debit
Bedi & Co Personal The Giver Credit
14
Bank Personal The Receiver Debit
Cash Real What goes out Credit
15
Rent Nominal Expennses and losses Debit
Bank Personal The Giver Credit
16
Salaries Nominal Expennses and losses Debit
Cash Personal The Giver Credit
17
Bir & Co Personal The Receiver Debit
Bank Personal The Giver Credit

35. Date Particulars L.F. Amount
Dr Cr
1 Cash A/c Dr 10000
To Capital A/c 10000
( Started business)
2 Bank A/c Dr 5000
To Cash A/c 5000
( Deposited Cash in bank)
3 Furniture A/c Dr 900
To Cash A/c 900
4 Purchase A/c Dr 4000
To Cash A/c 4000
( Goods purchased)
5 Cash A/c Dr 1700
To Sales A/c 1700
( Furniture purchased)
6 Telephone rent A/c Dr 400
To Cash A/c 400
( Telephone rent paid )

36. Date Particulars L.F. Amount
Dr Cr
7 Purchase A/c Dr 1000
To Bir & Co 1000
( Goods purchased )
8 Advertisement exp. A/c Dr 160
To Bank A/c 160
(Advertisement expenses Paid)
9 Office equipment A/c Dr 750
To Universal Co. 750
( Typewriter purchased)
10 Bedi & Co Dr 2900
To Sales A/c 2900
( Goods Sold)
11 Drawings A/c Dr 350
To Bank A/c 350
( Withdrawal from bank for
private use)
12 Cash A/c Dr 650
To Sales (goods) 650
( Goods Sold)

37. Date Particulars L.F. Amount
Dr Cr
13 Cash A/c Dr 2900
To Bedi & Co 2900
(cash received from Bedi & Co)
14 Bank A/c Dr 2500
To Cash 2500
( Cash deposited in bank)
15 Rent A/c Dr 500
To Bank 500
( Rent Paid)
16 Salaries A/c Dr 600
To Cash 600
( Salaries Paid)
17 Bir & Co Dr 1000
To Bank A/c 1000
(Bir & Co Account settled )

38. Submitted by:
Rakesh Verma