- The document provides an overview of accounting concepts including types of accounts, debit and credit rules, journal entries, ledger entries, and trial balance. - It discusses personal accounts like those relating to individuals, and impersonal accounts like cash, machinery, and expenses. - Key points covered include double-entry accounting with debits on the left and credits on the right of accounts, and the golden rules of accounting for recording transactions. - Worked examples demonstrate journalizing transactions, posting to ledger accounts, and preparing a trial balance to check totals.

1. FINANCIAL
ACCOUNTING
(HEC43181)

2. TOPICS:
THE BASIC CONCEPTS OF ‘ACCOUNT’,
‘DEBIT’ & ‘CREDIT’ USING
JOURNAL ENTRY & LEDGER ENTRIES &
TRIAL BALANCE…..
ANINDYA NAG
Enrollment No : AU/2018/02/0001809
Roll No : UG/02/BTCSE/2018/005
B-Tech CSE , Section – “A”
[3rd yr , 5th sem]

3. CONTENTS :
 TYPES OF ACCOUNTS
 DEBIT & CREDIT(DOUBLE ENTRY SYSTEM OF ACCOUNTING)
 THE GOLDEN RULES OF ACCOUNTING
 Mathematical Example using :
 Journal entry
 LEDGER ENTRY
 TRIAL BALANCE

4. TYPES OF ACCOUNTS
1.Personal Accounts :
Personal accounts relate to persons, trade receivables or trade payables .
Eg: The account of School of Engineering Adamas University,
The account Mr. W.
2. Impersonal Accounts:
Accounts which are not personal .
Eg: Machinery account, Cash account, Purchase A/c ,Rent account etc.

5. PERSONAL ACCOUNTS:
A)Natural personal accounts:
It relates to transactions of human beings like Mr. D ,Ms. R
B)Artificial (legal) personal accounts:
For business purpose, business entities are treated to have separate entity. They are recognised as persons in the
eye of law for dealing with other persons.
For example: Government, Companies (private or limited), Clubs, Co-operative societies etc.
C)Representative personal accounts:
These are not in the name of any person or organisation but are represented as personal accounts. For example:
outstanding liability account or prepaid account, capital account, drawings account.

6. IMPERSONAL ACCOUNTS:
A)Real Accounts: Accounts which relate to assets of the firm but not debt.
Eg:accounts regarding land, building, investment, fixed deposits etc., are real accounts.
Cash in hand and Cash at the bank accounts are also real.
B)Nominal Accounts: Accounts which relate to expenses, losses, gains, revenue, etc.
Eg: salary account, interest paid account, commission received account.

7. DEBIT AND CREDIT  (DOUBLE ENTRY SYSTEM OF
ACCOUNTING)
Formally accountants use the term Debit (Dr.) to denote an entry on the left side of any account and
Credit (Cr.) to denote an entry on the right side of any account.
Here, debit balance means the debit side is higher than the credit side and
The credit balance means the credit side is higher than the debit side.
The debit balance is written on the credit side and the credit balance is written on the debit side, to
make the total of both sides equal…

8. GOLDEN RULES OF ACCOUNTING:
ALL THE ABOVE CLASSIFIED ACCOUNTS HAVE TWO RULES EACH, ONE RELATED
TO DEBIT AND ONE RELATED TO CREDIT FOR RECORDING THE TRANSACTIONS
WHICH ARE TERMED AS GOLDEN RULES OF ACCOUNTING, AS TRANSACTIONS ARE
RECORDED ON THE BASIS OF DOUBLE ENTRY SYSTEM.
Types of Account: Debit Credit
Personal Account Receiver Giver
Real Account What comes in What goes out
Nominal Account Expense and losses Income and gains

9. MODERN CLASSIFICATIONOF ACCOUNTS
Modern
Rules:
(DEBI
T &
CREDI
T)
Types of Account: Normal Balance Account to be Debited Account to be Credited
Assetaccount Debit Increase Decrease
Liabilities account Credit Decrease Increase
Capital account Credit Decrease Increase
Revenueaccount Credit Decrease Increase
Expenditure account Debit Increase Decrease
Drawings account Debit Increase Decrease

10. •1. On 21/9/2020 Mr. Y Bought
Furniture for Rs. 5,000.
• Here , Furniture A/c ….. Dr.
To Cash A/c
Furniture A/c ----- Real A/c(Assets) &
•Cash A/c ----- Real A/c(Assets)

11. JOURNAL ENTRY
DR.
CR.
DaTe Particulars LedgerFolio
(L.F.)
Dr.
Amount
Rs.
Cr.
Amount
RS.
2020
September
21 Furniture A/c …. Dr.
To Cash A/c
(Being The Furniture purchased for Cash )
5,000
5,000

12. 2. . ON 21/9/2020 MR Y. TOOK LOAN FROM BANK RS. 50,000.
•Here , Cash A/c ….. Dr.
To Bank loan A/c
Here,
Bank loan A/c ----- Real A/c(Liability) &
•Cash A/c ----- Real A/c(Assets)

13. JOURNAL ENTRY
DR. CR.
DaTe Particulars LedgerFolio
(L.F.)
Dr.
Amount
Rs.
Cr.
Amount
RS.
2020
September
21 Cash A/c …. Dr.
To Bank lone A/c
(Being The long taken from bank )
50,000
50,000

14. JOURNAL ENTRY :
JOURNAL IS ALSO CALLED SUBSIDIARY BOOK. RECORDING OF TRANSACTIONS
IN JOURNAL IS TERMED AS JOURNALIZING THE ENTRIES. IT IS THE BOOK OF
ORIGINAL ENTRY IN WHICH TRANSACTIONS ARE ENTERED ON A DAILY BASIS
IN A CHRONOLOGICAL ORDER. ALL TRANSACTIONS MAY BE FIRST RECORDED
IN THE JOURNAL AS AND WHEN THEY OCCUR; THE RECORD IS
CHRONOLOGICAL; OTHERWISE IT WOULD BE DIFFICULT TO MAINTAIN THE
RECORDS IN AN ORDERLY MANNER. DEBITS AND CREDITS ARE LISTED ALONG
WITH THE APPROPRIATE EXPLANATIONS.
A journal entry is the method used to record all individual financial transactions made by a company
into its journal.
A properly documented journal entry consists of the correct date, amounts to be debited and
credited, description of the transaction and a unique reference number.

15. TRIAL BALANCE :
Trial Balance is a list of closing balances of ledger accounts on a certain date and is
the first step towards the preparation of financial statements. It is usually prepared
at the end of an accounting period to assist in the drafting of financial statements.
The total of the amounts in the debit column should equal the total of the amounts in
the credit columN

16. JOURNALIZE THE FOLLOWING TRANSACTION AND POST THEM INTO THE LEDGER:
1))18.08.2020MR. A STATEDBUSINESS WIRHCASH25,000
2))20.08.2020 BOUGTHFURNITUREFORRS. 8,000
3))21.08.20 SOLDGOODSFORRS. 4,000
IN THEBOOKS OF MR. A
JOURNALENTRIES
DR. CR.
Date Particulars Ledger
Folio
Dr.
Amount
Cr.
Amount
18.08.2020
20.08.2020
21.08.2020
Cash A/c ……. Dr.
To Capital A/c
(Being the business started with cash)
Furniture A/c ………….. Dr.
To Cash A/c
(Being the Furniture purchased for cash)
Cash A/c …………. Dr.
To Sales A/c
(Being the goods sold for cash)
Total
25,000
8,000
4,000
37,000
25,000
8,000
4,000
37,000

17. IN THEBOOKSOF MR.A
LEDGERENTRIES
CASHA/C
DR.
CR.
Date Particulars Ref. Amount Date Particulars Ref Amount
2020
August 18
2020 August 21
To Capital A/c
To Sales A/c
25,000
4000
2020
August
20
31
By Furniture
A/c
By Balance c/d
8,000
21,000
Total 29,000 Total 29,000
2020 September
1
To Balance b/d 21,000

18. IN THEBOOKSOF MR.A
LEDGERENTRIES
FURNITUREA/C
DR.
CR.
Date Particulars Ref. Amount Date Particulars Ref Amount
2020
August 20
To Cash A/c
8, 000
2020
August
31
By Balance c/d 8,000
Total 8,000 Total 8,0000
2020 September
1
To Balance b/d 8,000

19. IN THEBOOKSOF MR.A
LEDGERENTRIES
SALES A/C
DR. CR.
Date Particulars Ref. Amount Date Particulars Ref Amount
2020
August 31
To
Balance c/d 4,000
2020 August
21
By Cash A/c
4,000
Total 4,000 Total 4,000
2020
September 1
By Balance b/d 4,000

20. THANK YOU