Double entry bookkeeping is a method of recording accounting transactions where every transaction has two equal and opposite accounting entries. The key principle is that for every debit, there must be an equal and opposite credit. Luca Pacioli introduced this system in 1494. It provides more accurate, complete recording of transactions compared to conventional single-entry bookkeeping systems. Accounts are classified as personal, real, or nominal depending on what type of asset, person, or expense/income they represent. Debits and credits follow set rules according to these account types.

1. Double entry book keeping
By Srinivas Methuku

2. What do you know about double entry book
keeping?
 Introduction
 Luca De Pacioli – 1494
 Main Principle:
“Every debit has corresponding credit
and every credit has corresponding debit with equal
amount”.

3. Definition of double entry book keeping
 “Every business transaction has a two fold effect and
that it effects two accounts in opposite directions and
if a complete record is to be made of each such
transaction it would been necessary to debit one
account and credit another account. It is this
recording of two fold effect of every transaction that
has given rise to the term Double Entry.” - By J.R.
Batluboi

4. What are the advantages of double entry
book keeping?
 Advantages of double entry book keeping:
1. Accuracy
2. Business result
3. Complete record
4. Comparative study
5. Common acceptance

5. Conventional Accounting System
 This method is traditional method of recording
accounting information.
 Indian system of accounting is the example of
conventional accounting system.

6. Point Conventional accounting
system
Double entry book keeping
system
Meaning It records incomplete
business transactions
This method is scientific and
records complete business
transactions
Coverage It covers less details of
transactions
It covers complete details of
business transactions
Accuracy Arithmetic accuracy is not
guaranteed
Arithmetic accuracy is
guaranteed
Nature It is traditional method of
recording business
transactions
It is modern method of
recording business
transactions
Number of
account books
Only two books are prepared
(1) cash Book (2) Ledger
All subsidiary books/ Journals
and Ledgers are prepared
Recording All transactions are basically
recorded in only Cash book
All transactions are recorded
in different Subsidiary Books /
Journals

7. How can we classify the accounts?
Personal accounts: All Persons
• Natural person’s account. E.g. Natural Persons
• Artificial person’s account. e.g. Institutions
• Representative personal account. E.g. Prepaid and out
standing expenses
Real accounts: All assets
• Tangible Real Account
• Intangible Real Account
Nominal Accounts:
• Expenses and losses

8. Classify the following accounts under
Personal, Real and Nominal Accounts:
i. Cash Account
ii. Unpaid salary account
iii. Capital
iv. Fixtures account
v. Bank account
vi. Octopi account
vii. Prepaid insurance
account
viii. Land and buildings
account
ix. Loan account
x. Salary account
xi. Goods stolen by theft
account
xii. Copyrights account
i. Printing and stationary a/c
ii. Bills payable a/c
iii. Motor car a/c
iv. Capital a/c
v. Goods destroyed by fire
a/c
vi. LIC a/c
vii. Machinery a/c
viii. Hyderabad municipal
corporation a/c
ix. Goodwill a/c
x. Repairs and maintenance
a/c
xi. Stationary a/c
xii. Computer a/c

9.  State the types of two accounts involved in the
following:
a. Started business with cash 50,00,000
b. Deposited cash into the bank 5,00,000
c. Purchased goods for cash 3,00,000
d. Paid rent 50,000
e. Goods sold for cash10,00,000

10. Basic rules of accounting
Personal
accounts
Real accounts Nominal accounts
Debit Debit the receiver Debit what comes
in
Debit all expenses
and losses
Credit Credit the giver Credit what goes
out
Credit all incomes
and gains

11. Rules of debit and credit
Assets a/c Liabilities a/c Capital a/c Revenues/
Gains a/c
Expenses /
Losses a/c
Increases
debit
Decreases
debit
Decreases
debit
Decreases
debit
Increases
debit
Decreases
credit
Increases
credit
Increases
credit
Increases
credit
Decreases
credit

12. Analysis of transactions by applying rules of
Debit & Credit
Trans
action
Two
aspects
Account
s
involved
Categori
es
Rules
applied
Accoun
t
debited
Account
credited
Starte
d
busine
ss with
cash
Cash
increases
Proprietor
provides
funds
Cash a/c
Capital
a/c
Assets
a/c
Capital
a/c
Increase in
assets
debited
Increase in
capital
credited
Cash
a/c
Capital
a/c
Salary
paid to
Akash
Salary
increases
Cash
decreases
Salary
a/c
Cash a/c
Expense
s a/c
Assets
a/c
Increases in
expenses
debited
Decrease in
cash
credited
Salary
a/c
Cash a/c
Deposi
ted
into
the
Cash at
bank
increases
Cash in
Bank a/c
Cash a/c
Assets
a/c
Increase in
asset
debited
Bank
a/c
Cash a/c