what are the golden rules of accountancy about debit and credit ??what r the rules of recognition of nature of any account type so as to solve questions related to journal entry???pls help guys!!!
GOLDEN RULES OF ACCOUNTING
DEBIT CREDIT
PERSONAL A/C reciever giver
REAL A/C what comes in what goes out
NOMINAL A/C All the expenses and losses All the profits and income
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yeah debit in and credit out is the golden rule.... there are specific rules for recognition bit we need to classify them in to assets and liabilities then for journal entries we must see whether the transaction are in accounting terms i.e, real a/c ,perrsonal a/c , and nominal a/c....
the rules gosa follows 4 asstor real a/c
its DEBIT WAT COMES IN AND CREDIT WAT GOES OUT
PERSONAL A/C
DEBIT THE RECIEVER CREDIT THE GIVER
NOMINAL A/C OR LIABILITIES A/C
DEBIT EXPENSES AND LOSSES AND CREDIT ALL INCOMES AND GAINS
remember if u know one thing it can be debit or credit u can just close ur eyes and write the other entry as debi or creditt
coz there wil be a debit and a credit entry in a transaction.......
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Suhas Keshav Bali
A) Personal Account:
1) Debit the receiver.
2) Credit the giver.
B) Real Account:
1) Debit what comes in.
2) Credit what goes out.
C) Nominal account :
1) debit all expences losses.
2) Credit all icomes gains.
Posted By Suhas K eshav Bali(Washim,Maharashtra).
Student(1.7.2007).Commerce.
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"GOLDEN RULES OF ACCOUNTING"
"DEBIT'","CREDIT".
A) PERSONAL A/C:
1) Debit the receiver.
2) Credit the giver.
B) REAL A/C:
1) Debit what comes in.
2) Credit what goes out.
C) NOMINAL A/C:
1) Debit all expences losses.
2) Credit all incomes gains.
Suhas Keshav Bali (Washim,Maharashtra).
Student (1.7.2007) Commerce.
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Golden rules of Accounting:
1. Personal a/c:- Debit the Reciever Credit the giver.For Eg: All names like bank,debtors , creditor etc.
2. Real a/c:- Debit What comes in Credit What goes out. For Eg:All assets like Machinary, furniture etc.
3.Nominal a/c or Liabilties a/c:- Debit all expenditure and losses, Credit all incomes and gains. For Eg:expences, losses, Discount allowed and recieved.
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There are 3 golden rules of accounting.
Real Accounting:Dr - what comes inCr - what goes outExample: Cash/Bank, RentPersonal Accounting:Debit is the receiverCredit is the giverExample: Vendor, CustomerNominal Accounting:all gains and income are creditall losses and expenses are DebitExample: Sales, Purchase
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There are 3 golden rules of accounting.
Real Accounting:Dr - what comes inCr - what goes outExample: Cash/Bank, RentPersonal Accounting:Debit is the receiverCredit is the giverExample: Vendor, CustomerNominal Accounting:all gains and income are creditall losses and expenses are DebitExample: Sales, Purchase
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? ? ? ? 2. ?Real a/c : Debit what comes on
? ? ? ? ? ? ? ? ? ? ? ? ? ? Credit what goes out.
? ? ? ??
? ? ? ? 3. ? Nominal a/c : Debit all Expenses & losses
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Credit all Incomes & Gain.
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Okay, let's see why they are called the "Golden Rule" of Accountancy. There are always two transactions, debit and credit, affecting To and By side of Accounts. Analogically speaking, "humankind cannot gain anything without first giving something in return, to obtain something, something of equal value must be lost" -FMA
In short, the principle of accountancy is totally depended upon the relationship between what is given and what is received(debit and credit. Thus, GOLDEN FREAKING RULE!!
They are divided into three categories for the sake of convenience:
Real Accounting:
Dr - What comes in
Cr - What goes out
Examples of this kind of transaction include cash/bank and rent.
Personal Accounting:
Debit is the receiver.
Credit is the giver.
An example of this kind of transaction is Vendor/Customer relations.
Nominal Accounting:
All gains and income are credit.
All losses and expenses are debit.
An example of this kind of transaction is sales and/or purchases.
Source Of Golden Rule Types: Youth4work.com
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1. Personal Account
2. Real Account
3.Nominal Account
1. Personal Account :
"Debit the receiver, credit the giver."
Explaination : This account is usually for individuals. For Example : Ram Company, corporate body, instructions, statutory body, etc.
2.Real Account :
"Debit what comes in, Credit what goes out."
It includes all assets !! For example : Land, Building, Cash, Machinery, Copy rights, patents, Futniture, etc.
3.Nominal Account
"Debit all expense and losses, Credit all incomes and gains."
It includes all expenses and losses, it also includes incomes and gains.
Explaination given by Vijay Yadav.
Contact : 8108052827
3.
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PERSONAL - DEBIT THE RECEIVER CREDIT THE GIVER
eg - When business receives any sum it is debited and vice versa
REAL - DEBIT WHAT COMES IN CREDIT WHAT GOES OUT
eg - When you buy a table - table comes in to business and cash goes out from your business
NOMINAL - DEBIT ALL EXPENSES AND LOSSES AND CREDIT ALL INCOMES AND GAINS
eg - When you pay Conveyance fee it is debited or when you receive any fee it is credited
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(Debit the reciever and credit the giver)
P. acc. - will include name of a person or the name of institution
Real account
(Debit what comes in and credit what goes out )
R.acc. - will include all your assets (property) , cash , stock, machinary, furniture etc
Nominal account
(Debit all expenses and loses and credit all income , gains and profits )
N.acc - will include the profits , loses, gains , income, expenses of properitor
P.acc - eg:
Salary paid to shyam .
(Salary) N.acc(expenses) (shyam) P.acc.
Entry salary acc. .......Dr
To shyam general acc.
Ram started business with cash rupees 100000.
Ram - P.acc cash - R.acc
Entry cash acc. .........Dr
To capital acc.
R.acc
Purchase Machinery for cash rupees 4000
Machinary(asset) - R. acc
Cash(asset) - R. acc
Entry Machinary acc. ........Dr
TO cash acc.
N. acc
Income tax paid .
Income tax - N.acc
Paid - to cash
Entry tax acc. .........Dr
To cash acc.
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1.Personal account
2.Impersonal account
In impersonal account there are two sub accounts namely real and nominal account
Personal account
Personal account is related to person or people or entity that is involved in business.Eg.Shyam account,Raj account
For personal account the golden rule is
Debit the reciever
Credit the giver
In impersonal there are two accounts
Real and nominal
Real account
It is the account that is related to assets of the business.Eg. machinery account, building account. The golden rule is
Debit what comes in
Credit what goes out
Nominal account
It is the accounts that appear in the course of business. Eg. Bills payable account, rent account
The golden rule for this is
Debit all expenses and losses
Credit all incomes and gains
Hope my answer helps you
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?Natural Account(capital, drawings, names, outstanding, etc.)
Credit-the giver
Debit-the reciver
?Real account (assets-land, building, investment, etc.)
Credit-what goes out
Debit-what comes in
?Nominal account( expenses, losses, gains, revenue, etc.)
Credit-income and gain
Debit- expenses losses
On Modern Approach
?Assets(debit) -changes to credit when decreases
?Liability(credit) -changes to debit when decreases
?Capital(credit) -changes to debit when decreases
?Revenue(credit) -changes to debit when decreases
?Expenses(debit) -changes to credit when decreases
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supplier, calculate the material cost per unit :
Quantity Particulars Rate (300 kg Material X 10?00 per kg 3,000
200 kg Material Y 12?00 per kg 2,400
5,400
Less : trade discount 270
5,130
Add :
Cost of containers (capacity of each
100 kg) 60
Cartage and Carriage 75
Octroi duty @ 0?5% 27
5,292
Terms :
(a) 5% cash discount within a week
(b) Return value of containers
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