News Golden Rules Of Accounting Or Types Of Accounts
For every transaction in that place are 2 aspects. One is called Debit together with the other is called Credit. The debit together with credit aspects of a transaction are to last identified based on the principles of double entry organization of accounting.
Debit refers to entering an sum on the left side of an concern human relationship together with Credit agency to larn into an sum on the correct side of an account. The abbreviated course of pedagogy of doc Stands for Debit together with Cr. Stands for Credit. Rules of debit together with credit is based on dual facial expression concept i.e. every transaction has Debit lawsuit together with an equivalent credit effect.
Before deciding which concern human relationship is to last debited or credited, it is necessary to own upward one's heed the nature of accounts which are influenced yesteryear the concern transactions.
Golden Rules of Accounting or Types of Accounts:
There are three golden rules or types of accounts. These are:
1. Personal accounts
2. Real Accounts
3. Nominal Accounts
1. Personal Accounts: (Natural Persons together with Artificial Person)
• Rule: Debit the Receiver
Credit the Giver
According to the inward a higher house principle, the produce goodness receiver’s concern human relationship is to last debited together with and the produce goodness giver’s concern human relationship is to last credited.
Examples:
i. Goods purchased from Ramesh on credit for 2,000
The 2 accounts involved inward this transaction are goods purchased A/c together with Ramesh A/c. so, Ramesh is the Giver of the goods. Hence Ramesh concern human relationship is last credit (i.e. credit the giver dominion applies) goods purchased is expenditure, together with so nominal account, so is to last debited.
ii. Goods sold on credit to Mahesh Rs. 5,000/-
In this transaction Mahesh is receiving the produce goodness from the business. Hence, Mahesh concern human relationship is to last debited together with goods sold is an income, together with so nominal concern human relationship so to last credited.
iii. Cash paid to Mohan Rs. 500
In this transaction cash ( property – existent account) is going out together with Mohan (personal – personal A/c) is receiving cash. Hence Mohan concern human relationship is to last debited together with cash concern human relationship is to last credit.
iv. Cash received from Sathish Rs. 800
In this transaction Sathish (person) giving cash together with cash (real A/c) is coming into business. Here Sathish is the giver. Hence, his concern human relationship is to last credited.
2. Real Accounts: (Assets)
• Rule: Debit What comes in
Credit what goes out
According to existent accounts principle, when an assets is received yesteryear the business, the property concern human relationship is to last debited, when whatsoever property goes out of the business, the property concern human relationship is to last credited.
Example:
i. Purchased role slice of furniture for Rs. 10,000.
In this transaction role slice of furniture (asset – Real A/c) is coming inward together with cash (asset – Real A/c) is going out. Hence, role slice of furniture concern human relationship is to last debited together with cash concern human relationship is to last credited.
ii. Received cash from Shankar Rs. 2,000.
In this transaction cash (asset – Real account) is coming inward together with Shankar (personal A/c) is the giver. Hence, cash A/c is to last debited.
iii. Cash paid to Manoj Rs. 1,000.
In this transaction cash (asset) is going out together with Manoj (personal A/c) is receiving cash. Hence, cash A/c is to last credited together with Manoh concern human relationship is to last debited.
iv. Old Machine (asset) sold for Rs. 600.
In this transaction cash (asset) is coming inward together with Machine (asset) is going out. Hence, cash A/c is to last debited together with Machine concern human relationship is to last credited.
3. Nominal Accounts: (Expenses, Losses, Incomes, Gains)
• Rule: Debit all Expenses together with Losses.
Credit all Incomes together with Gains.
According to normal concern human relationship principle, expenses together with losses are to last debited together with all incomes together with gains of the concern are to last credited.
Example.
i. Salaries paid Rs. 5000
In this transaction salaries (expenditure-nominal A/c) is an special of expenditure together with cash (real A/c) is going out.
Hence, Salaries A/c is to last debited together with cash A/c is to last credited.
ii. Rent Received Rs. 200
In this transaction, cash (Real A/c) received is property together with rent received is income. Hence rent A/c existence income to last credited together with cash A/c is to last debited.
iii. Goods purchased for Rs.8000
In this transaction goods purchased is expenditure (nominal A/c) together with cash (asset) paid is existent A/c. Hence, Goods purchased concern human relationship is to last debited together with cash A/c is to last credited.
iv. Goods sold for Rs. 10,000
In this transaction cash (asset) received is existent A/c together with goods sold (income) is nominal A/c. Hence, goods sold concern human relationship is to last credited together with cash A/c is to last debited.