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Basic Rules For Accounts

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Rohit Kumar
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19 views9 pages

Basic Rules For Accounts

Uploaded by

Rohit Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Basic Rules of Accounting

for Understanding
Tally. ERP 9
Classification of accounts according to traditional
approach
Rules of debit and credit according to traditional approach:

● The role of journalising according to traditional approach is


also known as”golden rules of accounting”.
● This rule is applied after classifying the accounts into three
categories.
1. Personal account
2. Real account
3. Nominal account
Classification of accounts according to traditional
approach
Personal Account: It is an account of a person or a account relating
to a person with whom a business keeps dealing. For examples

Customers, suppliers, money lenders, the bank, and owner etc.

Personal Account can be further classified as

Natural Personal Account

Artificial Personal Account

Representative Personal Account


Classification according to traditional approach
Real Account:

An account of property or anything owned or possessed by


a business is called real account.

Nominal Account:

An account relating to business expense income gain and


loss is called nominal account.
Classification of accounts according to traditional
approach

Personal Accounts Real Accounts Nominal Accounts


Natural personal Account Purchase A/c Rent A/c
Shivanya, Advit, Kaaksha, Manan Building A/c Salary A/c
Goodwill A/c Commission A/c
Artificial Personal Account Patent A/c Discount A/c
(Partnership firm, company clubs, Interest A/c
Institutions, local authorities) : central
Bank of india, shivaji college A/c, M/S
Reliance Industries A/c

Representative Personal Account:


salary outstanding A/c, Rent payable A/c,
capital Account A/c, drawing account A/c,
insurance paid in advance A/c etc Debit what comes in Debit all expenses and
and credit what losses, credit all incomes
Debit the receiver and credit the giver goes out and gain
The rules and Journalising for these accounts

Types of Account Debit Credit

Personal Account The Receiver The Giver

Real Account What Comes in What Goes Out

Nominal Account Expenses and Losses Income and gains


Modern classification of Accounts
Modern approach of debiting or crediting the account is also known as
accounting equation approach ( Assets= liabilities + capital).

This equation indicates that if a business transaction results in the


increase in assets then there will be a corresponding increase in the
amount of either capital or liability by the same amount.
Modern classification of Accounts
Accounts can be classified into five categories

Asset Account

Liabilities Account

Capital Account

Revenue Account

Expense Account
Modern classification of Accounts

Types of Account In case of increase in In case of Decrease in


Account Account
Asset Account Debit Credit

Liabilities Account Credit Debit

Capital Account Credit Debit

Revenue Account Credit Debit

Expense Account Debit Credit

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