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Rule of Debit and Credit: Types of Accounts Accounts

The document discusses the basic rules and concepts of accounting, including: 1) The three main types of accounts - personal, real, and nominal. Personal accounts record transactions involving people, real accounts track assets and expenses, and nominal accounts track income and revenues. 2) The accounting equation that balances assets with liabilities and capital. Assets - Liabilities = Capital. 3) The steps in the accounting process - recording transactions, classifying accounts, summarizing, analyzing, and communicating financial information.

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65 views

Rule of Debit and Credit: Types of Accounts Accounts

The document discusses the basic rules and concepts of accounting, including: 1) The three main types of accounts - personal, real, and nominal. Personal accounts record transactions involving people, real accounts track assets and expenses, and nominal accounts track income and revenues. 2) The accounting equation that balances assets with liabilities and capital. Assets - Liabilities = Capital. 3) The steps in the accounting process - recording transactions, classifying accounts, summarizing, analyzing, and communicating financial information.

Uploaded by

vj1234567
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Rule of Debit and Credit

Types of Accounts Accounts

Personal

Real

Nominal

Personal Account:

Debit the Receiver Credit the Giver Debit What Comes in Credit What Goes Out
Debit All Expenses and Losses Credit All Incomes and Gains

Real Account:

Nominal Account:

E.g Rent paid Salaries Paid Furniture Purchased Paid to Mohan Machinery Sold Telephone charges paid etc.

Accounting Equation
Assets = Liabilities + Capital Or Assets Liabilities = Capital E.g. A starts business with a capital of Rs. 10,000.
Received Cash Capital (repay)

Asset

Liability

Suppose furniture is purchased for a sum of Rs. 2,000. Furniture 2000 Cash 8000 Capital 10000

Illustration
Anil had the following transactions . Use accounting equation to show the effect on his business, liabilities and capital. Started business with cash Rs. 5,000 Purchased goods on credit Rs. 400 Purchased goods for cash Rs. 100 Purchased Furniture Rs. 50

1. 2. 3. 4.

5.Withdres for personal use 6. Paid rent 7. Received interest 8. Sold goods costing Rs. 50 On credit for 9. Paid to creditors 10.Paid for salaries 11. Further capital invested 12. Borrowed from P Accounting equation

Rs. 70 Rs. 20 Rs. 10 Rs. 70 Rs. 40 Rs. 20 Rs. 1,000 Rs.1,000

Process of Accounting
Recording Classifying Summarizing Analyzing and Interpreting Communicating

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