ACCOUNT
Account is a record of transactions under a particular head. It records not only the number of transactions
but also their effect and direction
An account is divided into two parts i.e. Debit and Credit. It is usually in a T form and the commonly used
layout of an account is as follows
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
Meaning of Debit and Credit
Debit refers to the left side of an account and Credit refers to the right side of an account. Dr. stands
for debit and Cr. Stands for credit.
An item recorded on the debit side of an account is said to be debited to the account.
An item recorded on the credit side of an account is said to be credited to the account.
Both debit and credit may represent either increase or decrease depending upon the nature of
account.
Classification of Accounts
1. Traditional Classification; and
2. Modern Classification
Traditional Classification of Accounts
1.
Personal Impersonal
Accounts Accounts
2. 3.
Natural Artificial Representative
Nominal
Personal Personal Personal Real Accounts
Account
Accounts Accounts Accounts
Golden Rule:-
1. Debit the receiver, Credit the giver.
2. Debit what comes in, Credit was goes out.
3. Debit all expenses and losses, Credit all incomes and gains.
Nature of Accounts
Personal Accounts Real Accounts Nominal Accounts
Bank Cash Sales
Bank Overdraft Property Sales Return
Capital Furniture Purchase
Drawings Plant Purchase Return
Debtors Machinery Bad Debts
Creditors Goodwill Bade Debts recover
Outstanding expenses Patent Expenses paid
Prepaid expenses Trade mark Income Received
Advance income Depreciation
Accrued income Discount received and allowed
Q.1) Following account are being maintained in the books of Manoj.
Classify them into Personal, Real and Nominal accounts
a) Depreciation
b) Wages
c) Repairs
d) Kartik, a debtor
e) Interest received
f) Bank overdraft
g) Purchase returns
h) Drawings
i) Freight
j) Return inwards
Q.2) Following account are being maintained in the books of Vadi lal. Classify them into Personal, Real and
Nominal accounts
a) Land and building
b) Excise duty
c) Creditors
d) Capital
e) Motor vehicles
f) Goodwill
g) Investment
h) Salary
i) Debtors
j) Bad debts
Modern Classification of Accounts
Assets Liability Capital Revenue Expense
Accounts Accounts Accounts Accounts Accounts
Q.3) Classify the following into Assets, Liabilities, Capital, Revenue, and Expenses:
a) Wages
b) Advance income
c) Accrued income
d) Goodwill
e) Furniture and fixture
f) Outstanding expenses
g) Capital
Q.4) Classify the following into Assets, Liabilities, Capital, Revenue, and Expenses:
a) Plant and machinery
b) Bank loan
c) Sales
d) Rent
e) Discount received
f) Carriage inwards
g) Carriage outwards
h) Purchase
i) Bills payables
Q.5) From the following transactions, State the nature of accounts and State which account will be
debited and which account will be credited:
a) Mohan Started business with cash 5,00,000
b) Purchased goods for cash 1,00,000
c) Sold goods for cash 1,50,000
d) Sold goods to Ashok 60,000
e) Purchased furniture for cash 50,000
f) Paid wages 20,000
Q.6) Prepare a T shape account of furniture and enter the following transactions:
a) Furniture purchased 50,000
b) Furniture sold costing 10,000
c) Furniture purchased 15,000
d) Old Furniture discarded 5,000
e) Depreciation on furniture 3,000
f) Purchase furniture on credit of 3,000
Thank you
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