DOUBLE ENTRY SYSTEM
Every business transaction has two fold aspects. Double entry system may be
defined "as a system of accounting in which out of the two aspects of a
transaction, one aspect is debited and the other aspect is credited according to
certain prescribed rules."
Double entry system was first introduced by “Lucas Pacioli”.
Types of
Accounts
Personal Real Nominal
Accounts Accounts Accounts
Represent
Natural Artificial Intangible Expenses Revenue
ative Tangible
Personal Personal Assets & Losses & Gains
Personal Assets
Accounts Accounts
Accounts
Cash
Bank
Sales
Purchases
Rent Received
Rent Paid
Capital
Wages
Plant
Building
Goodwill
Software
Outstanding Salary
Prepaid Rent
Rules of Debit and Credit
Types of Account Debit Credit
Personal Account The Receiver The Giver
Real Account What comes in What goes out
Nominal Account All expenses and losses All incomes and gains
Modern
classification of
Accounts
Asset Liability Capital Expense Revenue
Rules of Debit and Credit
Types of Account Debit Credit
Asset Account Increase Decrease
Liability Account Decrease Increase
Capital Account Decrease Increase
Expense Account Increase Decrease
Revenue Account Decrease Increase
Date Particulars L.F. Dr. Cr.
1 Cash A/C Dr. 5,00,000
To Capital A/C 5,00,000
2 Cash A/C Dr. 1,00,000
To Loan From Naresh A/C 1,00,000
3 Furniture A/C Dr. 20,000
To Cash A/C 20,000
4 Furniture A/C Dr. 40,000
To Delhi Safe 40,000
5 Purchases A/C Dr. 15,000
To Cash A/C 15,000
6 Purchases A/C Dr. 30,000
To Mahesh 30,000
7 Cash A/C Dr. 25,000
To Sales A/C 25,000
8
Shyam’s A/C Dr. 30,000
To Sales A/C 30,000
9 Cash A/C Dr. 20,000
To Shyam’s A/C 20,000
10 Mahesh’s A/C Dr. 10,000
To Cash A/C 10,000
Date Particulars L.F. Dr. Cr.
1 Cash A/C Dr. 5,00,000
To Capital A/C 5,00,000
2 Purchases A/C Dr. 1,00,000
To Cash A/C 1,00,000
3 Cash A/C Dr. 1,50,000
To Sales A/C 1,50,000
4 Cash A/C Dr. 500
To Interest A/C 500
5 Ashok’s A/C Dr. 60,000
To Sales A/C 60,000
6 Furniture A/C Dr. 50,000
To Cash A/C 50,000
7 Wages A/C Dr. 20,000
To Cash A/C 20,000
