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What is meant by Debit&Credit?

Human Life In Different Stages

SACRIFICE
Without sacrifice
You cannot reach
Your goals ,wants
&needs

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What is meant by Debit &Credit ?

Debit (DR) means “receiving aspect”
Credit (CR) means ”giving aspect”

What is meant by aspect?

Aspect refers to either it may be an “Asses (or) liability
(or) income (or) expenditure(or) profit(or)loss.

Why we use accounting rules?

Confusion
Global wide transactions

Transactions other than persons

Transactions with persons Transactions with things
&things

Nominal A/c
Personal A/C Real A/C

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Part-2
Accounting Rules (or) Accounting principles (or) Types
of Accounts (or) Golden Rules of Accounts

PERSONAL A/C IMPERSONAL A/C

Personal Account?

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1. Transactions with natural Person

Eg: Human Beings
Rama A/C
Sita A/C

2. Transactions With Artificial Persons

Eg: Business Which is registered under any Law
SKILL WORLD,ltd A/C XYZ (P).ltd A/C

3. Transactions with Representative persons

Eg: Person who act on behalf of a group of persons
Capital A/c drawings A/c outstanding Expenses A/c
Rule:
Debit the receiver credit the giver
Capital

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Business Owner
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Impersonal A/C

Real A/C Nominal A/C

All assets including All Expenses,losses,

cash and bank balance incomes,gains etc.

Eg: Furniture,machinary,land, Eg: salaries paid,
Cash,stock etc. Interest Received, Rent

paid,Wages etc.

RULE: RULE:

Debit what comes in Debit all expenses and losses

Credit What goes out Credit all incomes& gains

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Book Keeping It is used a book which to record day to day

transactions of the business the person who maintain such
book is called “book keeper”
Eg: 1-4-2016 furniture purchased for rs. 20,000/-

Journal
the journo “refers to “A day “ in latin language . it is a book
which is used to record day to day transactions of the
business by using separate debit and credit aspects in a
chronological order.
Performa : structure (no. of rows & columns
Journal performa
Date Particulars L.F DEBIT(RS) CREDIT(Rs)
2016 Furniture A/CDr 20.000 20.000
1-4 To cash a/c ,
Being furniture
Purchased for
cash

PROBLEMS
Problems 1:

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2014
01-10 lakshimi started business with Rs.2500000

02-10 goods purchased for cash Rs.25000

04-10 goods sold for cash Rs.35000

06-10 furniture purchased for Rs.75000

9-10 goods purchased for Rs 10000

11-10 goods purchased from Ramu for Rs, 25000

12-10 goods purchased from sita for cash Rs,35000

13-10 goods sold to lakshimi for Rs50000

14-10 goods sold hari for cash RS , 35000

15-10 Rent paid Rs .5000

16-10 salaries paid RS.100000

17-10 Interest Received Rs . 7500

18-10 Machinery purchased Rs.250000

19-10 Horse Purchased for Rs. 50000

20-10 Amount brought by Lakshmi into the business Rs.200000

20-10 Owner with drawn Cash from the business for personal use Rs.5000

20-10 Owner With drawn Cash from the business inorder to purchase a saree
22-10 Horse carcase [purchased on 19-10-2014] were sold for Rs.30000

25-10 Goods purchased by Rahim Rs.20000

28-10 Goods sold by Ramana Rs.25000

for his wife Rs.100000

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2014
1-10 Cash A/C Dr 25,00,000 25,00,000
To capital a/c
2-10 Purchase a/c 25,000
To cash a/c 25,000
4-10 Cash a/c Dr 35,000
To sale a/c 35,000
6-10 Furnitures a/c dr 75,000
To cash a/c
Purchase a/c dr 75,000
9-10 To cash a/c 10,000
Purchase a/c dr
To ramu a/c 10,000
11-10 Purchase a/c dr 25,000
To sita a/c
Lakshman a/c dr 25,000
12-10 To sales a/c 35,000
Cash alc dr
To sales a/c rent 35,000
13-10 a/c dr 50,000
To cash a/c
Salaries a/c dr 50,000
14-10 To cash a/c 35,000
Cash a/c dr 35,000
15-10 To interest a/c 5,000
Machinery a/c dr 5,000
16-10 To cash a/c 1,00,000
Livestock a/c dr 1,00,000
17-10 To cash a/c 7,500
Cash a/c dr 7,500
18-10 To adni. Capital 2,50,000

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Drawing a/c dr
To cash 2,50,000
19-10 Drawing a/c dr 50,000
To cash a/c
Cash a/c dr 50,000
20-10 Profit & loss dr 2,00,000
To live stock a/c
Rahim a/c dr 2,00,000
20-10 To sales a/c 5,000
Purchses a/c dr 5,000
20-10 To ramana a/c 1,00,000
1,00,000
22-10 30,000
20,000
50,000

25-10 20,000
20,000
28-10 25,000

25,000

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LEDGER ?

Ledger is a type of folder , which is used to save information

Generally , we maintain separate folders according our
requirement.
We cannot maintain one holder to store all fills.

foider

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1-4-2016 business stated wih rs. 10,00,000

Cash a/c dr 10,00,000

ACCOUNT LEDGER FOLDER

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Purchases A/C TO cash A/C

Date Particulars L.F Account Date Particulars L.F Account

2014 2014 By purchases 25000

1-10 To capital A/c 2000000 2-10

4-10 To sales 35000 6-10 By furnitures 70000

14-10 To sales 35000 9-10 By purchases 10000

17-10 To interest 7500 12-10 By purchases 35000

received

20-10 To adni capital 200000 15-10 By rent 5000

22-10 To live stock 30000 16-10 By salaries 100000

18-10 By machinery 250000

19-10 By Live stock 50000

20-10 By drawings 5000

20-10 By drawings 100000

31-10 By Balance C/d 16,12,500

2-11 To balance B/d 23,07,500 23,07,500

16,12

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Obligation to receive money {or} benefits in future from the other part {or}

From the other business.

shop

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Current Assets

Though fixed assets business can Though current assets business can
enjoy the benefits in a long run, I,e, enjoy the benefits in a short run, I,e,
more than 1 year. less- than 1 year.

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Fixed Assets Current Assets

Goods stock

Examples or
intangible Assets

 Good will

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 Patent Rights

 Copy Rights

 Trade Marks

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Business

Double Entry System?

Assets purchases

Assets sold goods

Purchases,goods
Our business
Sold expenses

Spent in comesa/c dr 20.000

Purchase
Received profits,
To cash losses
a/cetc.20.000
re

Goods purchased by the business ssssssss

for Rs.20.000

Debit=Credit

Debit = Credit

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Debit =Credit
ERROR

Trial?

Vehiles

Trial

Balance?

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Serial No Name of the Debit (Rs) Credit(Rs)

Account .....................

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1 Capital (1-7-2016) 8,950 1,050

2 Drawings …………………….. …………………
3 Stock (1-7-2016) 3,725 …………………
4 Purchases 23,100 39,425
5 Sales …………………… …………………
6 Wages & Salaries 6,205 ………………...
7 Lighting &Heating 310 …………………
8 Equipment 3,600 230
9 Carriage Outwards ……………………. …………………..
10 Carriage Inwards 105 290
11 Returns Outwards ……………………… …………………..
12 Provision for Bad 350 315
13 debts ……………………… ……………………
14 Discount Allowed 1,115 ……………………
15 Rent,Rates&Insurance 1,475 …………………..
16 Motor Vehicles 110 …………………..
17 Cash in hand 4925 13,920
18 Sundary Creditors ………………… ……………………
19 Sundary Debtors 975
Bank Overdraft
55,230
55,230

Suspense Account ?

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IIustrated Problem :

The following Trial Balance of Durlabh singh has been

prepared wrongly . you are asked to prepare the Trial balance
correctly.

Part-9
How To Rectify Suspense Account ?

Rectification of
suspense A/c

Rectification of Errors after

Rectification of Errors
preparation of Trial
balance but before the after preparation of
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preparation of final final Accounts
Accounts
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Rectification of Errors after preparation of Trial Balance

but before the preparation of Final Accounts
A bookkeeper having failed to tally balance on 31st may 2016

Date Particulars L.F Debit Credit

opened a suspense a/c and transferred the difference of
Rs.1709 to the credit of suspense a/c the following errors
were later discovered:
1) Sales book was under cast by Rs.2000.
2) Purchase of machinery for Rs.3000 was passed through
the purchase book.
3) Goods sold to vijaya for Rs.45 was posted to her account
as Rs.54.
4) Purchase returns book was over cast by Rs.200.
5) The total of sales book was carried forward from page 5
to 6 as Rs.1222 instead of Rs.1122.

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(1) Suspense A/c dr 2000 …………..

To Sales A/c …………... 2000

(2) Machinery A/c dr 3,000 …………..

To Purchases A/c ………….. 3,000

(3) Suspense A/c dr 9 …………..

To vijay A/c …………. 9

(4) Purchase Returns A/c dr 200 …………..

To Suspense A/c ………….. 200

(5) Sales A/C dr 100 ……………

To Suspense’s A/c ………….. 100

Date Particulars JF Amount Date Particulars JF Amount

2016 2016
(1) To Sales 2000 1-6 By Balance b/d 1,709
(3) To Vijay 9 (4) By Pur Returns 200
(5) By Sales 100
2009 2009

Date Particulars J Amount Date Particulars JF Amount

F

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2016 2016
(3) To Suspense A/c 200 (1) By Suspense 2000
(4) To Suspense A/c 100 (2) By Machinery 3000

5000 5000

How To Rectify Suspense Account ?

Rectification of
suspense A/c

Rectification of Errors after

Rectification of Errors
preparation of Trial
balance but before the
after preparation of
preparation of final final Accounts
Accounts

Rectification of Errors after preparation of Trial

Balance but before the preparation of Final Accounts

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A bookkeeper having failed to tally balance on 31st may 2016

opened a suspense a/c and transferred the difference of
Rs.1709 to the credit of suspense a/c the following errors
were later discovered:
6) Sales book was under cast by Rs.2000.
7) Purchase of machinery for Rs.3000 was passed through
the purchase book.
8) Goods sold to vijaya for Rs.45 was posted to her account
as Rs.54.
9) Purchase returns book was over cast by Rs.200.
10) The total of sales book was carried forward from
page 5 to 6 as Rs.1222 instead of Rs.1122.
Date Particulars L.F Debit Credit
(1) Suspense A/c dr 2000 …………..
To Sales A/c …………... 2000

(2) Machinery A/c dr 3,000 …………..

To Purchases A/c ………….. 3,000

(3) Suspense A/c dr 9 …………..

To vijay A/c …………. 9

(4) Purchase Returns A/c dr 200 …………..

To Suspense A/c ………….. 200

(5) Sales A/C dr 100 ……………

To Suspense’s A/c ………….. 100

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Date Particulars J Amount Date Particulars JF Amount

F
2016 2016
(3) To Suspense A/c 200 (1) By Suspense 2000
(4) To Suspense A/c 100 (2) By Machinery 3000

5000 5000

Date Particulars JF Amount Date Particulars JF Amount

2016 2016
(1) To Sales 2000 1-6 By Balance b/d 1,709
(3) To Vijay 9 (4) By Pur Returns 200
(5) By Sales 100
2009 2009

Wages
&
Carriage inwards

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Carriage outwards

Our business

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customer business

OCTROI
Tax
time

Municipal corparation

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