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6.2 Double Entry Book Keeping—CBSE XI

CHAPTER SUMMARY

• An Account is a summarised record of relevant transactions at one place relating to a particular
head. It records not only the amount of transactions but also their effect and direction.
• Debit and Credit: Debit and Credit are simply additions to or subtraction from an account. In
accounting, debit refers to the left hand side of any account and credit refers to the right hand side.
In accounting the abbreviated form Dr. stands for debit and Cr. stands for credit.
Both debit and credit may represent either increase or decrease depending upon the nature
of an account.

• Traditional Classification of Accounts
Accounts

Personal Impersonal

Natural Artificial Representative Real Nominal (Revenue or Expense)

The Rule of debit and credit depends on the nature of an account.

Types of Account Account to be Debited Account to be Credited
1. Personal Account Receiver Giver
2. Real Account What comes in What goes out
3. Nominal Account Expenses and Losses Income and Gains
• Modern Classification of Accounts

Accounts

Asset Account Liability Account Capital Account Revenue Account Expense Account
The Rule of debit and credit depends on the nature of an account.

RULES FOR DEBIT AND CREDIT
Types of Account Account to be Debited Account to be Credited
1. Asset Account Increase ↑ Decrease ↓
2. Liability Account Decrease ↓ Increase ↑
3. Capital Account Decrease ↓ Increase ↑
4. Revenue Account Decrease ↓ Increase ↑
5. Expense Account Increase ↑ Decrease ↓

• Assets, expenses and losses accounts normally have debit balances; liability, income and
capital accounts normally have credit balances.