Page 47 - ISCDEBK-XI

7.2 Double Entry Book Keeping—ISC XI

• Traditional Approach for Classification of Accounts

Accounts

Personal Real Nominal (Revenue or Expense)

Natural Artificial Representative

Rules for Debit and Credit when the accounts are classified as Personal, Real and Nominal.
Types of Account Rules for Debit Rules for Credit
1. For Personal Account Debit the receiver. Credit the giver.
2. For Real Account Debit what comes in. Credit what goes out.
3. For Nominal Account Debit all expenses and losses. Credit all gains and incomes.
• Modern Approach for Classification of Accounts

Accounts

Asset Accounts Liability Accounts Capital Accounts Revenue Accounts Expense Accounts

RULES FOR DEBIT AND CREDIT
Types of Account Accounts to be Debited Accounts to be Credited
1. Asset Accounts Increase Decrease
2. Liability Accounts Decrease Increase
3. Capital Accounts Decrease Increase
4. Revenue Accounts Decrease Increase
5. Expense Accounts Increase Decrease
According to modern classification, for Capital or Liability or Revenue Account—debit means decrease
while credit means increase, whereas for any Asset or Expense Account—debit means increase while
credit means decrease.
• Source Documents. Documents on the basis of which entries are recorded in the accounts are termed as
source documents.
• Double Entry Book Keeping. Double Entry Book Keeping refers to a system of accounting in which every
transaction is recorded under two aspects. Each debit has a corresponding credit of equal amount and
each credit has a corresponding debit of equal amount.
• Journal is the primary book of account in which transactions are originally recorded in a chronological
order, i.e., in the order they take place.
• Journal is a book of original entry because a transaction is first entered in the Journal from where it is
posted to the Ledger.
The process of recording transactions in a Journal is termed as Journalising. The transactions in a Journal
are recorded on the basis of rules of debit and credit.