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MAC Rules of Account part 1.txtReal accounts: (all assets)Debit what comes incredit what goes out

Personal accounts : Call 1iabi 1ities)

Debit the receivercredit the giverNominal accounts: Call expenses and profit and gains)Debit all expenses and lossescredit all incomes and gains

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MAC Rules of Accounts part 2.txtFor any recording in book of accounts there should be ~ransaction.Transaction having monetary value alone can be recorded.4 essentials for a transaction

Da~eAmountReceipt/paymentReason

The reason becomes account head.Types of accountsPersonal Ale of persons or group of persons.

ex : ABe Ltd, XYZ Bank, Mr. a, Mr.BImpersonal

Real Ale->->->ex

tangiblenon-recurringenduring life: land, building, plant, machinery, livestock, cash.

furniture, vehices.Nominal AIC

-> intangible-> recurri ng-> short livedex : profit, loss, salary, wages,

electricity, expenditure, revenue, purchases, sales.stationery, travelling,

Rules for accountingNominal Debit all expenses, losses

credit all incomes, gains, profitReal Debit all that comes in

credit all that goes outpersonal

Debit the receiverCredit the giver

Examples1) purchased furniture for RS. 50000

A/e involvedFurniture (real)cash (nominal)

Furnitue A/e debitTO cash A/ecash A/e credit

By Furniture Ale2) purchased goods for Rs llakh

Alc involvedpurchase (nominal)eash (real)

purchase Ale debitTO eash Ale

Cash A/e creditBy purchase A/e

goods for RS 2 lakhsA/e involvedsales (nominal)

cash (real)

3) sold

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MAC Rules of Accounts Part 2.txteash Ale debit

TO sales A/csales A/c creditBy eash Ale

4) opened bank alc by depositing 1 lakhAle involvedBank (real)

cash (real)Bank Ale debit

To eash Aleeash A/c creditBy Bank Ale

5) Received cheque for sale of goods RS 2 lakhsAle involvedsales (nominal)

Bank (real)Bank Ale debitTo sales A/c

Sales Ale creditBy Bank Ale6) opened bank ale by depositing 1 lakh

Ale involvedBank (real)cash (real)

Bank Ale debitTO Cash Ale

cash AIC creditBy Bank A/c

7) Paid salary Rs 50,000 by chequeAle involvedBank (real)

salary (Nominal)Salary A/c debit

To eash AleBank Ale creditBy salary Ale

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Steps involved in making journal entries:i) Find out how many accounts are involved (minimum 2 accounts are involved).ii) Find out each account either coming under real account or personal account or nominal account.iii) Accordingly apply the rule to decide debit and credit.( Giving debit to any account means putting the figure on left hand side of that account.Giving credit to any account means putting the figure on the right hand side of that account)

Transactions:i] Company purchased furniture of Rs lO,DOOand paid in cash.ii) Telephone expenditure of Rs1,000 in cash.Hi) Cornpany received cash of Rs100000 towards equity capital.iv) Company deposited Rs 25000 cash in lOBI bank account.vJ Purchased goods of Rs 20000 and paid through cash.vi) Purchased goods of Rs30000 from ABC Ltd on credit.vii) Issued a cheque of Rs30000 to ABC Ltd against the purchases.viii) Purchased goods of Rs10000 from XYZLtd on credit basis.ix) Issued a cheque on favour of XYl Ltd of Rs9500 in full settlement.x) Sold goods of Rs40000 against cash.xi) Sold goods of Rs 15000 to PQRltd on credit basis.xii) Received Rs 14000 by cheque from PQRLtd in full settlement.xiii) Charge depreciation of Rs500 on furniture.xiv) Telephone bill of Rs 1000 is outstanding.

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SrNo Date Transaction Ale invoived

1 1st Jan 2009 Started business by introducing cash of Rs. 500000Cash elc :debit

Capital elc : credit2nd January Bank alc : debit-

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Opened bank a7c by depositing Rs. 100000Cash etc : credit

33rd January

Purchased furniture Rs.sO,OOOand paid by chequeFurniture alc : debit

2009 Bank alc : creditPurchase alc : debit

44th January Purchased goods of Rs2,00,000 from X&Co to whom Rs. 50,000 paid Cash alc : credit

2009 in cash and like amount by cheque Bank alc : creditX&Co alc : creditBank lac: debit

55th January Sold goods to Y&Co for Rs. 3,00,000 who paid 50% by cheque & Rs Cash a/c : debit

2009 1,00,000 in cash Y&co: debitSales a/c : credit

X&co: debit

66th January Settled X&Co elc in account by paying Rs 50,000 by cheque balance in Bank alc : credit

2009 cash who offered discount of 10% on dues Cash ale: creditDiscount received ale: credit

77th January

Paid salary by cheque Rs.25,000Salary a/c : debit

2009 Bank alc : credit

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Date Particulars L.F Debit Credtt:(Rs) (Rs)

1/1/2009 Cash alc Dr 5,00,000To Capital alc 5,00,000

(Capital introduced in cash).2/1/2009 Bank alc Dr 1,00,000

To Cash a/e 1,00,000(Opened bank alc by depositing cash)

3/1/2009 Furniture elc. Or 50,000To Bank ale 50,000

(Chq no: XXXX paid to : YYYYagainstTI no : ZZZZvide receipt no: AAAA)

41112009 Purchase ale Dr 2,00,000To Cash alc 50,000To Bank alc 50,000To X&Co ale 1,00,000

(Chq no : XXXX paid to : X&Co against TI no : YYYYvide receipt no : ZZZZtowardspart-payment; balance to be paid to X&Co Rs1,00,000)

5/1/2009 Cash alc Or 1,00,000Bank ale Dr 1,50,000Y&Co ale Dr 50,000

To Sales a/c 3,00,000(Sales of Rs3,00,000 from Y&Co; 50,000 received by cash, 1,00,000 received bycheque, balance Rs 50,000 to be received from Y&co)

6/1/2009 X&Co elc Or 1,00,000To Cash alc 40,000To Bank alc 50,000To Discount Received a/e 10,000

(Settled X&Co alc in full by paying 40,000 in cash 50,000 in cheque and got adiscount of 10%on balance dues which is equa I to 10,000)

7/1/2009 salarv a/c Or 25,000To Bank ale 25,000

(Chq no : ><XXXpaid to M r YYYYtowards salary for month of December 2008)

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Date ParticularsL.F Debit CreditNo (Rs) (Rs)

Furniture ale Or 50000

To Cash ale 50000(Furniture purchased)Telephone Expenditure ale Or 1000

To Cash ale 1000(Paid telephone bil of Rs 1000)Cash ale Or 100000

To Equity Capital ale 100000(Company received 100000 towards equity capital)lOBI bank ale Or 25000

To Cash ale 25000(Company deposited 25000 cash in bank account)Puehases ale Or 25000

To Cash alc 25000(Purchased goods worth 25000 by paying cash)Purchases ale Or 30000

To ABC Ltd ale 30000(Purchased goods worth 30000 on credit from ABC Ltd)

ABC Ltd alc Or 30000

To Bank ale 30000(Paid ABC Ltd 30000 by cheque)Purchases el: Or 10000

To XYZ Ltd elc 10000(Purchasedgoods worth 10000 on credit from XVZ Ltd)

XYZ Ltd ale Dr 10000

To Bank ale 9500

To Discount ale(9500 paid by cheque in full settlement of purchase of goods worth 50010000 from XVZ Ltd)Cash ale Or 40000

To Sales ale 40000

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(Sales of Rs 40000 in cash)PQR Ltd ale Dr 15000

To Sales ale 15000(Sales of Rs 15000 to PQR in credit)

Bank ale Dr 14000Discount ale Dr 1000

To PQR Ltd ale 15000(Received Rs 14000 in full settlement from PQR Ltd)Depreciation ale Dr 500

To Furniture ale 500(Charge 500 depreciation on furniture)Telephone Expenditure ale Dr 1000

To Outstanding Expense ale 1000(Bill of Rs 1000 is outstanding)

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Journal Entries