Chapter: 2 Fundamental of Double Entry System

Mukund Pathak May 18, 2023

FYJC 11th Commerce 

                Book-Keeping and Accountancy   

Chapter: 2

 

Meaning and Fundamentals of 


Double Entry Book-keeping





Traditional Approach

$ Golden Rule of Debit and Credit:

Personal Account:            

Debit:   The Receiver

Credit:  The Giver

 Real Account;

Debit:   What Comes in

Credit:  What Goes Out

Nominal account:

Debit:   All Expenses & Losses

Credit:  All Income & Gain

Page No. 31

Illustration – 2 Classify the following accounts into Personal, Real and Nominal accounts.              

1) Stationery A/c     2) Mahesh's A/c     3) Machinery A/c     4) Capital A/c    5) Loss by Fire A/c     

6) Pune Municipal Corp. A/c     7) Building A/c    8) Bank of Maharashtra A/c         9) Copyright A/c

10) Repairs A/c      11) Laptop A/c     12) Wages A/c

Personal

Real

Nominal

2) Mahesh's A/c

4) Capital A/c

6) Pune Municipal Corp. A/c

8) Bank of Maharashtra A/c

3) Machinery A/c

7) Building A/c

9) Copyright A/c

11) Laptop A/c

1) Stationery A/c

5) Loss by Fire A/c

10) Repairs A/c

12) Wages A/c

 

Illustration – 3 Classify the following accounts under Personal, Real and Nominal Accounts.        

1) Cash A/c                 2) Outstanding Salary A/c      3) Rohit's A/c                      4) Furniture A/c 

5) Life Insurance Corp. A/c    6) Goodwill A/c        7) Prepaid Insurance A/c      8) Trademark A/c      

9) Commission A/c              10) Loan A/c            11) Drawings A/c                       12) Interest A/c

 

Personal

Real

Nominal

2) Outstanding Salary A/c

3) Rohit's A/c

5) Life Insurance Corp. A/c

7) Prepaid Insurance A/c

10) Loan A/c

1) Cash A/c

4) Furniture A/c

6) Goodwill A/c

8) Trademark A/c

9) Commission A/c

11) Drawings A/c

12) Interest A/c

 

Page No. 42

Q.6 Classify the following accounts under the types of Personal, Real and Nominal account.                         

1) Mr. Rohit’s capital A/c       2) Loose Tools A/c                  

3) Drawing A/c                        4) Cartage A/c     

5) Prepaid Rent A/c                 6) Copyright A/c          

7) Patent A/c                              8) Outstanding Income A/c     

9) Prepaid Expenses A/c            10) Commission Received A/c                                    

11) Freight A/c                           12) Plant and Machinery A/c                           

13) Sundry Income A/c              14) Live Stock A/c                                                 

15) Goods distributed as free sample A/c                                 

16) Radhika`s A/c                                     17) Outstanding Wages A/c    

18) Loss on Sale of Furniture A/c           19) Bank of Maharashtra A/c         

20) Loan A/c                                            21) Computer A/c 

22) Legal Expenses A/c                           23) Fixed Deposit A/c                                            

24) Income Receivable A/c                       25) Audit Fees A/c          

26) Trademark A/c                                    27) Loss by fire A/c    

28) Motor Car A/c                                     29) Income tax A/c 

30) GST A/c (Goods and Service Tax)      31) Siddhivinayak Trust A/c  

32) Office Equipment A/c                           33) Stock of Stationery A/c           

34) Indian Railways A/c                             35) Income Received in Advance A/c       

36) Dividend on Investment A/c                 37) Discount A/c          

38) Raj & company A/c                               39) Repairs A/c                                     

40) Royalty A/c

Personal

Real

Nominal

1) Mr. Rohit’s capital A/c

5) Prepaid Rent A/c

8) Outstanding Income A/c    

9) Prepaid Expenses A/c

16) Radhika`s A/c

17) Outstanding Wages A/c

19) Bank of Maharashtra A/c

20) Loan A/c

24) Income Receivable A/c

31) Siddhivinayak Trust A/c

34) Indian Railways A/c

35) Income Received in Advance A/c

38) Raj & company A/c

2) Loose Tools A/c

6) Copyright A/c

7) Patent A/c

12) Plant and Machinery A/c

14) Live Stock A/c

21) Computer A/c

23) Fixed Deposit A/c

26) Trademark A/c

28) Motor Car A/c

32) Office Equipment A/c

33) Stock of Stationery A/c

3) Drawing A/c

4) Cartage A/c

10) Commission Received A/c

11) Freight A/c

13) Sundry Income A/c

15) Goods distributed as free sample A/c

18) Loss on Sale of Furniture A/c

22) Legal Expenses A/c

25) Audit Fees A/c

27) Loss by fire A/c

29) Income tax A/c

30) GST A/c (Goods and Service Tax)

36) Dividend on Investment A/c

37) Discount A/c

39) Repairs A/c

40) Royalty A/c

 

 

Illustration – 4 Classify the following accounts under Assets, Liabilities, Income and Expenditure.

1) Prepaid Rent                       2) Salary A/c                   3) Bank Loan A/c       

4) Motor Car A/c                     5) Rent Payable A/c        6) Bad Debts A/c        

7) Copyright A/c                      8) Interest Received A/c    9) Dividend Received A/c                        

10) Premises A/c                   11) Insurance Premium A/c    12) Audit Fees A/c

Assets

Liabilities

Income

Expenditure

Capital

1) Prepaid Rent A/c

4) Motor Car A/c

7) Copyright A/c

10) Premises A/c

3) Bank Loan A/c

5) Rent Payable A/c

8) Interest Received A/c

9) Dividend Received A/c

2) Salary A/c

6) Bad Debts A/c

11) Insurance Premium A/c

12) Audit Fees A/c

 

 

 

Illustration – 5 Classify the following accounts into Assets, Liabilities, Income, Expenditure and Capital.

1) Land and Building                          2) Interest Received                        3) Computer           

4) Sundry Creditors                             5) Bills Receivables                        6) Discount Allowed 

7) Sundry Debtors                                8) Goodwill                                     9) Freight                        

10) Discount Received                        11) Bills Payable                             12) Amit`s Capital    

13) Interest on Fixed deposit.            14) Bank Overdraft                          15) Live Stock             

16) Printing & Stationery                    17) Cash at Bank                            18) Rent Received              

19) Repairs & Maintenance                   20) Carriage                                  21) Outstanding Rent 

22) Commission Received                  23) Bank Loan                                  24) Electricity Bill  

25) Copyright

Assets

Liabilities

Income

Expenditure

Capital

1) Land and Building

3) Computer

5) Bills Receivables

7) Sundry Debtors

8) Goodwill

15) Live Stock            

17) Cash at Bank

25) Copyright

4) Sundry Creditors

11) Bills Payable

14) Bank Overdraft

21) Outstanding Rent

23) Bank Loan

2) Interest Received

10) Discount Received

13) Interest on Fixed deposit

18) Rent Received

22) Commission Received

6) Discount Allowed

9) Freight    

16) Printing & Stationery

19) Repairs & Maintenance

20) Carriage

24) Electricity Bill  

                 

12) Amit`s Capital    

 

Personal Account:

Debit:   The Receiver

Credit:  The Giver

 Real Account;

Debit:   What Comes in

Credit:  What Goes Out

 Nominal account:

Debit:   All Expenses & Losses

Credit:  All Income & Gain

 

I) From the following transactions find out

1) Two aspects                       2) Two accounts                    3) Classify the accounts

1) Commenced business with Cash Rs. 20,000.

2) Purchased goods on credit from Ajay ` 10,000.

3) Cash Sales ` 7,000.

4) Received commission ` 500. Cash

5) Paid Rent ` 800.

Solution: Two Aspects

Sr. No.

Aspects I

Aspects II

1

Cash comes in

Proprietor is Giver

2

Purchased is Expenses & Losses

Ajay is Giver

3

Cash comes in

Sales is Income & Gain

4.

Cash comes in

Commission is Income & Gain

5.

Rent is Expenses

Cash Goes Out

 

2) Two Aspects & Two accounts

Sr. No.

Two Aspects

 

Two Accounts

1

Cash comes in

Proprietor is Giver

Cash A/c

 

Capital A/c

2

Purchased is Expenses & Losses

Ajay is Giver

Purchased A/c

 

Ajay’s A/c

3

Cash comes in

Sales is Income & Gain

Cash A/c

 

Sales A/c

4.

Cash comes in

Commission is Income & Gain

Cash A/c

 

Commission A/c

5.

Rent is Expenses

Cash Goes Out

Rent A/c

 

Cash A/c

 

3) Two Aspects, Two Accounts and Classify the Accounts.

Sr. No.

Two Aspects

 

Two Accounts

Classification

1

Cash comes in

Proprietor is Giver

Cash A/c

Capital A/c

Real A/c

Personal A/c

2

Purchased is Expenses & Losses

Ajay is Giver

Purchased A/c

Ajay’s A/c

Nominal A/c

Personal A/c

3

Cash comes in

Sales is Income & Gain

Cash A/c

Sales A/c

Real A/c

Nominal A/c

4.

Cash comes in

Commission is Income & Gain

Cash A/c

Commission A/c

Real A/c

Nominal A/c

5.

Rent is Expenses

Cash Goes Out

Rent A/c

Cash A/c

Nominal A/c

Real A/c

From the following transactions find out

1) Two Aspects                      2) Two Accounts                   3) Classify the Accounts and Fill the following Tables

1) Started business with Cash Rs. 50,000.

2) Purchased Machinery on credit from Avinash Rs. 20,000.

3) Purchased goods Rs. 5,000 from Rahul on cash.

4) Sold goods to Aniket Rs. 6,000 on credit.

5) Paid Salary Rs. 1,000.

6) Sold old Tables for Rs.3,000

Solution:

Two Aspects

Sr. No.

Aspects I

Aspects II

1

Cash Comes in

Proprietor is Giver

2

Machinery Comes in

Avinash is Giver

3

Purchases is Expenses & Losses

Cash is Goes out

4.

Aniket is Receiver

Sales is Income & Gain

5.

Salary is Expenses & Losses

Cash Is Goes Out

6.

Cash cones in

Furniture Goes out

 

2) Two Aspects & Two accounts

Sr. No.

Two Aspects

 

Two Accounts

1

Cash Comes in

Proprietor is Giver

Cash A/c

 

Capital A/c

2

Machinery Comes in

Avinash is Giver

Machinery A/c

 

Avinash’s A/c

3

Purchases is Expenses & Losses

Cash is Goes out

Purchases A/c

 

Cash A/c

4.

Aniket is Receiver

Sales is Income & Gain

Aniket’s A/c

 

Sales A/c

5.

Salary is Expenses & Losses

Cash Is Goes Out

Salary A/c

 

Cash A/c

6.

Cash Comes in

Furniture Goes out

Cash A/c

 

Furniture A/c

3) Two Aspects, Two Accounts and Classify the Accounts.

Sr. No.

Two Aspects

 

Two Accounts

Classification

1

Cash Comes in

Proprietor is Giver

Cash A/c

Capital A/c

Real A/c

Personal A/c

2

Machinery Comes in

Avinash is Giver

Machinery A/c

Avinesh’ A/c

Real A/c

Personal A/c

3

Purchases is Expenses & Losses

Cash is Goes out

Purchases A/c

Cash A/c

Nominal A/c

Real A/c

4.

Aniket is Receiver

Sales is Income & Gain

Aniket’s A/c

Sales A/c

Personal A/c

Nominal A/c

5.

Salary is Expenses & Losses

Cash Is Goes Out

Salary A/c

Cash A/c

Nominal A/c

Real A/c

6.

Cash Comes in

Furniture Goes out

Cash A/c

Furniture A/c

Real A/c

Real A/c

 

Page No: 26

Analysis of transaction by applying rules of Debit and Credit (Traditional Approach)

Sr. No.

Transaction

Two Aspects

Two Accounts

Classification A/c

Ruled Applies

Account to be Debit

Account to be Credit

1.

Commenced business with cash Rs. 50,000

1) Cash Comes in

 

2) Proprietor is Giver

 

Cash A/c

 

Capital A/c

Real A/c

 

Personal A/c

1)Debit What Comes in

2) Credit is the Giver

 

Cash A/c

 

 

 

Capital A/c

 

2.

Advertisement paid Rs.5,000 to Imran

1)Advertisement is Expenses

 

2) Cash is Goes out

Advertisement A/c

 

Cash A/c

Nominal A/c

 

 

Real A/c

1)Debit is All Expenses & Losses

2) Credit what goes out

Advertisement A/c

 

 

 

 

Cash A/c

3.

Deposited cash into the Bank of India Rs. 10,000

1)Bank of India is Receiver

2)Cash is Goes out

Bank of India A/c

 

Cash A/c

Personal A/c

 

Real A/c

1)Debit the Receiver

2) Credit what goes out

Bank of India A/c

 

 

 

Cash A/c

4.

Purchased Goods from Sunil Rs. 13,000

1)Purchase is Expenses

2)Sunil is Giver

Purchases A/c

 

Sunil’s A/c

Nominal A/c

 

Personal A/c

1)Debit is Expenses/ Losses

2)Credit is Giver

Purchases A/c

 

 

 

Sunil’s A/c

5.

Sold goods for cash Rs. 12,000

1)Cash is Comes in

2)Sales is an Income

Cash A/c

Sales A/c

Real A/c

Nominal A/c

1) Debit what comes in

2)Credit is Income/Gain

Cash A/c

 

Sales A/

6.

Received Commission Rs. 4,500

1)Cash is Comes in

2) Commission is an Income

Cash A/c

Commission A/c

Real A/c

Nominal A/c

1)Debit what comes in

2)Credit is Income/Gain

Cash A/c

 

Commission A/c

 

Page No: 27

Analysis of transaction by applying rules of Debit and Credit (Traditional Approach)

Sr. No.

Transaction

Two Aspects

Two Accounts

Classification A/c

Ruled Applies

Account to be Debit

Account to be Credit

1.

Commenced business with cash Rs. 90,000

Cash comes in

Proprietor is Giver

Cash A/c

Capital A/c

Real A/c

Personal A/c

Debit What Comes in

Credit is Giver

Cash A/c

 

 

Capital A/c

2.

Deposited cash into Dena bank Rs. 9,000

Dena Bank is Receiver

Cash Goes out

Dena Bank A/c

 

Cash A/c

Personal A/c

 

Real A/c

Debit The Receiver

 

Credit What Goes out

Dena Bank A/c

 

 

 

Cash A/c

3.

Withdrew cash for Personal use Rs. 1,500

Drawing is Expenses

Cash is Goes out

Drawing A/c

 

Cash A/c

Nominal A/c

 

Real A/c

Debit all Expenses & Losses

Credit What Goes out

Drawing A/c

 

 

 

Cash A/c

4.

Purchased Goods from Mandar Rs. 12,000

Purchases is Expenses

Mandar is Giver

Purchases A/c

 

Mandar’s A/c

Nominal A/c

 

Personal A/c

Debit all Expenses & Losses

Credit is Giver

Purchases A/c

 

 

 

Mandar’s A/c

5.

Paid salary Rs. 2,900

Salary is Expenses

Cash Goes Out

Salary A/c

 

Cash A/c

Nominal A/c

 

Real A/c

Debit all Expenses & Losses

Credit What Goes out

Salary A/c

 

 

Cash A/c

6.

Received Interest Rs. 4,000

Cash Comes in

Interest is Income & Gain

Cash A/c

Interest A/c

Real A/c

Nominal A/c

Debit What comes in

Credit all Income & Gain

Cash A/c

 

Interest A/c






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