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  • Rules For Recording Transaction of Books of Account: by Shruthi.S

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    This document outlines the traditional and modern methods of recording transactions in accounting books. The traditional method classifies accounts as personal, real, or nominal. Personal accounts are debited when the person receives and credited when they give. Real accounts are debited for increases in assets and credited for decreases. Nominal accounts are debited for expenses and losses, and credited for incomes and gains. The modern (American) method classifies accounts as assets, liabilities, capital, or revenue. Assets and expenses are debit accounts, while liabilities, capital and revenue are credit accounts. Under this method, accounts are debited when they increase and credited when they decrease.

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    This document outlines the traditional and modern methods of recording transactions in accounting books. The traditional method classifies accounts as personal, real, or nominal. Personal accounts are debited when the person receives and credited when they give. Real accounts are debited for increases in assets and credited for decreases. Nominal accounts are debited for expenses and losses, and credited for incomes and gains. The modern (American) method classifies accounts as assets, liabilities, capital, or revenue. Assets and expenses are debit accounts, while liabilities, capital and revenue are credit accounts. Under this method, accounts are debited when they increase and credited when they decrease.

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    © All Rights Reserved
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    7 views5 pages

    Rules For Recording Transaction of Books of Account: by Shruthi.S

    Uploaded by

    Shruthi
    This document outlines the traditional and modern methods of recording transactions in accounting books. The traditional method classifies accounts as personal, real, or nominal. Personal accounts are debited when the person receives and credited when they give. Real accounts are debited for increases in assets and credited for decreases. Nominal accounts are debited for expenses and losses, and credited for incomes and gains. The modern (American) method classifies accounts as assets, liabilities, capital, or revenue. Assets and expenses are debit accounts, while liabilities, capital and revenue are credit accounts. Under this method, accounts are debited when they increase and credited when they decrease.

    Copyright:

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    of 5

    RULES FOR RECORDING

    TRANSACTION OF
    BOOKS OF ACCOUNT

    BY…SHRUTHI.S
    1.TRADITIONAL METHOD

    PERSONAL IMPERSONAL

     Natural Personal a/c  Real a/c

     Artificial personal a/c  Nominal a/c

     Representative Personal a/c


    G O L DEN RUL ES OF
    AC COUNTI NG

    ACCOUNT DEBIT CREDIT


    PERSONAL A/C WHEN A PERSON WHEN A PERSON
    IS A RECEIVER IS A GIVER

    REAL A/C WHAT COMES IN WHAT GOES OUT


    AS A ASSET AS ASSEST

    NOMINAL A/C EXPENSES/LOSS INCOME/GAIN


    2.MODERN METHOD[AMERICAN
    METHOD]

    ASSET CAPITAL REVENUE

    LIABILITY EXPENSE
    RULES OF MODERN
    ACCOUNTING

    ASSET EXPENSE
    ASSET AND EXPENSE HAVE SAME ACCOUNTING NATURE WHICH
    IS A DEBIT NATURE. WHEN ASSET/EXPENSE INCREASE IT IS
    SUPPOSED TO BE DEBITED.WHEN IT DECREASE IT IS SUPPOSED TO
    BE CREDITED

    LIABILITY CAPITAL REVENUE


    LIABILITY,CAPITAL AND REVENUE HAS THE SAME NATURE
    WHICH IS A CREDIT NATURE.WHEN IT INCREASES IT IS SUPPOSED
    TO BE CREDITED AND WHEN IT DECREASES IT IS SUPPOSED TO BE
    DEBITED

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