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Lecture Outline
What is an Account
Classification of Accounts
General Journal
Rule For Debit and Credit
Frequently Debited & Credited Items
What
Is
An
Account?
Every transaction has two aspects
and each aspect has an account. It
is stated that an account is a
summary
of
relevant
transactions
at
one
place
relating to a particular head.
The accounts are classified into
following heads:
Assets
Liabilities
Income
Expenses (further divided into capital and revenue
Classification of
Accounts
Transactions can be divided into
three categories.
I. Transactions relating to individuals
and firms
II. Transactions relating to properties,
goods or cash
III. Transactions relating to expenses or
losses and incomes or gains.
Classification of
Accounts
Classification of
Accounts
Personal Accounts : The accounts which
persons. Personal accounts include the following.
relate
to
Classification of
Accounts
Impersonal Accounts: All those accounts which are
not personal accounts. This is further divided into two
types viz. Real and Nominal accounts.
I.
General Journal
The general journal is where
double entry bookkeeping entries are
recorded by debiting one or more
accounts and crediting another one
or more accounts with the same total
amount. The total amount debited
and the total amount credited should
always be equal, thereby ensuring
the
accounting
equation
is
maintained.
Credits:
Any account that provides a benefit is Credit.
OR
Anything to which the business has a responsibility to return
a benefit in future is Credit
Nature of
Accounts
Personal
Accounts
Definition
The element of accounts,
which represents persons or
organizations whom a
business usually deals with.
Real
Accounts
Nominal
Accounts
Frequently
Debited Items
Frequently
Credited Items
Expenses/Charges (all
types)
Purchases
Sales
Sales Return
Purchase Return
Discount Allowed
Discount Received
Reserves, Funds