Journal entries

The two aspects of a transaction are identified as two Accounts While recording transactions the accounts involved are Debited and Credited All accounts are classified in the following categories

Personal Account

/ Real Account

/Nominal Account

Personal Account is an account of a person eg. Ms. Jyoti, Mr. Ram, Debtors account, Creditors account etc. Real accounts are accounts of assets of the business eg. Stock, furniture, land, building, Goodwill, Bank account Nominal Account are accounts of expenses, income, losses, gains, interest, stationery etc.

Classify the following

Goods account Printing & Stationery account Repairs to machinery account Vinays account Land account Debtors account

Salary account
Furniture account

Golden Rules
Personal Account Debit the receiver Credit the giver Real Account

Debit what comes in

Credit what goes out Nominal Accounts Debit all expenses and losses Credit all income and gains Journalise the transaction Cash brought in as capital to start business in Jyoti & Company Rs. 1 lakh

Format of a journal entry

IN THE BOOKS OF JYOTI & CO.
C r .
J.V NO. DATE PARTICULARS L.F. Dr (Rs.). Cr (Rs.)

4 . 5 0

01

11/11/08

Cash a/c

Dr.

21

100000

To Capital a/c (Being cash brought in as capital to start business)

22

100000

Pass Journal entries for the following transactions

Mr. A starts a Company called M/s. Jyoti & Company with a cash investment of Rs. 1,00,000 on 15th November He buys office building space for Rs. 50,000 and furniture of Rs. 25,000 in cash on 20th November He pays for advertising expenses Rs. 1900 on 20th November. He buys office stationery for Rs. 1000 on 22nd November He purchase 1000 pens for Rs. 10,000 on 25th November. He sells the pens for Rs. 15,000 on 29th November He pays salary to staff of Rs. 2000 on 30th November He pays for water Rs.500 and Rs.600 for electricity on 30th November

Ledgers

Classification of data
Collecting all transactions of a similar type or category at one single place so as to give complete information The book used to classify transactions is called Ledger For an individual type of transaction an individual account is maintained in the ledger book used to classify transactions is called Ledger

Format of a ledger account

Bank Loan Account
Dr.
Date Particulars JF Rs. Date Particulars JF

Cr.
Rs.

5/31/99

To Bal c/d

4.50

5/1/99

By Bank a/c

4.50

4.50

4.50

Balancing the ledgers Once the process of posting to the ledger accounts is complete, these accounts are balanced If debit side is higher, the account has a debit balance and vice versa The trial balance is a statement of balances of the ledger accounts

The Trial Balance totals match as the double entry system is followed

Assignment

Survey of the Indian Industry 2010

Thank you!