Play with Debit and Credit

The only way to be expert in general entry is practice. More you do better you become overtime, it goes same like how do you learn cycling or driving. There are limited number of variations in entry and it depend on nature of job.

If you encounter new economic transaction then simply we can make entry on the basis of accounting Golden rule and experience. We also need to have understanding of each terminology we are using in general entry.

For Example ;

1. Ankesh & co. started a business with 1 Mn and Ankesh give this money to business.

Entry will be.

Cash/Bank a/c  Dr.       1,000,000.00
   To Capital a/c                 1,000,000.00

Here Rule applies, Debit whats come in - Cash/Bank (Cheque)

Capital is owner's investment but a responsibility for business to return capital with return. Business and Owner both are different entity.

What is the difference between Cash or Capital ?

Cash - Hard cash in your pocket.
Capital - Cash or good to generate income or more cash.

2 . We need to buy building  for business. Ankesh & Co. bought building for 100k through cheque.

Whats come in or you can say Debit the expenditure (but this goes out for Nominal accounts like Salary, stationary). Trick is how do you learn these things efficiently.

Building;


and goes out Bank balance as paid through Cheque.

So entry goes like this..

Building a/c Dr.     1000,000.00
  To Bank a/c             1,000,000.00


More to go...think what else do you need to run a business.....??

Accounts world Debit and Credit.

When i start learning accounts, specially general entries, it was mix of fun and frustration. But i was happy that i am learning how the finance world is moving around accounts...... Three types of account:-

1. Real Account (accounts which represents assets) 
2. Nominal Account (accounts which represents expenses, loss, income, gains) 
3. Personal Account (accounts which represent people or organization)

  one more thing for today, three Golden rule of accounting:-

1. DEBIT what comes IN, CREDIT what goes OUT
2. DEBIT the receiver, CREDIT the giver 
3. DEBIT all the expenses, CREDIT all income and gains 

 Please try to learn above basic account terms with your heart and soul. People tend to ask basics in Interview, completions and just for fun to test your accounts knowledge as we generally forget basic things.
Good night!!!