Fundamentals of Accounting Commerce Notes | EduRev

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Commerce : Fundamentals of Accounting Commerce Notes | EduRev

 Page 1


1 | P a g e                T L C 1 1 + 1 2 / C A / C S / C M A        C A A M I T T A L D A : 9 7 3 0 7 6 8 9 8 2 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TALDA LEARNING CENTRE 
Building Conceptions… 
 
 
 
Shop No. 70, 2
nd
 Floor, Gulshan Tower, Jaistambh Square, Amravati 
M: 9730768982   Email: amittalada@gmail.com 
Website: http://taldalearningcentre.webs.com/ 
 
 
COMMON PROFICIENCY COURSE 
 
 
FUNDAMENTALS OF ACCOUNTING 
By 
 
CA AMIT TALDA 
 
For Complete Revision 
 
 
11+12 Commerce/CA/CS/CMA 
 
 
 
Your Name:              Batch: 
 
                           
                               
Page 2


1 | P a g e                T L C 1 1 + 1 2 / C A / C S / C M A        C A A M I T T A L D A : 9 7 3 0 7 6 8 9 8 2 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TALDA LEARNING CENTRE 
Building Conceptions… 
 
 
 
Shop No. 70, 2
nd
 Floor, Gulshan Tower, Jaistambh Square, Amravati 
M: 9730768982   Email: amittalada@gmail.com 
Website: http://taldalearningcentre.webs.com/ 
 
 
COMMON PROFICIENCY COURSE 
 
 
FUNDAMENTALS OF ACCOUNTING 
By 
 
CA AMIT TALDA 
 
For Complete Revision 
 
 
11+12 Commerce/CA/CS/CMA 
 
 
 
Your Name:              Batch: 
 
                           
                               
2 | P a g e                T L C 1 1 + 1 2 / C A / C S / C M A        C A A M I T T A L D A : 9 7 3 0 7 6 8 9 8 2 
THEORETICAL FRAMEWORK 
Book Keeping 
Source 
Documents 
Represent all documents in business which contains 
financial records and act as evidence of the transactions 
which have taken place. 
 
Recording 
(Journalizing) 
Book of Original 
Entry 
(Chorological 
manner) 
These are books which are used in recording the 
transactions for the first time. The books are maintained 
for memorandum purpose only and will not form part of 
the double entry system. Examples include; Purchase 
day book, Cash book, Sales day book and purchases 
return day book. (Principal Books) 
 
Classifying 
(Posting & 
Balancing) 
Ledger Accounts 
(Analytical 
Manner) 
These form part of double entry system and used to 
record the Transactions for the period. These are 
accounts where information relating to a particular 
asset, liability, capital, income and expenses are 
recorded. (Secondary Books) 
 
Summarizing 
*(Net Profit is 
ascertained) 
Trial Balance 
(Statement form) 
Contains the totals from various ledger accounts and act 
as a Preliminary check on accounts before producing 
final accounts. (Arithmetic Accuracy)(List of 
Accounts)(Not a conclusive proof) 
 
Final Accounts 
Financial Statements are produced to show the financial 
Performance and financial position of a business entity. 
 
Analyzing 
Ratio Analysis & 
Cash flow 
statement 
After the preparation of final accounts, the results and 
financial position is analyzed using ratio analysis 
techniques and meaningful results is interpreted. 
Various decision of owner are based on this analysis and 
interpretation. Various charts are also used for 
interpretations and communication of results to the 
owner. 
 
 
  
Page 3


1 | P a g e                T L C 1 1 + 1 2 / C A / C S / C M A        C A A M I T T A L D A : 9 7 3 0 7 6 8 9 8 2 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TALDA LEARNING CENTRE 
Building Conceptions… 
 
 
 
Shop No. 70, 2
nd
 Floor, Gulshan Tower, Jaistambh Square, Amravati 
M: 9730768982   Email: amittalada@gmail.com 
Website: http://taldalearningcentre.webs.com/ 
 
 
COMMON PROFICIENCY COURSE 
 
 
FUNDAMENTALS OF ACCOUNTING 
By 
 
CA AMIT TALDA 
 
For Complete Revision 
 
 
11+12 Commerce/CA/CS/CMA 
 
 
 
Your Name:              Batch: 
 
                           
                               
2 | P a g e                T L C 1 1 + 1 2 / C A / C S / C M A        C A A M I T T A L D A : 9 7 3 0 7 6 8 9 8 2 
THEORETICAL FRAMEWORK 
Book Keeping 
Source 
Documents 
Represent all documents in business which contains 
financial records and act as evidence of the transactions 
which have taken place. 
 
Recording 
(Journalizing) 
Book of Original 
Entry 
(Chorological 
manner) 
These are books which are used in recording the 
transactions for the first time. The books are maintained 
for memorandum purpose only and will not form part of 
the double entry system. Examples include; Purchase 
day book, Cash book, Sales day book and purchases 
return day book. (Principal Books) 
 
Classifying 
(Posting & 
Balancing) 
Ledger Accounts 
(Analytical 
Manner) 
These form part of double entry system and used to 
record the Transactions for the period. These are 
accounts where information relating to a particular 
asset, liability, capital, income and expenses are 
recorded. (Secondary Books) 
 
Summarizing 
*(Net Profit is 
ascertained) 
Trial Balance 
(Statement form) 
Contains the totals from various ledger accounts and act 
as a Preliminary check on accounts before producing 
final accounts. (Arithmetic Accuracy)(List of 
Accounts)(Not a conclusive proof) 
 
Final Accounts 
Financial Statements are produced to show the financial 
Performance and financial position of a business entity. 
 
Analyzing 
Ratio Analysis & 
Cash flow 
statement 
After the preparation of final accounts, the results and 
financial position is analyzed using ratio analysis 
techniques and meaningful results is interpreted. 
Various decision of owner are based on this analysis and 
interpretation. Various charts are also used for 
interpretations and communication of results to the 
owner. 
 
 
  
3 | P a g e                T L C 1 1 + 1 2 / C A / C S / C M A        C A A M I T T A L D A : 9 7 3 0 7 6 8 9 8 2 
ACCOUNTING CONCEPTS 
Entity Concept Business is separate from its owner. 
Effects:  
? Owner’s Capital is shown as a Liability in the Business. 
? Amount taken by Owner from business is recorded as Drawings. 
? Owner’s expenses are not recorded in the books of business and if 
payment is made from business, it is recorded as Drawings. 
? Proprietor cannot use the bank account of business for his personal 
transactions. 
 
Money 
Measurement 
Concept 
Only those transactions, which can be measured in terms of money, are 
recorded. 
Effects: 
? Employees are not recorded as an Asset in the Balance Sheet. 
? Inherently generated goodwill is not recorded in the books. 
? Qualitative information is not recorded in the books of account. 
 
 
Periodicity 
Concept 
According to this concept accounts should be prepared after every period 
& not at the end of the life of the entity. Usually this period is one calendar 
year. In India we follow from 1st April of a year to 31st March of the 
immediately following year.  
Effects: 
? Adjustment of Prepaid and outstanding is done at the end of the 
period. (Matching Principle) 
 
Accrual Concept Accrual means recognition of revenue and costs as they are earned or 
incurred and not as money is received or paid. Expenses accrue when 
benefit is received and income is accrued when benefit is given. 
Effects: 
? Advance money received is not treated as a sale. 
 
Matching 
Concept 
In this concept, all expenses matched with the revenue of that period 
should only be taken into consideration. This concept is based on accrual 
concept as it considers the occurrence of expenses and income and do not 
concentrate on actual inflow or outflow of cash. 
Effects: 
? Adjustment of Prepaid and outstanding is done at the end of the 
period. 
 
Going Concern 
Concept 
(indefinite life) 
The financial statements are normally prepared on the assumption that an 
enterprise is a going concern and will continue in operation for the 
foreseeable future. Hence, it is assumed that the enterprise has neither 
the intention nor the need to liquidate or curtail materially the scale of its 
operations; if such an intention or need exists, the financial statements 
may have to be prepared on a different basis and, if so, the basis used is 
disclosed. 
Effects: 
? That the assets are classified as current assets and fixed assets. 
? The liabilities are classified as short-term liabilities and long-term 
liabilities. 
 
 
Cost Concept By this concept, the value of an asset is to be determined on the basis of 
historical cost, in other words, acquisition cost. Hence, All the fixed assets 
are recorded at Historical Cost only and market value of fixed assets is 
ignored. 
Page 4


1 | P a g e                T L C 1 1 + 1 2 / C A / C S / C M A        C A A M I T T A L D A : 9 7 3 0 7 6 8 9 8 2 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TALDA LEARNING CENTRE 
Building Conceptions… 
 
 
 
Shop No. 70, 2
nd
 Floor, Gulshan Tower, Jaistambh Square, Amravati 
M: 9730768982   Email: amittalada@gmail.com 
Website: http://taldalearningcentre.webs.com/ 
 
 
COMMON PROFICIENCY COURSE 
 
 
FUNDAMENTALS OF ACCOUNTING 
By 
 
CA AMIT TALDA 
 
For Complete Revision 
 
 
11+12 Commerce/CA/CS/CMA 
 
 
 
Your Name:              Batch: 
 
                           
                               
2 | P a g e                T L C 1 1 + 1 2 / C A / C S / C M A        C A A M I T T A L D A : 9 7 3 0 7 6 8 9 8 2 
THEORETICAL FRAMEWORK 
Book Keeping 
Source 
Documents 
Represent all documents in business which contains 
financial records and act as evidence of the transactions 
which have taken place. 
 
Recording 
(Journalizing) 
Book of Original 
Entry 
(Chorological 
manner) 
These are books which are used in recording the 
transactions for the first time. The books are maintained 
for memorandum purpose only and will not form part of 
the double entry system. Examples include; Purchase 
day book, Cash book, Sales day book and purchases 
return day book. (Principal Books) 
 
Classifying 
(Posting & 
Balancing) 
Ledger Accounts 
(Analytical 
Manner) 
These form part of double entry system and used to 
record the Transactions for the period. These are 
accounts where information relating to a particular 
asset, liability, capital, income and expenses are 
recorded. (Secondary Books) 
 
Summarizing 
*(Net Profit is 
ascertained) 
Trial Balance 
(Statement form) 
Contains the totals from various ledger accounts and act 
as a Preliminary check on accounts before producing 
final accounts. (Arithmetic Accuracy)(List of 
Accounts)(Not a conclusive proof) 
 
Final Accounts 
Financial Statements are produced to show the financial 
Performance and financial position of a business entity. 
 
Analyzing 
Ratio Analysis & 
Cash flow 
statement 
After the preparation of final accounts, the results and 
financial position is analyzed using ratio analysis 
techniques and meaningful results is interpreted. 
Various decision of owner are based on this analysis and 
interpretation. Various charts are also used for 
interpretations and communication of results to the 
owner. 
 
 
  
3 | P a g e                T L C 1 1 + 1 2 / C A / C S / C M A        C A A M I T T A L D A : 9 7 3 0 7 6 8 9 8 2 
ACCOUNTING CONCEPTS 
Entity Concept Business is separate from its owner. 
Effects:  
? Owner’s Capital is shown as a Liability in the Business. 
? Amount taken by Owner from business is recorded as Drawings. 
? Owner’s expenses are not recorded in the books of business and if 
payment is made from business, it is recorded as Drawings. 
? Proprietor cannot use the bank account of business for his personal 
transactions. 
 
Money 
Measurement 
Concept 
Only those transactions, which can be measured in terms of money, are 
recorded. 
Effects: 
? Employees are not recorded as an Asset in the Balance Sheet. 
? Inherently generated goodwill is not recorded in the books. 
? Qualitative information is not recorded in the books of account. 
 
 
Periodicity 
Concept 
According to this concept accounts should be prepared after every period 
& not at the end of the life of the entity. Usually this period is one calendar 
year. In India we follow from 1st April of a year to 31st March of the 
immediately following year.  
Effects: 
? Adjustment of Prepaid and outstanding is done at the end of the 
period. (Matching Principle) 
 
Accrual Concept Accrual means recognition of revenue and costs as they are earned or 
incurred and not as money is received or paid. Expenses accrue when 
benefit is received and income is accrued when benefit is given. 
Effects: 
? Advance money received is not treated as a sale. 
 
Matching 
Concept 
In this concept, all expenses matched with the revenue of that period 
should only be taken into consideration. This concept is based on accrual 
concept as it considers the occurrence of expenses and income and do not 
concentrate on actual inflow or outflow of cash. 
Effects: 
? Adjustment of Prepaid and outstanding is done at the end of the 
period. 
 
Going Concern 
Concept 
(indefinite life) 
The financial statements are normally prepared on the assumption that an 
enterprise is a going concern and will continue in operation for the 
foreseeable future. Hence, it is assumed that the enterprise has neither 
the intention nor the need to liquidate or curtail materially the scale of its 
operations; if such an intention or need exists, the financial statements 
may have to be prepared on a different basis and, if so, the basis used is 
disclosed. 
Effects: 
? That the assets are classified as current assets and fixed assets. 
? The liabilities are classified as short-term liabilities and long-term 
liabilities. 
 
 
Cost Concept By this concept, the value of an asset is to be determined on the basis of 
historical cost, in other words, acquisition cost. Hence, All the fixed assets 
are recorded at Historical Cost only and market value of fixed assets is 
ignored. 
4 | P a g e                T L C 1 1 + 1 2 / C A / C S / C M A        C A A M I T T A L D A : 9 7 3 0 7 6 8 9 8 2 
Conservatism 
Concept 
Conservatism states that the accountant should not anticipate income and 
should provide for all possible losses. When there are many alternative 
values of an asset, an accountant should choose the method which leads 
to the lesser value.  
Effects: 
? Provision for doubtful debts is created at the end of the year. 
? Stock is valued at Cost or NRV, Whichever is less. 
 
 
Consistency 
Concept 
In order to achieve comparability of the financial statements of an 
enterprise through time, the accounting policies are followed consistently 
from one period to another; a change in an accounting policy is made only 
in certain exceptional circumstances. 
 
An enterprise should change its accounting policy in any of the following 
circumstances only: 
a. To bring the books of accounts in accordance with the issued 
Accounting Standards. 
b. To compliance with the provision of law. 
c. When under changed circumstances it is felt that new method will 
reflect more true and fair picture in the financial statement. 
 
Materiality 
Concept 
(Exception to 
Full disclosure 
concept) 
Materiality principle permits other concepts to be ignored, if the effect is 
not considered material. This principle is an exception of full disclosure 
principle. According to materiality principle, all the items having 
significant economic effect on the business of the enterprise should be 
disclosed in the financial statements and any insignificant item which will 
only increase the work of the accountant but will not be relevant to the 
users’ need should not be disclosed in the financial statements. 
Effects: 
? Assets with low value like calculators, books, tools, etc are written off 
in one year instead of capitalizing the same. 
? Omission of paisa and showing the round figure in the financial 
statements. 
 
 
Dual Aspect 
Concept 
Every Transaction has two effects: Debit and Credit. Both are opposite and 
equal also known as Double Entry System. Accounting equation has been 
derived on the basis of dual aspect concept as under: 
Assets = Liabilities + Equity (Balance Sheet Equation) 
Net Profit = Income – Expenses (Profit & Loss Equation) 
 
CLASSIFICATION OF ACCOUNTS 
Real Account 
Related to Assets of the 
business(tangible and intangible both) 
Machinery, Furniture, Land 
and building, Vehicles, 
Goodwill, Patents, copyrights, 
Stock, etc 
Person Account 
Related to natural, artificial persons & 
representational person 
Debtors, creditors, proprietor, 
bank, Bank Loan, Dividend 
payable, Outstanding 
liabilities, Prepaid expenses, 
etc 
Nominal Account 
Related to Income, Expenses, Loss and 
Gains 
Salary, Advertisement, 
Stationery, Travelling, Sales, 
Interest, etc 
 
Page 5


1 | P a g e                T L C 1 1 + 1 2 / C A / C S / C M A        C A A M I T T A L D A : 9 7 3 0 7 6 8 9 8 2 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TALDA LEARNING CENTRE 
Building Conceptions… 
 
 
 
Shop No. 70, 2
nd
 Floor, Gulshan Tower, Jaistambh Square, Amravati 
M: 9730768982   Email: amittalada@gmail.com 
Website: http://taldalearningcentre.webs.com/ 
 
 
COMMON PROFICIENCY COURSE 
 
 
FUNDAMENTALS OF ACCOUNTING 
By 
 
CA AMIT TALDA 
 
For Complete Revision 
 
 
11+12 Commerce/CA/CS/CMA 
 
 
 
Your Name:              Batch: 
 
                           
                               
2 | P a g e                T L C 1 1 + 1 2 / C A / C S / C M A        C A A M I T T A L D A : 9 7 3 0 7 6 8 9 8 2 
THEORETICAL FRAMEWORK 
Book Keeping 
Source 
Documents 
Represent all documents in business which contains 
financial records and act as evidence of the transactions 
which have taken place. 
 
Recording 
(Journalizing) 
Book of Original 
Entry 
(Chorological 
manner) 
These are books which are used in recording the 
transactions for the first time. The books are maintained 
for memorandum purpose only and will not form part of 
the double entry system. Examples include; Purchase 
day book, Cash book, Sales day book and purchases 
return day book. (Principal Books) 
 
Classifying 
(Posting & 
Balancing) 
Ledger Accounts 
(Analytical 
Manner) 
These form part of double entry system and used to 
record the Transactions for the period. These are 
accounts where information relating to a particular 
asset, liability, capital, income and expenses are 
recorded. (Secondary Books) 
 
Summarizing 
*(Net Profit is 
ascertained) 
Trial Balance 
(Statement form) 
Contains the totals from various ledger accounts and act 
as a Preliminary check on accounts before producing 
final accounts. (Arithmetic Accuracy)(List of 
Accounts)(Not a conclusive proof) 
 
Final Accounts 
Financial Statements are produced to show the financial 
Performance and financial position of a business entity. 
 
Analyzing 
Ratio Analysis & 
Cash flow 
statement 
After the preparation of final accounts, the results and 
financial position is analyzed using ratio analysis 
techniques and meaningful results is interpreted. 
Various decision of owner are based on this analysis and 
interpretation. Various charts are also used for 
interpretations and communication of results to the 
owner. 
 
 
  
3 | P a g e                T L C 1 1 + 1 2 / C A / C S / C M A        C A A M I T T A L D A : 9 7 3 0 7 6 8 9 8 2 
ACCOUNTING CONCEPTS 
Entity Concept Business is separate from its owner. 
Effects:  
? Owner’s Capital is shown as a Liability in the Business. 
? Amount taken by Owner from business is recorded as Drawings. 
? Owner’s expenses are not recorded in the books of business and if 
payment is made from business, it is recorded as Drawings. 
? Proprietor cannot use the bank account of business for his personal 
transactions. 
 
Money 
Measurement 
Concept 
Only those transactions, which can be measured in terms of money, are 
recorded. 
Effects: 
? Employees are not recorded as an Asset in the Balance Sheet. 
? Inherently generated goodwill is not recorded in the books. 
? Qualitative information is not recorded in the books of account. 
 
 
Periodicity 
Concept 
According to this concept accounts should be prepared after every period 
& not at the end of the life of the entity. Usually this period is one calendar 
year. In India we follow from 1st April of a year to 31st March of the 
immediately following year.  
Effects: 
? Adjustment of Prepaid and outstanding is done at the end of the 
period. (Matching Principle) 
 
Accrual Concept Accrual means recognition of revenue and costs as they are earned or 
incurred and not as money is received or paid. Expenses accrue when 
benefit is received and income is accrued when benefit is given. 
Effects: 
? Advance money received is not treated as a sale. 
 
Matching 
Concept 
In this concept, all expenses matched with the revenue of that period 
should only be taken into consideration. This concept is based on accrual 
concept as it considers the occurrence of expenses and income and do not 
concentrate on actual inflow or outflow of cash. 
Effects: 
? Adjustment of Prepaid and outstanding is done at the end of the 
period. 
 
Going Concern 
Concept 
(indefinite life) 
The financial statements are normally prepared on the assumption that an 
enterprise is a going concern and will continue in operation for the 
foreseeable future. Hence, it is assumed that the enterprise has neither 
the intention nor the need to liquidate or curtail materially the scale of its 
operations; if such an intention or need exists, the financial statements 
may have to be prepared on a different basis and, if so, the basis used is 
disclosed. 
Effects: 
? That the assets are classified as current assets and fixed assets. 
? The liabilities are classified as short-term liabilities and long-term 
liabilities. 
 
 
Cost Concept By this concept, the value of an asset is to be determined on the basis of 
historical cost, in other words, acquisition cost. Hence, All the fixed assets 
are recorded at Historical Cost only and market value of fixed assets is 
ignored. 
4 | P a g e                T L C 1 1 + 1 2 / C A / C S / C M A        C A A M I T T A L D A : 9 7 3 0 7 6 8 9 8 2 
Conservatism 
Concept 
Conservatism states that the accountant should not anticipate income and 
should provide for all possible losses. When there are many alternative 
values of an asset, an accountant should choose the method which leads 
to the lesser value.  
Effects: 
? Provision for doubtful debts is created at the end of the year. 
? Stock is valued at Cost or NRV, Whichever is less. 
 
 
Consistency 
Concept 
In order to achieve comparability of the financial statements of an 
enterprise through time, the accounting policies are followed consistently 
from one period to another; a change in an accounting policy is made only 
in certain exceptional circumstances. 
 
An enterprise should change its accounting policy in any of the following 
circumstances only: 
a. To bring the books of accounts in accordance with the issued 
Accounting Standards. 
b. To compliance with the provision of law. 
c. When under changed circumstances it is felt that new method will 
reflect more true and fair picture in the financial statement. 
 
Materiality 
Concept 
(Exception to 
Full disclosure 
concept) 
Materiality principle permits other concepts to be ignored, if the effect is 
not considered material. This principle is an exception of full disclosure 
principle. According to materiality principle, all the items having 
significant economic effect on the business of the enterprise should be 
disclosed in the financial statements and any insignificant item which will 
only increase the work of the accountant but will not be relevant to the 
users’ need should not be disclosed in the financial statements. 
Effects: 
? Assets with low value like calculators, books, tools, etc are written off 
in one year instead of capitalizing the same. 
? Omission of paisa and showing the round figure in the financial 
statements. 
 
 
Dual Aspect 
Concept 
Every Transaction has two effects: Debit and Credit. Both are opposite and 
equal also known as Double Entry System. Accounting equation has been 
derived on the basis of dual aspect concept as under: 
Assets = Liabilities + Equity (Balance Sheet Equation) 
Net Profit = Income – Expenses (Profit & Loss Equation) 
 
CLASSIFICATION OF ACCOUNTS 
Real Account 
Related to Assets of the 
business(tangible and intangible both) 
Machinery, Furniture, Land 
and building, Vehicles, 
Goodwill, Patents, copyrights, 
Stock, etc 
Person Account 
Related to natural, artificial persons & 
representational person 
Debtors, creditors, proprietor, 
bank, Bank Loan, Dividend 
payable, Outstanding 
liabilities, Prepaid expenses, 
etc 
Nominal Account 
Related to Income, Expenses, Loss and 
Gains 
Salary, Advertisement, 
Stationery, Travelling, Sales, 
Interest, etc 
 
5 | P a g e                T L C 1 1 + 1 2 / C A / C S / C M A        C A A M I T T A L D A : 9 7 3 0 7 6 8 9 8 2 
PROFIT & LOSS ACCOUNT (For the year) 
Particular Type Particulars Type 
Opening Stock Real Sales Nominal 
Purchases Nominal Closing Stock Real 
Direct Expenses Nominal   
Gross Profit Not an 
Account 
  
Salary Nominal Gross Profit  
Rent Nominal Discount Received Nominal 
Legal Fees Nominal Interest Received Nominal 
Travelling Nominal Commission Received Nominal 
Printing & Stationery Nominal Rent Received  Nominal 
Electricity Exp Nominal Dividend Received Nominal 
Telephone Expense Nominal   
Office Exp Nominal   
Interest Paid Nominal   
Repairs & Maintenance Nominal   
Insurance Exp Nominal   
Advertisement Exp Nominal   
Discount Allowed Nominal   
Accounting Charges Nominal   
Bad Debts Nominal   
Depreciation Nominal   
Net Profit Not an 
Account 
  
BALANCE SHEET (Only Real & Personal Accounts)(As on a date) 
Liabilities Type Assets Type 
Non Current Liabilities  Non Current Assets  
Share Capital Personal Goodwill & Patent Real 
Reserves & Surplus Personal Plant and Machinery Real 
Bank Loan Personal Land and Building Real 
Debentures Personal Furniture and Fixtures Real 
Public Deposits Personal Vehicles Real 
Unsecured Loans Personal Long term investments Real 
Current Liabilities  Current Assets  
Sundry Creditors Personal Sundry Debtors Personal 
Dividend Payable Personal Loans and Advances Personal 
Bill Payable Personal Cash  Real 
Bank Overdraft Personal Bill Receivable Personal 
Outstanding Expenses Personal Stock Real 
  Prepaid Expenses Personal 
  Bank balance Personal 
 
GOLDEN RULES OF ACCOUNTING: (Lucas Pacioli is the father of accounting) 
1. Personal account is governed by the following two rules: 
Debit the receiver 
Credit the giver 
 
2. Real account is governed by the following two rules: 
Debit what comes in 
Credit what goes out 
 
3. Nominal account is governed by the following two rules: 
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