DOUBLE ENTRY SYSTEM

According to this system every

business transaction affects at
least two accounts in opposite
direction.
For example, if the furniture is
purchased in the business,
furniture is increased whereas the
cash is decreased.
PRINCIPLES OF DOUBLE
ENTRY ENTRY SYSTEM
*EVERY BUSINESS TRANSACTION AFFECTS TWO
ACCOUNTS
:-Every business transaction has a two-fold effects,
i.e., it affects two accounts simultaneously.
*RECORDING OF BOTH PERSONAL AND IMPERSONAL
ASPECTS
:-It is possible that both the aspects of a transaction
may be personal or both may be impersonal or one
may be personal and the other may be impersonal.
*PREPARATION OF TRIAL BALANCE
:-since one account is debited and the other account
is credited ,total of all debits is always equal to the
total of all credits. this is done by preparing a trial
balance.
*RECORDING IS MADE ACCORDING TO CERTAIN
SPECIFIED RULES
:-There are certain rules for debiting and crediting
debits and credits are made on the bases of these
CLASSIFICATION OF
ACCOUNTS
1.PERSONAL ACCOUNTS
2.IMPERSONAL ACCOUNTS
A.)REAL ACCOUNTS
B.)NOMINAL ACCOUNTS
PERSONAL ACCOUNTS

The accounts which relate to

an individual, firm, company or
an institution are called
personal accounts. for example
account of Mohan, bank
account etc.
RULE FOR PERSONAL
ACCOUNTS
• DEBIT THE RECEIVER
• CREDIT THE GIVER
EXAMPLE 1:-PAID RS.1,000 TO HARI:-
The entry will be :-
HARI (debit the receiver) Dr. 1,000
TO CASH A\C 1,000
EXAMLE 2:-RECEIVED RS.500 FROM MOHAN:-
The entry will be:-
CASH A\C Dr. 500
TO MOHAN (credit the giver) 500
OBJECTS:-

Object of preparing a personal

account is to ascertain as how
much amount is due to be
received from a personal a\c
and how much amount is
payable to him.
REAL ACCOUNTS

• The accounts of those things

whose value can be measured
in terms of money and the
properties of the business are
termed as real a\c.
• Such as , cash a\c, furniture a\c,
goodwill a\c etc.
 RULE OF REAL
ACCOUNTS
• DEBIT WHAT COMES IN
• CREDIT WHAT GOES OUT
FOR EXAMPLE:-FURNITURE IS
PURCHASED FOR Rs.5,000 FOR CASH
The entry will be:-
FURNITURE A\C Dr. 5,000
(debit what comes in)
TO CASH A\C 5,000
(credit what goes out)
OBJECTS:-

• These accounts represent the

value of various properties
owned by a business in terms of
money and indicate the
financial position of the
business.
NOMINAL ACCOUNTS

• These accounts include the

accounts of all expenses (like
salaries paid, discount paid
etc.) and incomes (like
commission received, discount
received etc.)
RULE
• DEBIT THE EXPENSES AND LOSSES
• CREDIT THE INCOME AND GAIN
FOR EXAMPLE 1:-
Paid Rs. 5,000 for salaries.
Entry will be:-
SALARY A\C (Dr.the expenses) Dr. 5,000
TO CASH A\C(Cr.what goes out) 5,000
EXAMPLE 2:-
RECEIVED RS. 1,000 FOR COMMISSION.
Entry will be:-
CASH A\C(Dr. what comes in) Dr. 1,000
TO COMMISSION A\C(Cr. The incomes)
1,000
OBJECTS

• NOMINAL accounts are those

accounts which are in name only and
which do not really exist. They
provide information regarding
following:-
• 1.amount spent on various heads in
a particular period.
• 2.income received on various heads
in a particular period.