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 MAC Rules of Account part 1.txt
Real accounts: (all assets)
Debit what comes in
credit what goes out

Personal accounts : Call 1iabi 1iti es)

Debit the receiver
credit the giver
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~ Nominal accounts: Call expenses and profit and gains)
r~ Debit all expenses and losses
~~
credit all incomes and gains

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page 1

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 MAC Rules of Accounts part 2.txt
For any recording in book of accounts there should be ~ransaction.
Transaction having monetary value alone can be recorded.
4 essentials for a transaction
Da~e
Amount
Receipt/payment
Reason
The reason becomes account head.
Types of accounts
Personal
Ale of persons or group of persons.
ex : ABe Ltd, XYZ Bank, Mr. a, Mr.B
Impersonal
Real Ale
-> tangible
-> non-recurring
-> enduring life
§-
ex : land, building, plant, machinery, livestock, cash.
~"' furniture, vehices.
Nominal AIC
-> intangible
-> recurri ng
-> short lived
ex : profit, loss, salary, wages, stationery, travelling,
electricity, expenditure, revenue, purchases, sales.
Rules for accounting
Nominal
Debit all expenses, losses
credit all incomes, gains, profit
Real
Debit all that comes in
credit all that goes out
personal
Debit the receiver
Credit the giver

Examples
1) purchased furniture for RS. 50000
A/e involved
Furniture (real)
cash (nominal)
Furnitue A/e debit
TO cash A/e
cash A/e credit
By Furniture Ale
2) purchased goods for Rs llakh
Alc involved
purchase (nominal)
eash (real)
purchase Ale debit
TO eash Ale
Cash A/e credit
By purchase A/e

3) sold goods for RS 2 lakhs

A/e involved
sales (nominal)
cash (real)
Page 1
 MAC Rules of Accounts Part 2.txt
eash Ale debit
TO sales A/c
sales A/c credit
By eash Ale
4) opened bank alc by depositing 1 lakh
Ale involved
Bank (real)
cash (real)
Bank Ale debit
To eash Ale
eash A/c credit
By Bank Ale
5) Received cheque for sale of goods RS 2 lakhs
Ale involved
sales (nominal)
Bank (real)
Bank Ale debit
To sales A/c
Sales Ale credit
By Bank Ale
6) opened bank ale by depositing 1 lakh
Ale involved
Bank (real)
cash (real) i
\
Bank Ale debit
TO Cash Ale
cash AIC credit
By Bank A/c
(
7) Paid salary Rs 50,000 by cheque
Ale involved C
Bank (real)
salary (Nominal)
Salary A/c debit (
To eash Ale
r
Bank Ale credit
By salary Ale "
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Steps involved in making journal entries:

i) Find out how many accounts are involved (minimum 2 accounts are involved).
ii) Find out each account either coming under real account or personal account or nominal account.
iii) Accordingly apply the rule to decide debit and credit.
( Giving debit to any account means putting the figure on left hand side of that account.
Giving credit to any account means putting the figure on the right hand side of that account)

Transactions:
i] Company purchased furniture of Rs lO,DOOand paid in cash.
ii) Telephone expenditure of Rs 1,000 in cash.
Hi) Cornpany received cash of Rs100000 towards equity capital.
iv) Company deposited Rs 25000 cash in lOBI bank account.
vJ Purchased goods of Rs 20000 and paid through cash.
vi) Purchased goods of Rs 30000 from ABC Ltd on credit.
vii) Issued a cheque of Rs30000 to ABC Ltd against the purchases.
viii) Purchased goods of Rs 10000 from XYZLtd on credit basis.
ix) Issued a cheque on favour of XYl Ltd of Rs9500 in full settlement.
x) Sold goods of Rs 40000 against cash.
xi) Sold goods of Rs 15000 to PQRltd on credit basis.
xii) Received Rs 14000 by cheque from PQRLtd in full settlement.
xiii) Charge depreciation of Rs500 on furniture.
xiv) Telephone bill of Rs 1000 is outstanding.
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SrNo Date Transaction Ale invoived

Cash elc: debit
1 1st Jan 2009 Started business by introducing cash of Rs. 500000
Capital elc : credit
2nd January Bank alc : debit-
2 Opened bank a7c by depositing Rs. 100000
20()9 Cash etc : credit
3rd January Furniture alc : debit
3 Purchased furniture Rs.sO,OOOand paid by cheque
2009 Bank alc : credit
Purchase alc : debit
4th January Purchased goods of Rs 2,00,000 from X&Co to whom Rs. 50,000 paid Cash alc : credit
4
2009 in cash and like amount by cheque Bank alc : credit
X&Co alc : credit
Bank lac: debit
5th January Sold goods to Y&Co for Rs. 3,00,000 who paid 50% by cheque & Rs Cash a/c : debit
5
2009 1,00,000 in cash Y&co: debit
Sales a/c : credit
X&co: debit
6th January Settled X&Co elc in account by paying Rs 50,000 by cheque balance in Bank alc : credit
6
2009 cash who offered discount of 10% on dues Cash ale: credit
Discount received ale: credit
7th January Salary a/c : debit
7 Paid salary by cheque Rs. 25,000
2009 Bank alc : credit
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Debit Credtt:
Date Particulars L.F
(Rs) (Rs)
1/1/2009 Cash alc Dr 5,00,000
To Capital alc 5,00,000
(Capital introduced in cash)
.2/1/2009 Bank alc Dr 1,00,000
To Cash a/e 1,00,000
(Opened bank alc by depositing cash)
3/1/2009 Furniture elc. Or 50,000
To Bank ale 50,000

(Chq no: XXXX paid to : YYYYagainstTI no : ZZZZvide receipt no: AAAA)

41112009 Purchase ale Dr 2,00,000

To Cash alc 50,000
To Bank alc 50,000
To X&Co ale 1,00,000
(Chq no : XXXX paid to : X&Co against TI no : YYYYvide receipt no : ZZZZtowards
part-payment; balance to be paid to X&Co Rs 1,00,000)
5/1/2009 Cash alc Or 1,00,000
Bank ale Dr 1,50,000
Y&Co ale Dr 50,000
To Sales a/c 3,00,000
(Sales of Rs 3,00,000 from Y&Co; 50,000 received by cash, 1,00,000 received by
cheque, balance Rs 50,000 to be received from Y&co)
6/1/2009 X&Co elc Or 1,00,000
To Cash alc 40,000
To Bank alc 50,000
To Discount Received a/e 10,000
(Settled X&Co alc in full by paying 40,000 in cash 50,000 in cheque and got a
discount of 10% on balance dues which is equa I to 10,000)
7/1/2009 salarv a/c Or 25,000
To Bank ale 25,000

(Chq no : ><XXXpaid to M r YYYYtowards salary for month of December 2008)

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L.F Debit Credit

Date Particulars
No (Rs) (Rs)

Furniture ale Or 50000

To Cash ale 50000

(Furniture purchased)
Telephone Expenditure ale Or 1000
To Cash ale 1000
(Paid telephone bil of Rs 1000)
Cash ale Or 100000
To Equity Capital ale 100000
(Company received 100000 towards equity capital)
lOBI bank ale Or 25000
To Cash ale 25000
(Company deposited 25000 cash in bank account)
Puehases ale Or 25000
To Cash alc 25000
(Purchased goods worth 25000 by paying cash)
Purchases ale Or 30000
To ABC Ltd ale 30000
(Purchased goods worth 30000 on credit from ABC Ltd)
ABC Ltd alc Or 30000
To Bank ale 30000
(Paid ABC Ltd 30000 by cheque)
Purchases el: Or 10000
To XYZ Ltd elc 10000
(Purchasedgoods worth 10000 on credit from XVZ Ltd)
XYZ Ltd ale Dr 10000
To Bank ale 9500
To Discount ale
(9500 paid by cheque in full settlement of purchase of goods worth 500
10000 from XVZ Ltd)
Cash ale Or 40000
To Sales ale 40000
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(Sales of Rs 40000 in cash)

PQR Ltd ale Dr 15000
To Sales ale 15000
(Sales of Rs 15000 to PQR in credit)
Bank ale Dr 14000
Discount ale Dr 1000
To PQR Ltd ale 15000
(Received Rs 14000 in full settlement from PQR Ltd)
Depreciation ale Dr 500
To Furniture ale 500
(Charge 500 depreciation on furniture)
Telephone Expenditure ale Dr 1000
To Outstanding Expense ale 1000
(Bill of Rs 1000 is outstanding)
Journal Entries

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