जर्नल एंट्री फॉर इंटरेस्ट एक्रूड ऑन इन्वेस्टमेंट
Answers
Answer:
Every economic entity must present its financial information to all its stakeholders. The information provided in the financials must be accurate and present a true picture of the entity. For this presentation, it must account for all its transactions. Since economic entities are compared to understand their financial statuses, there has to be uniformity in accounting. To bring about uniformity and to account for the transactions correctly there are three Golden Rules of Accounting.
These rules form the very basis of passing journal entries which in turn form the basis of accounting and bookkeeping.
Types of accounts
Golden rules of accounting
Conclusion
Types of accounts
To understand the Golden Rules of Accounting we must first understand the types of accounts. The account classification applies to all the types of general ledgers. In other words, every account will fall in one of the broad classifications given below.
There are three types of accounts:
Real Account
Personal Account
Nominal Account
A Real Account is a general ledger account relating to Assets and Liabilities other than people accounts. These are accounts that don’t close at year-end and are carried forward. An example of a Real Account is a Bank Account.
A Personal account is a General ledger account connected to all persons like individuals, firms and associations. An example of a Personal Account is a Creditor Account.
A Nominal account is a General ledger account pertaining to all income, expenses, losses and gains. An example of a Nominal Account is an Interest Account.
Golden rules of accounting
Looking at the nature of all the accounts, the accounting rules have been devised. For each account there is a set of Golden Rules and hence there are three Golden Rules of Accounting. The Golden rules define the treatment of all transactions conducted by the business.

Illustration
An entity named Orange Ltd. has the following transactions.
It deposits Rs.10,000 into Bank
It buys goods worth Rs.50,000 from Apple Ltd.
It sells goods worth Rs.35,000 to Melon Ltd.
It pays Rs.12,000 as Rent for its premises
It earns Rs.3,000 as interest on a bank account.
First of all, let us identify the accounts involved in these transactions and classify them into the different types of accounts:
Transaction
Accounts involved
Type of Accounts
Deposit Rs.10,000 in Bank
Bank Account
Cash Account
Real Account – Asset account
Real Account – Asset account
Purchase goods worth Rs.50,000 from Apple Ltd.
Purchase Account
Apple Ltd. Account
Nominal Account – Expense account
Personal Account – Creditors account
Sale of goods worth Rs. 35,000 to Melon Ltd.
Sales Account
Melon Ltd. Account
Nominal Account -Income Account
Personal Account – Debtors Account
Pays Rs.12,000 as rent