Question

wht do you understand by principal of double entry ? give the rule of debit and credit wit suitable examples

Answer 1

Principle of Double Entry states that, for every debit ,there is a corresponding and equal credit.

Rules for double entry are also closed as GOLDEN RULES OF ACCOUNTING.

1)Personal Account

Debit the receiver of the benefit

Ex : Goods sold on credit

Credit the giver of the benefit

Ex: Goods purchases on credit.

2)Real Account

Debit what comes into the business.

Ex:Cash sales

Credit what goes out of the business

Ex:Cash purchases

3)Nominal Account :

Debit all expenses and losses.

Ex:Rent paid , electricity charges paid , discount allowed

Credit all incomes and Gains

Ex: Rent received , Discount received