Skip to main content

Modern or Golden Rules Rules of debit and credit

Following are the rules of debit and credit:

*      Assets

When Assets increase then Dr.

When Assets decreases then Cr.

Purchase Building for Cash $ 10000

Here Building (Assets) increase so Dr Building Account and Cash (Assists) decrease so Cr Cash Account Cr.  

*      Expenses

When expenses increase then Dr.

When expenses decrease then Cr.

We can say that

  • When Assets and Expense increase they are debited (Dr.) and when decrease they are credited. (Cr.)

 

*      Liabilities

When liabilities increase then Cr.

When liabilities decrease then Dr.

 

*      Capital / Owner’s equity

When Capital / Owner’s equity increase then Cr.

When Capital / Owner’s equity decrease then Dr.

*      Revenues

 

When Revenues increase then Cr.

When Revenues decrease then Dr.

We can say that

  • When liabilities, capital and revenues increase they then Cr. and when they decrease then Dr.

Comments

Post a Comment

Popular posts from this blog

Distinction between Journal and Ledger

 S.No Journal Ledger 1 Journal is the book of first entry ( original entry) Ledger is the book of second entry 2 Journal is the book for chronological record Ledger is the book for analytical record 3 The unit of classification of data within Journal is the transaction The unit of classification of data within Ledger is the account 4 The process of recording in Journal is called Journalizing or Journalization. The process of recording in Ledger is called posting  5 Journal as a book of source entry ordinarily has greater weight as legal evidence than the Ledger. Q. What is meant by Posting The process of recording information from journal to ledger is called posting.
Post a Comment
Read more

Define Ledger. Also write down the list of “sub-division of Ledger”

The ledger is a book which contains a classified record of all similar transactions of the business, brought from the journal or from books of original entry. Note: the record kept in ledger is called “classified record” or “condensed record”. Types of ledger   Ledger accounts can be prepared in the following two ways: 1-       “T” accounts form/Traditional/Standard/Conventional form (British) 2-       Running Balance Form/Modern Form (American)   Different names of ledger Ø   Secondary book Ø   Book of final entry Note: ledger is King of all books of accounts. Sub-division of Ledger: 1.       Debtors’ Ledger or customers’ Ledger or sales Ledger. 2.       Creditors’ Ledger or Suppliers’ Ledger or purchase Ledger 3.       General Ledger or nominal Ledger.
Post a Comment
Read more

Define the term Balance, Balancing Debit balance and Credit Balance

 The difference between the totals of two sides of an account is its balance. The balance is written of the lesser side to make the two sides equal.  For example: Total of Dr. Side Rs.20000 Total of Cr. Side Rs.15000 Balance Rs.5000 1. Balancing  The process of equalizing the two sides of an account is known as balancing. 2. Debit balance While finding the balance if total of debit side is greater than that of credit side, the difference is named as debit balance.  For example: Total of Dr. Side of an account Rs.80000 Total of Cr. Side of an account Rs.70000 Balance (Debit balance) Rs.10000 3. Credit balance While finding the balance if total of credit side is greater than that of debit side, the difference is named as credit balance. For example: Total of Dr. Side of an account Rs.35000 Total of Cr. Side of an account Rs.50000 Balance (Credit Balance) Rs.15000
Post a Comment
Read more