Atul Kumar Pandey

Atul is a regular blogger at atulhost who is a Professional WordPress Geek and SEO Specialist. He loves blogging on topics of business, entertainments, how to, tech news and web hosting topics.

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43 Responses

  1. Jagan says:

    Personal A/C and nominal A/C to be same?

    • Let me clear your doubt Jagan, both the account types and scenarios are totally different.

      In personal account there is a relation between person to any other person or party. So in case being in a business if any person is giving you a goods or services then you should debit the name of giver (because it’s personal account) and credit the giver (your account).

      Whereas in nominal account the scenario is based on business things like business expenses, loss, income and gains. So being a businessman you will debit all expenses and losses if occurs and credit all incomes and gains.

  2. Anumod Markose says:

    When a cash sales, should I mention the name of goods?
    Or should I enter like, Cash a/c debit to sales?

    • Yes Anumod right…
      When cash sales the entry would be as,

      Cash a/c … Debit
      Sales a/c … Credit

      and Journal entry for a Cash Sales would be like this.

      Acc. | Dr. | Cr.
      —————-
      Cash | 300 | —
      Sales| — | 300
      —————-
      Total| 300 | 300

    • Hi Anumod, Ashok Kumar Vaishnav answered your question too.

  3. Shah Mohammed says:

    Hello, I had a student of science after 3 year I took a admission in fybcom so commerce is totally new for me I have 1 doubt on how to identify personal account real account and nominal account in Question please?

    • Personal Account: The accounts and elements which represent persons and organisations.
      – Mrs. Aarti’s A/c – representing Mrs. Aarti an individual.
      – M/s Arun & Co A/c – representing M/s Arun & Co. an organisation.
      – Capital A/c – representing the owner of the business, a person or organisation.
      – Bank A/c – representing Bank, an organisation.

      Real Account: The accounts and elements which represent tangible aspects.
      – Cash a/c – representing cash which is tangible.
      – Goods/Stock a/c – representing Stock which is tangible.
      – Furniture a/c – representing Furniture which is tangible.

      Nominal Account: The accounts and elements which represent expenses, losses, incomes, gains.
      – Salaries a/c – representing expenditure on account of salaries, which is an expense.
      – Interest received a/c – representing income on account of interest, which is an income.
      – Loss on sale of Asset a/c – representing the loss incurred on sale of assets, which is a loss.

      I hope this will clear your doubt about identifying three different accounts type in golden rules for accounting.

  4. Ashok Kumar Vaishnav says:

    Not required to mention the nature or product name, only cash received against cash sales naration is enough.

  5. Abhishek Kr Singh says:

    Graduation Level Accounting Questions With Answers. Thanks for Posting it.

  6. Vivek says:

    What about Capital A/c and liabilities? Where does it come in golden rules?

    • Hi Vivek, Capital A/c and liabilities are noted in Journal entries and it follows the Golden Rules of Account. Capital account comes under Personal Account and Liabilities are like loan and debt so such kind of entries are recorded under Balance sheet.

  7. Mary says:

    Hi, My question is if we consider personal account is for person or an organisation. Now if a person or an organization incurs an expense of commission. Now how the rule should we apply. Is it to be Dr the receiver Cr the giver or Dr all expense and loss and Cr all income.

    • Hi Mary, first of all let me clear your first point i.e., Personal Account could be only or a person not for organization. (Personal account relates to persons with whom a business keeps dealings) So use this rule, Debit the Receiver, Credit the Giver. It’s simple just try to identify the kinda account.

  8. Shazia says:

    Hi, I have a big doubt in the types of Personal Accounts can you pls. clear it. Pls pls because my exams are closer…

    • Hi Shazia, as far as I know there is no kinda types in Personal account as there are three kinda accounts as Personal Account, Real Account and Nominal Account. But in modern accounting world three accounts you might see under Personal Account i.e.,

      Natural Account: It is related to individuals or natural persons made of flesh and bones.
      Artificial Account: It is related to artificial person recognized by Law – such as Manipal Learning Ltd, SBI, RBI, BEL. BHEL etc.
      Representative Account: Account of groups or representative such as Debtors, Creditors, outstanding expenses and prepaid insurance.

      I hope this will help you a lot. Good Luck.

  9. Naman jain says:

    Hello Sir,

    Thanks for your valuable guidance. It is very beneficial or us and also thanks for clearing all doubts in one place.

    Regards,
    Naman Jain

  10. Sowmya says:

    Hi Atul,

    I know Land does not have depriciation but it has appreciation value. Can you please explain how and why?

    • Yes Sowmya, You are right. One way I can explain you this case with the help of demand and supply rule.

      Rule 1: When Demand Increases and Supply Decreases the Price of Value Increases and Vice Versa.
      Rule 1: When Demand Decreases and Supply Increases the Price of Value Decreases and Vice Versa.

      For an asset there is always supply thus, there is more space of production, but land is limited and very scarce. Therefore due to more demand and less supply of land the land always has an appreciation value. I hope you got my point very well.

  11. rakesh mohanty says:

    Good afternoon sir, please solve my doubt. What is difference between book keeping and accounting?

    • Hi Rakesh,

      The accounting process involves recording, interpreting, classifying, analyzing, reporting and summarizing financial data. Bookkeeping is the process of recording financial transactions. Recording financial transactions is the first part of and the foundation of the accounting process.

  12. Annies says:

    Hello Mr. Atul, I have one small doubt in nominal account. Why expenses is to be debited in nominal account, may I know the reason?

    • Simply I can say is because it is the Golden rules of account. But it is recorded in debit side because the balances on the right side of an account are credit balances. Since expenses cause a decrease to the owner’s equity credit balance, a debit entry is required. However, at the time that the expense is recorded, the amount is entered as a debit in an expense account.

  13. Satyadeep Mohanty says:

    What if ABC Ltd. has not paid the salary of June month, then what account will be debited and what account will be credited.

    • Unpaid salaries are salary liabilities (salary outstanding) that you have incurred but have not paid. You must record all accrued salaries, employment taxes and related compensation expenses in the same period in which they are incurred. Here I am presenting 2 cases, one salary is unpaid and another is outstanding salary paid.

      1. Salary Outstanding

      Acc. | Dr. | Cr.
      —————-
      Salary A/c… Dr.
      To Salary Outstanding A/c
      (Being salary unpaid or due)

      2. Outstanding Salary Paid

      Acc. | Dr. | Cr.
      —————-
      Salary Outstanding A/c… Dr
      To Bank/Cash A/c
      (Being due salary cleared)

      I hope this will be helpful to you.

  14. Rakesh Kumar Mohanty says:

    Sir, Which transaction are recorded in debit side in journal, but these transaction are changed in credit side in ledger. Why it is change?

    • Hello Rakesh, as I understand your question is about change of debit side entries of journal to credit side entries or vice-versa when we are adding entries from journal to ledger. account. It is recorded in opposite direction because your credit is someones debit and someones credit is your debit. It changes because the account has been changed. Ledger is always made for specific account, goods and services and it is more detailed in nature.

  15. Abhinov Bhardwaj says:

    Sir, My question is, what is the major difference between Public Accounting and Private Accounting?

    • Hello Abhinov, thanks for asking a nice question. So Public account is account where you deal with business systems and where strong analytical is required. Whereas in Private account you mostly deal in business process, and need to know industry standards.

  16. Randeep Singh says:

    Hlo Sir I Have an Question about the dishonour of a bill.

    • A bill is said to dishonoured when a drawee fails to make the payment on the date of the maturity. In this case, liability of the acceptor is restored. Thus, the entries made on the receipt of the bill as reversed. Let’s say if ABC received bill of exchange accepted by XYZ, which dishonoured. Then entries of dishonour will be as,

      Acc. | Dr. | Cr.
      —————-
      XYZ A/c Dr.
      To Bills Receivables A/c
      (Being a bill dishonoured )

      I hope this will be helpful to you.

  17. Prudhvi raj chowdary says:

    Hi Atul, one of my friend got question when she attend for an interview.
    Interviewer question: why we need to prepare trading account when we are preparing P&L A/c. and Balance Sheet.

    • Hi Prudhavi, it’s a basic thing to know. When we create a final account which is Profit and Loss account and Balance sheet we need to calculate first gross profit and loss; on the basis of which final accounts are created. Trading Account is the first stage in the process of preparing final accounts. Trading account shows the gross profit or gross loss during an accounting year. Thus, we need to prepare trading account first when we are preparing Profit and Loss account and Balance sheet.

  18. shivu says:

    Sir, can you please tell me the journal entry of “cash eaten by rat”?

    • Hi Shivu, the cash eaten by rat doesn’t comes under abnormal loss and insurance claims. The loss on theft of cash and any other assets may be simply be expensed to the income statement net of any insurance claim received or receivable. Following accounting entries would therefore be required:

      Acc. | Dr. | Cr.
      ——-
      Loss on asset theft (balancing amount) A/c Dr.
      Accumulated Depreciation A/c Dr. (If it is required)
      To Asset (carrying amount) A/c.

      Incase if it was assets which has a claim by insurance company then there would be 2 more entries thus I am making a case here to explain how all entries will go. In this case, when insurance company is ready to give some percentages of claim.

      Acc. | Dr. | Cr.
      ——-
      Loss due to Accident A/c Dr.
      Insurance Claim A/c Dr.
      To Trading A/c Cr.
      (Being cash eaten by rat and insurance claim received)

      Entry for transferring loss to Profit & Loss A/c.

      Acc. | Dr. | Cr.
      ——-
      Profit & Loss A/c Dr.
      To Loss due to Accident A/c
      (Being entry recorded for transferring loss to Profit & Loss A/c)

  19. ravi says:

    Hi,

    I have a query regarding Accounts. Many times I have rejected in final round of interview only because of accounts knowledge. In my current organization or previous organization I never used these accounting thing, what I have learnt in my school and college life. Mostly I have experience of accounts receivable.

    So could you please tell me what should I have brush up before going to an interview. Because mostly every interviewer ask golden rule of accounts that I know. Anything you can suggest or any entries which they are surely ask for accounts receivable process.

    • Hi Ravi, Glad to know that you are talking about practical uses of this. Basically when we are in colleges we tough predefined journal entries and accounting methods, but once we enter in the practical world nothing other than basic rules are followed. Thus, I would like suggest that make habit of learning current cases going on everywhere.

      Nowadays no one make journal entries on books but the same things are done with accounting software (My CA uses “QuickBook” for accounts and invoices; he also follows the real cases of multinational companies to make himself updated). So it’s better to learn more on real life transactions other than what we have studied yet.

  20. dinesh says:

    Hi Atul, first of all thanks for sharing this amazing accountancy rules with us. I have a question that loan from bank is a personal a/c or nominal a/c or real a/c?

  21. Nishant says:

    Hello Atul, I want to know difference between prepaid and postpaid expenses.

    • Hi Nishant, first of all thanks for presenting your query in account. Prepaid Expenses represent goods or services delivered over a period of time, but which are paid in a lump sum at the beginning of that time period. Whereas Postpaid Expenses are just opposite to it. The amount of prepaid expenses that have not yet expired are recorded on a company’s balance sheet as an asset. Whereas postpaid expenses are recoded on a company’s balance sheet as an liability.

  22. Ratnakar sahu says:

    Thank you sir for posting such a difficult topic in simple way. Examples are really helpful.

  23. Salman Khan says:

    Hi Atul, I want to know what is different between Gross Profit and Net Profit.

    • Hi Salman, Gross profit is sales revenues minus the cost of goods sold. Net Profit means all revenues minus all expenses including the cost of goods sold, the selling, general, and administrative expenses, and the non-operating expenses.

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