CHAPTER 7: DOUBLE ENTRY SYSTEM (RULES OF DEBIT AND CREDIT) ASSIGNMENTS #1-4

 DO THE FOLLOWING ASSIGNMENTS

 MODERN APPROACH

 NATURE OF ACCOUNTS

 Assets, Expense, Liabilities, Capital Revenue 

1.Assets Account: 

Rule : Debit- Increase in the amount of an Asset
           Credit - Decrease in the amount of the Asset.

2. Expenses Account: 

Rule: Debit- Increase in the amount of expense or loss
          Credit- Decrease in the amount of expense or loss

3.Liabilities Account: 

Rule: Credit- Increase in the amount of the liability
          Debit- Decrease in the amount of the liability

4. Capital Account: 
Rule: Credit-Increase in the amount of the Capital
          Debit- Decrease in the amount of the Capital

5.Revenue Accounts: 
Rule: Credit- Increase in the amount of the revenue or income
          Debit- Decrease in the amount of the revenue or income
ASSIGNMENT # 1

ON WHICH SIDE, THE INCREASE IN THE FOLLOWING ACCOUNTS WILL BE RECORDED? ALSO SPECIFY THE NATURE OF ACCOUNTS TO WHICH THEY BELONG:
1.FURNITURE
2. DEBTORS
3. INTEREST RECEIVED ACCOUNT
4. CASH ACCOUNT
5. BANK ACCOUNT 

 Example:
1. Furniture : DEBIT the increase) ASSET

ASSIGNMENT # 2

ON WHICH SIDE, THE DECREASE IN THE FOLLOWING ACCOUNTS WILL BE RECORDED? ALSO SPECIFY THE NATURE OF ACCOUNTS.
1.MACHINERY ACCOUNT
2.BANK OVERDRAFT ACCOUNT
3. ACCRUED COMMISSION ACCOUNT
4. KAPIL (SUPPLIER)

 Example:
1. Machinery: CREDIT (the decrease) ASSET



TRADITIONAL APPROACH


Personal accounts : 
Rule: 
Debit The Receiver
 (account of the person who receive something from the business is debited)
Credit- The Giver 
(account of the person who gives something to the business is credited)
Classification of personal accounts:

2. Real Accounts: 

Rule: 
Debit- what comes in (when any property comes into the business) Credit- what goes out (when any property goes outside the business)

3.Nominal Accounts: 

Rule: 
Debit- All expenses and losses 
Credit- All incomes and gains



1. Personal accounts : 
Rule: Debit The Receiver (account of the person who receives something from the business is debited)
Credit- The Giver (account of the person who gives something to the business is credited)

2. Real Accounts: 
Rule: Debit- what comes in (when any property comes into the business) Credit- what goes out (when any property goes outside the business)

3.Nominal Accounts:
Rule: Debit- All expenses and losses Credit- All incomes and gains

ASSIGNMENT # 3

CLASSIFY THE FOLLOWING ACCOUNTS INTO PERSONAL, REAL OR NOMINAL ACCOUNTS:

1. CAPITAL
2. PLANT AND MACHINERY
3. TRAVELLING EXPENSES
4. CREDITORS
5. COMMISSION PAID


ASSIGNMENT # 4

FROM THE FOLLOWING TRANSACTIONS, SHOW THE ACCOUNTS TO BE DEBITED AND CREDITED UNDER MODERN APPROACH AND TRADITIONAL APPROACH:

1. MAYANK STARTED BUSINESS WITH CASH
2. GOODS PURCHASED IN CASH
3. RENT PAID
4. GOOD SOLD TO SHYAM ON CREDIT


EXAMPLE:

ACCORDING TO MODERN APPROACH OR AMERICAN APPROACH

S.no
Affected
Accounts
Nature of
Account
Effect of
Transaction
Debit or
Credit
1.
CASH
CAPITAL
ASSET
CAPITAL
INCREASE
INCREASE
DEBIT
CREDIT

ACCORDING TO TRADITIONAL APPROACH OR ENGLISH APPROACH


S.no
Affected
Accounts
Nature of
Account
Effect of
Transaction
Debit or
Credit
1.
CASH
CAPITAL
REAL
PERSONAL
Dr. WHAT COMES IN
Cr. THE GIVER
DEBIT
CREDIT




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