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1.introduction To Accounting

The document introduces the accounting equation and different types of accounts. It discusses personal accounts, real accounts, and nominal accounts. Personal accounts are for individuals or organizations. Real accounts track assets that come in or go out of a business. Nominal accounts relate to expenses, losses, incomes or gains.

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Dhairya Ailani
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31 views5 pages

1.introduction To Accounting

The document introduces the accounting equation and different types of accounts. It discusses personal accounts, real accounts, and nominal accounts. Personal accounts are for individuals or organizations. Real accounts track assets that come in or go out of a business. Nominal accounts relate to expenses, losses, incomes or gains.

Uploaded by

Dhairya Ailani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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1.

Introduction to Accounting

𝐴𝑠𝑠𝑒𝑡𝑠 = 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 + 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠


The Accounting Equation can also be shown in the vertical
form, it is called STATEMENT Of FINANCIAL POSITION
Types of Account
Personal Account
Account of a person, firm, business,
organisation, company, bank, etc.
e.g- Bank of England, James Bond, Podar International
school.
They are either givers or receivers of cash,
goods, services, assets, fees etc.
Rule
Debit the receiver Credit the giver
Types of Account
Real Account
All assets of a firm, which are tangible or intangible,
fall under this category.
e.g- Machinery, Inventory, Goodwill , etc
They either come in the business or go out of the
business.
Rule
Debit what comes in
Credit what goes out
Types of Account
Nominal Account
Accounts which are related to expenses, losses, incomes or gains are called
Nominal accounts.
The dictionary meaning of the word “nominal” is “existing in name only” and
the meaning remains absolutely true in accounting sense too, because
nominal accounts do not really exist in physical form, but behind every
nominal account money is involved.
e.g. Salary account, Commission received account, etc.

The final result of all nominal accounts is either profit or loss which is then
transferred to the capital account.

Rule
Debit all expenses & loses
Credit all incomes & gains
Debit Balance Credit Balances
Assets Liabilities
Expenses/losses Income/gains
Drawings Capital
Purchases Sales
Sales Return Purchase returns
Trade receivables Trade payables
Irrecoverable debts Debts recovered
Provision……..

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