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Classification of Accounts

I. Personal Accounts: - Personal accounts are the accounts of persons, firms,
concerns and institutions which the businessmen deal.

Example: ABC & co., Ram Account, Debtors, Creditors, Account of The Proprietor, Drawings
Account Of The Proprietor etc.

Rule: Debit the Receiver & Credit the Giver

Debit the receiver: - receiver of the amount is debited. For example, in case of
payment to a dealer, the payment made to him is debited.

Credit the giver: - the one who gives the amount is credited. For example, in case of
receipts from the customers, the customer giving the payment is credited.
In Other Words, "Debit That Person's Account? Who Receives Something From The Business And
Credit That Person's Account Who Give Something To Business".

Example 1: I have given Rs. 5000 to Rahul Saxena in Cash.

In The Case, Two Accounts Affected Are Rahuls A/C And Cash A/C. According To the Rule Of
"Debit The Receiver Of Cash. Simultaneously, The Account of Cash Will Be Credited, As Cash Has
Gone Out. The Entry Will Be:-

Entry: Rahul Saxena (Debit The Receiver) Dr 5,000
To Cash A/c 5,000

Example 2: Received from Ramesh Rs. 2000.

In this transaction, the personal account involved is Ramesh's Account. The personal account of
Ramesh gives the cash. So, Ramesh's Personal Account has to be credited.

Entry: Cash A/c Dr 2,000
To Ramesh (Credit the Giver) 2,000

Example 3: Purchased goods from David on credit Rs. 5000

Here, the personal account involved is David's Account. The personal account of David gives the
goods. Therefore, David's Personal Account has to be credited.

Entry: Purchase A/c Dr 5,000
To David A/c (Credit the Giver) 5,000

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Example 4: Goods sold on credit to Dev Raj Rs. 1600

Here, Dev Raj is receiver of goods, so his personal account will be debited.
Goods go out, so, goods or sale account will be credited.

Entry: Dev Raj A/c Dr 1,600
To Sales A/c (Credit the Giver) 1,600

Personal accounts can be Classified into:

I. Accounts of natural or physical persons: - These accounts are of natural persons, We can
touch them physically and they can feel us . They can sells the goods to us or we sell them
goods. So, we need to make these accounts for tracking the amount receivable and payable.
i.e., Ram's Account, Sitaram's Account, Janakiram's Account, etc.

II. Accounts of artificial or legal persons :- Artificial persons are those which are not living
human being but have existence in the eye of Law. They can operate their business by board
of directors, managers and other authorities of organization.
i.e., accounts of partnership firms, companies, clubs, associations, banks,
Government institutions, schools and colleges, etc.

III. Representative personal accounts: - An account indirectly representing a person or persons
is known as representative personal account. When accounts are of a similar nature and their
number is large, it is better to group them under one head and open a representative personal
account. e.g., prepaid insurance, outstanding salaries, rent, wages etc.
When a person starts a business, he is known as proprietor. This proprietor is
represented by capital account for all that he invests in business and by drawings accounts for
all that which he withdraws from business. So, capital accounts and drawings account are
also personal accounts.

These accounts are of Representative Persons who represent following:-

( i ) Outstanding Expenses account

Outstanding expenses account are those personal account to whom, we have to pay expenses,
we have already taken services from them. But still we have not paid them. This is also called
liability account because its balance will be shown in liability side of organizations balance
sheet.

For example outstanding salary account, outstanding lighting bill, outstanding Internet
charges account etc.

Entry:

1) Salaries Unpaid Rs. 500

Salary A/c (Indirect Exp.) Dr. 500
To, Outstanding Salary A/c (Current Liabilities) 500
(Being Salaries for the month of March, 2011 due but not yet paid accounted.)

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( ii ) Advance expenses/Prepaid Expenses account

If we have paid the expenses in advance but still we have to obtain services .So, we make
advance expenses account which represents the person to whom we have paid expenses in
advance.
For example Advance salary account, Advance lighting bill, Advance Internet charges
account etc.

Example 1: Prepaid Insurance:

Purchasing insurance:
When purchasing insurance, first debit the asset account "prepaid insurance" and credit the
asset "cash." This journal entry will have the effect of increasing "prepaid insurance" and
decreasing the balance of "cash."

For example, suppose that Oregon Corporation purchased a full year's worth of insurance on
May 1 for 1,200. Here's the journal entry:

Prepaid Insurance ..Dr. 1,200
To Cash A/c 1,200

The asset prepaid insurance would increase by $1,200, while the asset cash decreases by
1,200.

Recording the adjusting Journal entry:

Returning to our example of Oregon Corporation, the company had purchased a year's worth
of insurance on May 1 for 1,200. How much prepaid insurance would be left at year-end on
December 31? There would be four months left (January, February, March and April of next
year) and eight months were consumed (May through December). The insurance itself cost
100 per month (1,200 / 12 months). So 400 worth of prepaid insurance (100 x 4 months)
remains on December 31.

The adjusting journal entry would reduce prepaid insurance by the 800 worth of insurance
that was consumed, crediting prepaid insurance and debiting the account insurance expense:

Insurance Expense ..Dr. 800
To Prepaid Insurance A/c 800

This journal entry increases insurance expense by 800 and decreases the asset prepaid
insurance by the same amount.


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Another way to do it:

Suppose that, when initially purchasing insurance on May 1, Oregon debited the expense
account insurance expense and credited the asset account cash for $1,200.

Insurance Expense ..Dr. 1,200
To Cash A/c 1,200

By December 31, Oregon still had $400 worth of unexpired insurance. However, the balance
of the asset account prepaid insurance is zero. Therefore, Oregon needs to increase the
account prepaid insurance for $400 and decrease the account insurance expense by the same
amount:

Prepaid Insurance A/c ..Dr. 400
To Insurance Expense A/c 400

Example 2: Prepaid Rent

ABC LTD pays advance rent to its landowner of 10,000 on 31st December 2010 in respect of
office rent for the following year. ABC LTD has an accounting year end of 31st December
2010.
ABC LTD will recognize an asset of 10,000 in the financial statements of year 2010 in
respect of the prepaid expense to recognize its right to use office space in the following year.
Following accounting entry will be recorded in the books of ABC LTD in the year 2010:

Prepaid Rent .Dr 10,000
To Cash 10,000

The prepaid expense will be recognized as expense in the next accounting period to which the
rental expense relates. Following accounting entry will be recorded in the year 2011:

Rent Expense ..Dr. 10,000
To Prepaid Rent 10,000

( iii ) Outstanding Income account

This account shows the amount of income which is receivable from other party.
We can explain this account with simple example

Suppose if Ram have given services to Sham but after providing services, if Ram does not get
his income, then Ram will open outstanding income account in his books. It is Representative
account of Sham. This account will tell amount which is receivable from sham.


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( iv ) Advance income account

Advance income account is also personal account. This account is made when earning is
received but services are not given. So, this account is very helpful to track the amount which
is taken advance before giving services.

Example

ABC LTD receives advance rent from its tenant of 10,000 on 31st December 2010 in respect
of office rent for the following year. ABC LTD has an accounting year end of 31st December
2010.
ABC LTD will recognize a liability of 10,000 in the financial statements of year 2010 in
respect of the prepaid income to acknowledge its obligation to make the office space
available to the tenant in the following year. Following accounting entry will be recorded in
the books of ABC LTD in the year 2010:

Entry:

Cash A/c .Dr. 10,000
To Prepaid Rent Income (Liability) 10,000

The prepaid income will be recognized as income in the next accounting period to which the
rental income relates. Following accounting entry will be recorded in the year 2011:

Prepaid Rent Income (Liability) .Dr. 10,000
To Rent Income 10,000

II. Real Accounts: - Accounts relating to properties or assets are known as Real
Accounts, A separate account is maintained for each asset e.g., Cash, Machinery,
Building, etc.,

Real accounts can be further classified into tangible and intangible.

(a) Tangible Real Accounts: These accounts represent assets and properties which can
be seen, touched, felt, measured, purchased and sold. E.g. Machinery account, Cash
account, Furniture account, stock account etc.

(b) Intangible Real Accounts: These accounts represent assets and properties which
cannot be seen, touched or felt but they can be measured in terms of money.
e.g., Goodwill accounts, patents account, Trademarks account, Copyrights account, etc.

Rule: Debit what comes in & Credit what goes out


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Examples of Real or Asset accounts

An asset is a lifeless thing. So, it cannot receive or give a benefit. It can only come into the business
or go out of the business. Therefore, the account of an asset which comes into the business is debited
and the account of an asset which goes out of the business is credited.

The rule for debiting and crediting real accounts may be explained with the help of the following
examples:

1. Received interest Rs. 100.
In this transaction, the asset account involved is Cash Account. Cash comes into the business. So,
Cash Account has to be debited.

2. Paid Bhaskar Rs. 200
In this transaction, the asset account involved is Cash Account. Cash goes out of the business. So,
Cash Account has to be credited.

3.Sold Machinery to Rao Rs. 5000
The asset account involved in this transaction is Machinery Account. Machinery goes out of the
business. So, Machinery Account has to be credited.

4. Bought furniture from Ahmed & Co. on credit Rs. 500
The asset account involved in this transaction is Furniture Account. Furniture comes into the
business. Therefore, Furniture Account has to be debited.

III. Nominal Accounts: Accounts relating to income, revenue, gains, expenses and losses
are termed as nominal accounts. These accounts are also known as fictitious accounts as
they do not represent any tangible asset. A separate account is maintained for each head
or expense or loss and gain or income. Wages account, Rent account, Commission
account, Interest received account, Salaries, bad debts etc are some examples of nominal
account

Rule: Debit expenses and losses & Credit incomes and gains

Examples of Nominal or Fictitious Accounts

Nominal accounts may be expenses and losses or incomes and gains. Therefore, the accounts of
expenses and losses are debited, and the accounts of incomes and gains are credited.

The rule for debiting and crediting nominal accounts may be explained with the help of the following
examples:


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1.Paid rent Rs.100.

In this transaction, the nominal account involved is Rent Account. Rent paid is an expenses. So, Rent
Account has to be debited.

2.Paid salary Rs. 500.

Here, the nominal account involved is Salary Account. Salary is an expense. Therefore, Salary
Account has to be debited.

3.Received commission Rs.100.

In this transaction, the nominal account involved is Commission Account. Commission received is
an income. So, commission Account has to be credited.

4.Received Interest on bank deposit Rs.100.

The nominal account involved in this transaction is Interest Account. Interest received is an income.
So, Interest Account has to be credited

Important Rules of Debit and Credit

Rule of Personal Account : Debit the receiver, Credit the giver

Rule of Real Account : Debit What Comes in, Credit what goes out

Rule of Nominal Account: Debit the Expenses and Losses, Credit the Incomes and Gains

Illustration: How will you classify the following into Personal, Real and Nominal accounts?

i. Investments
ii. Freehold Premises
iii. Accrued Interest
iv. Punjab Agro Industries Corporation
v. Janata Allied Mechanical Works
vi. Salary Accounts
vii. Loose Tools Accounts
viii. Purchases Account
ix. Indian Bank Ltd.
x. Capital Account
xi. Brokerage Account
xii. Toll Tax Account
xiii. Dividend Received Account
xiv. Royalty Account
xv. Sales Account

Solution
Real Account: (i), (ii), (vii), (viii), (xv).
Nominal Account: (vi), (ix), (xi), (xii), (xiii), (xiv)
Personal Account: (iii), (iv), (v), (x)


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Journalizing

Journalism is the process of recording journal entries in the Journal. It is a systematic act of entering
the transaction in a day book in order of their occurrence i.e., date-wise or event-wise. After
analysing the business transactions, the following steps in journalising are followed:

i. Find out what accounts are involved in business transaction.
ii. Ascertain what is the nature of accounts involved?
iii. Ascertain the golden rule of debit and credit is applicable for each of the accounts involved.
iv. Find out what account is to be debited which is to be credited.
v. Record the date of transaction in the Date Column.
vi. Write the name of the account to be debited very near to the left hand side in the Particulars
Column along with the word Dr on the same line against the name of the account in the
vii. Particulars Column and the amount to be debited in the Debit Amount column against the
name of the account.
viii. Record the name of the account to be credited in the next line preceded by the word To at a
few space towards right in the Particulars Column and the amount to be credited in the
Credit Amount Column in front of the name of the account.
ix. Record narration (i.e. a brief explanation of the transaction) within brackets in the following
line in Particulars Column.
x. A thin line is drawn all through the particulars column to separate one Journal entry from the
other and it shows that the entry of a transaction has been completed.

Illustration: Analyse the following transactions.

a. Ramesh started his business with cash
b. Borrowed from Nikhil
c. Purchased furniture
d. Purchased furniture from Mohan on
credit
e. Purchased goods for cash
f. Purchased goods from Ram on credit
g. Sold goods for cash
h. Sold goods to Hari on credit
i. Received cash from Hari
j. Paid cash to Ram
k. Deposited into bank
l. Withdrew cash for personal use
m. Withdrew from bank for office use
n. Withdrew from bank for personal use
o. Received cash from a customer,
Shyam
p. Paid salary by cheque
q. Received donation in cash
r. Paid to Ram by cheque
s. Paid salary
t. Paid rent by cheque
u. Goods withdrawn for personal use
v. Paid an advance to suppliers of goods
w. Received an advance from customers
x. Paid interest on loan
y. Paid installment of loan
z. Interest allowed by bank.


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Solution
ANALYSIS OF TRANSACTIONS

(a) Cash A/c Real Cash is coming in Debit
Capital A/c Personal Ramesh is the giver Credit
(b) Cash A/c Real Cash in coming in Debit
Loan from Nikhil A/c Personal Nikhil is the giver Credit
(c) Furniture A/c Real Furniture is coming in Debit
Cash A/c Real Cash is going out Credit
(d) Furniture A/c Real Furniture is coming in Debit
Mohans A/c Personal Mohan is the giver Credit
(e) Purchases A/c Real Goods are coming in Debit
(f) Purchases A/c Real Goods are coming in Debit
Rams A/c Personal Ram is the giver Credit
(g) Cash A/c Real Cash is coming in Debit
Sales A/c Real Goods are going out Credit
(h) Haris A/c Personal Hari is the receiver Debit
Sales A/c Real Goods are going out Credit
(i) Cash A/c Real Cash is coming in Debit
Haris A/c Personal Hari is the giver Credit
(j) Rams A/c Personal Ram is the receiver Debit
(k) Bank A/c Personal Bank is the receiver Debit
(l) Drawings A/c Personal Ramesh is the receiver Debit
(m) Cash A/c Real Cash is coming in Debit
Bank A/c Personal Bank is the giver Credit
(n) Drawings A/c Personal Ramesh is the receiver Debit
(o) Cash A/c Real Cash is coming in Debit
Shyams A/c Personal Shyam is the giver Credit
(p) Salary A/c Nominal Salary is an expense Debit
Bank A/c Personal Bank is the receiver Credit
(q) Cash A/c Real Cash is coming in Debit
Donation A/c Nominal Donation is a gain Credit
(r) Rams A/c Personal Ram is the receiver Debit
(s) Salary A/c Nominal Salary is an expense Debit
(t) Rent A/c Nominal Rent is an expense Debit
(u) Drawings A/c Personal Ramesh is the receiver Debit
Purchases A/c Real Goods are going out Credit
(v) Advance to Suppliers A/c Personal Suppliers are the receivers Debit
(w) Cash A/c Real Cash is coming in Debit
Adv. from Customers A/c Personal Customers are the givers Credit
(x) Interest on Loan A/c Nominal Interest on loan is an expense Debit
(y) Loan A/c Personal Lender is the receiver Debit
(z) Bank A/c Personal Bank is the receiver Debit
Bank Interest A/c Nominal Bank Interest is a gain Credit
Accounts involved Nature of accounts How affected Debit8/Credit
T
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Illustration: Prepare Journal in the books of K.K. Co. from the following transactions:

2014 Rs. 2014 Rs.
Dec. 1 Started business with a capital
of
50,000 Dec. 15 Purchased goods from
Ram
4,000
Dec. 6 Paid into bank 20,000 Dec. 18 Paid wages to workers 300
Dec. 8 Purchased goods for cash 4,000 Dec. 20 Recd. from Pankaj
Allowed him discount Rs.
50
1,000
Dec. 9 Paid to Ram 1,980 Dec. 22 Withdrawn from bank 3,000
Dec. 9 Discount allowed by him 20 Dec. 25 Paid Ram by cheque 500
Dec. 10 Cash sales 3,000 Dec. 31 Withdrawn for personal
use
200
Dec. 12 Sold to Hari for cash 2,000

Solution
IN THE BOOKS OF K.K. CO.
Journal
Dr. Cr.

Date Particulars L.F. Rs. Rs.
2014 Dec. 1 Cash A/c Dr. 50,000
To Capital A/c 50,000
(Being business started with capital)
6 Bank A/c Dr. 20,000
To Cash A/c 20,000
(Being cash paid into bank)
8 Purchase A/c Dr. 4,000
To Cash A/c 4,000
(Being goods purchased for cash)
9 Ram A/c Dr. 2,000
To Cash A/c 1,980
To Discount Received A/c 20

(Being cash paid to Ram and discount received Rs. 20)
10 Cash A/c Dr. 3,000
To Sales A/c 3,000
(Being goods sold for cash)
12 Cash A/c Dr. 2,000
To Sales A/c 2,000
(Being goods sold for cash)


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Date Particulars L.F. Rs. Rs.
15 Purchases A/c Dr. 4,000
To Ram A/c 4,000
(Being goods purchased from Ram)
18 Wages A/c Dr. 300
To Cash A/c 300
(Being wages paid)
20 Cash A/c Dr. 1,000
Discount Allowed A/c Dr. 50
To Pankaj A/c 1,050

(Being cash received from Pankaj
and allowed him discount Rs. 50)

22 Cash A/c Dr. 3,000
To Bank A/c 3,000
(Being cash withdrawn from bank)
25 Ram A/c Dr. 500
To Bank A/c 500
(Being paid by cheque)
31 Drawings A/c Dr. 200
To Cash A/c 200
(Being withdrawn for personal use)
Grand Total 90,050 90,050

Rent Nominal Account Indian Bank Personal Account Reserve Personal Account
Interest paid Nominal Account Capital Personal Account Labour charge Personal Account
Discount received Nominal Account Drawings Personal Account Interest outstanding Personal Account
Advertisement Nominal Account Raju Personal Account kt & sons Personal Accounts
Wages Nominal Account Raj Lending Library Personal Account Sales Real Account
Freight Nominal Account Outstanding Salary Personal Account Purchase Account Real Account
Advertisement Expenses Nominal Account prepaid rent Personal Account Cash Real Account
Stationery Nominal Account Debtors Personal Account Building Real Account
Discount Nominal Account Creditors Personal Account Bank Real Account
Repairs Nominal Account james Personal Account Sales return Real Account
Tax Nominal Account Tamil&co Personal Account Purchase return Real Account
Bad debts Nominal Account Indian bank Personal Account Computer Real Account
Trade expense Nominal Account Raja Personal Account Land Real Account
Outstanding expenses Nominal Account Prepaid insurance Personal Account Goodwill Real Account
Commission Nominal Account Sk Limited Personal Account Investments Real Account
Depreciation Nominal Account Provision for bad debts Personal Account Furniture Real Account
Interest outstanding Nominal Account Tamilarasan Personal Account Stock Real Account
Debit & Credit Accounts

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IMPORTANT CONSIDERATIONS FOR RECORDING THE BUSINESS TRANSACTIONS

1. Trade Discount
For example, purchased goods of list price 8,000 at 15% trade discount from X. In this case
the following entry will be passed:

Purchases Account Dr. 6,800
To X 6,800
(Being goods purchased at 15% trade discount Less list price)

2. Amount paid or received in full settlement or cash discount
For example, X owes 6,000 to Y. He pays 5,950 in full settlement against the amount due.
In the books of X the journal entry will be:
Y Dr. 6,000
To Cash Account 5,950
To Discount Received account 50
(Being Cash paid and discount received)
In the books of Y
Cash Account Dr. 5,950
Discount Allowed Account Dr. 50
To X 6,000
(Being cash received and discount allowed)

3. Goods distributed as free samples
For example, goods costing 8000 were distributed as free sample. to record this transactions
following entry will be passed:
Advertisement Account Dr. 8,000
To Purchases Account 8,000

4. Interest on capital
Interest paid on capital is an expense. Therefore interest account should be debited. On the
other hand the capital of the business is increases. So the capital account should be credited.
The entry will be as follows:
Interest on Capital Account Dr.
To Capital Account


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5. Interest charged on Drawings
If the interest is charged on drawings then it will be an increase in the income of business, so
interest on drawings will be credited. On the other hand there will be increase in Drawings or
decrease in Capital. So Drawings Account will be debited. To record this, following entry will
be passed:
Drawing Account or Dr.
Capital Account Dr.
To Interest on Drawing Account

6. Depreciation charged on Fixed Assets
Depreciation is the gradual, permanent decrease in the value of an assets due to wear and tear
and many other causes. Depreciation is an expense so the following entry will be passed:
Depreciation Account Dr.
To Asset Account
7. Bad Debts
Sometimes a debtor of business fails to pay the amount due from him. Reasons may be many
e.g. he may become insolvent or he may die. Such irrecoverable amount is a loss to the
business. To record this following entry will be passed:
Bad Debts Account Dr.
To Debtors Account

8. Bad Debts Recovered
When any amount becomes irrecoverable from any costumer or debtor his account is closed
in the books. If in future any amount is recovered from him then his personal account
will not be credited because that does not exist in the books. So the following entry is passed:
Cash Account Dr.
To Bad Debts Recovered Account
9. Purchase and Sale of investment
When business has some surplus money it may invest this amount is shares, debentures or other
types of securities. When these securities are purchased, these are recorded at the purchase
price paid. At the time of sale of investment the sale price of an investment is recorded in the
books of accounts. The following entry is passed to record the purchase of investment:
Investment Account Dr.
To Cash Account

In case of sale of these securities the entry will be:
Cash Account Dr.
To Investment Account

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10. Loss of Goods by Fire/Accident/theft
A business may suffer loss of goods on account of fire, theft or accident. It is a business loss
and a nominal account. It also reduces the goods at cost price, and increases the loss/expenses
of the business. The entry will be passed as:

Loss by fire/Accident/theft Account Dr (for loss)

Insurance Company Account Dr. (for insurance claim admitted)

To Purchases Account

11. Income Tax Paid

Income Tax paid should be debited to Capital Account or Drawings Account and credited to cash
Account in case of sole proprietorship and partnership firms. The reason behind this is that
income tax is a personal expense for the sole trader and partners because it is paid on income of
proprietor.

The entry will be as follows:
Capital Account Dr.
Drawing Account Dr.
To Cash Account

12. Bank Charges

Banks provide various services to their customer Bank deducts some charges by debiting the
account of customer It is an expenses for the business. To record this following entry will be
passed in the books of businessman/customer:

Bank Charges Account Dr.
To Bank Account
13. Drawings Account
It is a personal account of the proprietor. When the businessman withdraws cash or goods form
the business for his personal/domestic use it is called as drawings. Drawings reduce the
capital as well as goods/cash balance of the business.
The journal entry is:
Drawings Account Dr.
To Cash Account
To Purchases Account

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14. Personal expenses of the proprietor
When the private expenses such as life insurances premium, income tax, home telephone bill,
tuition fees of the son of the proprietor etc. are paid out of the cash or bank account of
business it should be debited to the Drawing Account of the proprietor.
Capital/Drawings Account Dr.
To Cash/Bank
15. Sale of Asset/Property
When the asset of a business is sold, there may occur a profit or loss on its sale. It should be
noted carefully that sales account is never credited on the sale of asset.

(i) In case there is a profit on sale of Property/Assets
Cash/Bank Account Dr.
To Asset/Property Account
To Profit on sale of Asset Account

(ii) In case of a loss on sale of asset
Loss on sale of Asset Account Dr
To Asset Account

16. Amount paid or Received on behalf of customer
(i) When the business entity pays the amount on behalf of old reputed customers such as
carriage in anticipation of recovering the same later on, carriage account should not be
opened because carriage is not the expense of the seller. It should be debited/charged to
customers Personal account. The journal entry is:
Customer/Debtors Account Dr.
To Cash/Bank Account
(ii) When the business entity receives the amount on behalf of customers from the third party
as mutually settled between the third party and the customer, the account of the third
party/person making the payment should not be opened in the books of the receiving entity.
The journal entry in the books of the entity is:
To Customer/Debtors Account

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17. Amount paid on behalf of creditors
When the creditors/supplier instructs the business entity to make payment on their behalf, the
amount so paid should be debited to creditors account and liability of the business will
decrease accordingly.
Suppliers/Creditors Account Dr.
18. Paid wages/installation charges for erection of machinery
Wages and installation charges are the expenses of nominal nature. But for erection of
machinery no separate account should be opened for such expenses because these expenses are
of capital nature and it will be merged/debited to the cost of assets i.e. machinery. The journal
entry is:
Machinery Account Dr.
(Being wages/installation charges paid for the erection of machinery)


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TALLY LEDGER & GROUP LIST
Accounts Name Groups
Accrued Income Current Assets
Accrued Rent/ Accrued Income Current Assets
Advertisement Expenses Indirect Expenses
Advertisement Payable Current Liabilities
Air Conditioner Fixed Assets
Apprentice Premium Direct Incomes
Audit Fees Indirect Expenses
Bad Debts Indirect Expenses
Bad Debts Received Indirect Incomes
Bad Debts Reserve (last year balance) Indirect Incomes
Bank Bank Account
Bank Balance Bank Account
Bank Charges Indirect Expenses
Bank Commission Indirect Expenses
Bank Loan Loans & Liabilities
Bank Overdraft Bank OD
Bills Payable Current Liabilities
Bills Receivable Current Assets
Bombay Branch Branch & Division
Bonds Current Assets
Building Fixed Assets
Capital Capital Account
Car Fixed Assets
Car Expenses Indirect Expenses
Car Repair Indirect Expenses
Carriage Direct Expenses
Carriage on Sales Indirect Expenses
Cash Cash in Hand
Cash at Bank Bank Account
Closing Stock Stock in Hand
Coal & Fuel Direct Expenses
Coal, Gas & Water of Factory Direct Expenses
Coffee Expenses Indirect Expenses
Coke Expenses Indirect Expenses
Commission (Cr.) / Commission Received Indirect Incomes
Commission (Dr.) Indirect Expenses
Computer Fixed Assets
Consignment Stock Current Assets
Consumed Material Direct Expenses

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Coolage Direct Expenses
Creditors Sundry Creditors
Debtors Sundry Debtors
Deferred Expenses Current Assets
Deferred Income Current Liabilities
Delhi Branch Branch & Division
Depreciation Indirect Expenses
Depreciation Reserve Current Liabilities
Difference in Trial Balance (Dr or Cr) Suspense Account
Discount (Cr.) / Discount Received Indirect Incomes
Discount (Dr) / Discount Allowed Indirect Expenses
Donation Indirect Expenses
Drawing Capital Account
Electricity Expenses Indirect Expenses
Expenses on Purchases Direct Expenses
Expenses on Sales Indirect Expenses
Export Duty Indirect Expenses
Factory Fixed Assets
Factory Expenses (Lighting, Power etc.) Direct Expenses
Factory Incomes Direct Incomes
Farm House Fixed Assets
FDR Current Assets
Fire Insurance Indirect Expenses
Fitting Charges Received Indirect Income
Forex Gain Loss Indirect Expenses
Freight Direct Expenses
Freight Inward Direct Expenses
Freight on Purchase (Freight Inward) Direct Expenses
Freight on Sale (Freight Outward) Indirect Expenses
Freight Outward Indirect Expenses
Fuel & Power of Factory Direct Expenses
Furniture & Fitting Fixed Assets
Furniture & Fixture Fixed Assets
Gas and Water Direct Expenses
General Expenses Indirect Expenses
General Reserve Current Liabilities
Godown Rent Indirect Expenses
Goods Sent on Consignment Sales Account
Goodwill Fixed Assets
Horse & Carts Fixed Assets
House Rent Capital Account

19

Hundi (Assets) Current Assets
Hundi (Liability) Current Liabilities
Import Duty Direct Expenses
Income From Repair Indirect Incomes
Income on Assets Indirect Incomes
Income on Investments Indirect Incomes
Income Tax Capital Account
Input VAT 4%, 12.5% Duties & Taxes
Insurance Indirect Expenses
Insurance Claim Indirect Incomes
Insurance Company Sundry Debtors
Interest (Dr.) Indirect Expenses
Interest on Capital Indirect Expenses
Interest on Drawing Indirect Incomes
Interest on Loan Indirect Expenses
Interest Received (Cr.) Indirect Incomes
Invest in Govt. Bond Investment
Investment Investment
Labour Charges Indirect Expenses
Land & Building Fixed Assets
Lease Hold Building Fixed Assets
Legal Expenses Indirect Expenses
LIC Premium (Dr) Capital Account
LIC Refund (Cr) Capital Account
Life Insurance Capital Account
Loan on Mortgage, Loans Loans & Liabilities
Loose Tools Fixed Assets
Loss By Damage Indirect Expenses
Loss by Fire Indirect Expenses
Loss in Transit Indirect Expenses
Loss on Assets Indirect Expenses
Loss on Joint Venture Indirect Expenses
Machine & Tools Fixed Assets
Machine Repair Indirect Expenses
Managers Commission Indirect Expenses
Manufacturing Expenses Direct Expenses
Master Plus Investment
Miscellaneous Expenses Indirect Expenses
Miscellaneous Income Indirect Incomes
Motor Cycle Fixed Assets
Motor Cycle Repair Indirect Expenses

20

Mutual Fund Investment
Octroi Direct Expenses
Office Expenses Indirect Expenses
Oil Direct Expenses
Opening Stock Stock in Hand
Output VAT 4%, 12.5% Duties & Taxes
Outstanding Expenses Current Liabilities
Packing Exp. Indirect Expenses
Pan and Tea Expenses Indirect Expenses
Personal Expenses Capital Account
Petrol Expenses Indirect Expenses
Plant & Machine Fixed Assets
Postage & Telegram Indirect Expenses
Power & Fuel Direct Expenses
Prepaid Expenses Current Assets
Printing & Advertisement Indirect Expenses
Printing & Stationery Indirect Expenses
Printing, Papers & Advertisement Indirect Expenses
Production Wages Direct Expenses
Profit on Consignment Indirect Incomes
Profit on Jointventure Indirect Incomes
Provision for Bad Debts Indirect Expenses
Provision for Discount on Creditors Indirect Incomes
Provision for Discount on Debtors Indirect Expenses
Provision for Office Expenses Current Liabilities
Purchase Purchase Account
Purchase of New Land Fixed Assets
Purchase of Raw Material Purchase Account
Purchase Return Purchase Account
Purchase UP/ Ex-UP Purchase Account
Railway Authority Sundry Debtors
Rates & Taxes Indirect Expenses
Refreshment Expenses Indirect Expenses
Refrigerator Fixed Assets
Rent Indirect Expenses
Rent & Tax Indirect Expenses
Rent on Purchase Direct Expenses
Rent Payable Current Liabilities
Rent Received Indirect Incomes
Repair & Renovation Indirect Expenses
Repairing Charges Received Indirect Incomes

21

Return Inward Sales Account
Return Outward Purchase Account
Salary Indirect Expenses
Salary & Wages Indirect Expenses
Salary Payable Current Liabilities
Sales Sales Account
Sales Return Sales Account
Sales UP/ Sales Ex-UP Sales Account
Scooter Fixed Assets
Shares / Bonds Investments
Shop Fixed Assets
Shop Expenses Indirect Expenses
Shop Rent Indirect Expenses
Showroom / Shop Fixed Assets
Showroom Repair Indirect Expenses
Stable Expenses Indirect Expenses
Stamp & Postage Indirect Expenses
Stationery Indirect Expenses
Stock (1st April and 31st March) Stock in Hand
Stock of Material Current Assets
Sundry Creditors Sundry Creditors
Sundry Debtors Sundry Debtors
Tea Exp. Payable Current Liabilities
Tea or Coffee Expenses Indirect Expenses
Telephone Expenses Indirect Expenses
Telephone Securities Indirect Expenses
Trade Expenses Indirect Expenses
Train Freight & Rent Direct Expenses
Travelling Expenses Indirect Expenses
Typewriter Fixed Assets
Unearned Income Current Liabilities
UPTT Duties & Taxes
VAT Payable Current Liabilities
Vehicle Repair Indirect Expenses
Wages Direct Expenses
Wages on Production Direct Expenses

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