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Amity Business School

ACCOUNT
In actual practice, the individual transactions of
like nature are recorded, added and subtracted at
one place. Such place is customarily termed as
an Account.
An account is a ledger record in a summarized
form, of all the transactions that have taken place
with the particular person of things specified
- Carter
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Amity Business School

Amity Business School

Personal Account
The accounts which relates to an individual, firm,
company or an institution are called personal
accounts.
Account of Mohan, account of Shweta, Account of
Reliance Industries Ltd., Account of Delhi
University, Bank Account, Capital Account of the
proprietor, etc.

Amity Business School

Types of Personal Accounts


Natural Personal Account: For example, Sachins A/c,
Anils A/c, Proprietors Capital A/c, Proprietors Drawings
A/c, Debtors A/c, Creditors A/c etc.
Artificial Personal Account: For example, any Firms
account, any limited companys account, Bank account.
Representative Personal Accounts: For example, if the
salaries for the month of December are not paid to the
employees, the amount payable to these employees will
be added and put under one common title Salaries
Outstanding Account. This account represents the
accounts of all the persons to whom salaries have to be
paid. Similarly prepaid salaries account.
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Amity Business School

REAL ACCOUNTS
The accounts of all those things whose value can
be measured in terms of money and which are
the properties of the business are termed as Real
Account. Such as Cash Account, Furniture
Account, Machinery Account, Building Accounts,
Goodwill Accounts etc.
Types of Real Accounts:
Tangible Real Account: E.g. Cash A/c, Furniture
A/c, Land A/c etc.
Intangible Real Account: E.g. Goodwill A/c,
Trade Mark A/c, Patent A/c, Copyright A/c etc.
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Amity Business School

NOMINAL ACCOUNTS

These accounts include the accounts of all


expenses, losses, revenues and gains.
E.g. Salaries paid, Rent paid, Discount Allowed
and Bad Debts etc.

Amity Business School

Meaning of Debit and Credit


All accounts are divided into two sides.
In simple terms, the left side of an account is called Debit side and
the right side of an account is called Credit side.
In the abbreviated form, Debit is written as Dr. and Credit is
known as Cr.
Debit (Dr.)
Credit (Cr.)

Cash Account

The above account is often called T shape account. An account


is abbreviated as A/c.
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Amity Business School

Rules of Debit and Credit

Amity Business School

EXAMPLES
Example
Example
Example
Example
Example

1:
2:
3:
4:
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Paid Rs. 1,000 to Hari


Received Rs. 500 from Mohan
Purchased furniture of Rs 5000
: Paid Rs. 5, 000 for Salaries.
Received Rs. 1, 000 for Commission