Journal
Journal is a primary record or original record of financial transaction. It is also called chronological record of financial transaction.
Account
Account is the detail record of income, expenditure, asset, liability, etc. Account is the statement that is in english alphabet ’T’ form and the left hand side is debit and right hand side is credit
Types of Account
a. Personal account
The account that is related to person (natural person, artificial person, representative person) is called personal account. For eg, Capital account, trading account , debtors account, creditors account, capital account, supplier account, bank account, loan account, Nobel bank account, Ram account, Sita account etc.
b. Real account
The account that is related to property and asset is called real account. For eg furniture, machinery, equipment, vehicle, land and building, cash in hand, cash at bank, cash in finance bank, etc
c. Nominal account
The account that is related to income and expenses is called nominal account for eg. purchase expense, dales revenue, service revenue, supply expenses, utility expense, water charge, electricity charge, mobile charge, commission received, discount received, interest received etc.
Rule of Debit and credit
a. Personal account
Receiver -> debit
Giver -> credit
b. Real account
What comes in -> debit
What goes out -> credit
c. Nominal account
Loss & expense -> debit
income & gain -> credit
Accounting equation approach (American Approach)
Assets account (Inc-Dr, Dec-Cr)
Expense account (Inc-Dr, Dec-Cr)
Capital account (Inc-Dr, Dec-Cr)
Liability account (Inc-Dr, Dec-Cr)
Revenue account/Income account ( Dec-Dr,Inc-Cr)
Background knowledge Journal problems
- Started business with cash Rs 5,00,000
- Cash deposited into bank Rs 2,00,000
- Cash withdrawn from bank Rs 1,00,000
- Loan taken from Fewa finance Rs 4,00,000
- Purchase goods for Rs 75,000
- Purchase goods from Yadav store Rs 80,000
- Purchase goods on Credit for Rs 90,000
- Purchase goods for Rs 2,00,000 and cash paid Rs 1,00,000 only
- Good sold far RS 3,00,000
- Good sold for Rs. 20,000 and check received for the same
- Good sold to Mohan Rai for Rs 50,000
- Good sold on credit for Rs 80,000 and cash receive Rs 50,000 only.
- The owner withdrew official cash Rs 50,000 for personal use
- The owner withdrew goods of Rs 30,000 for domestic use
- The owner withdrew cash Rs 10,000 from bank for personal use
- Purchase furniture for Rs 60,000
- Sold old computer for Rs 20,000
- Rent paid Rs 10,000
- Salary paid Rs. 80,000
- Water charge paid Rs. 5000
- Commission received Rs. 10,000
- Interest receive Rs 30,000
- Donation receive Rs 10,000
- Cash Rs 18,000 receive for the full settlement of Rs 20,000.
- Cash Rs 28000 paid to Mohan for the full settlement of Rs 30,000.
- Depreciation charged on Machinery on Rs 10,000
| Date | Particulars | L.F. | Debit(Rs) | Credit(Rs) |
| 1. | Cash A/C – Dr to Capital A/C (Being business started) | 5,00,000 | 5,00,000 | |
| 2. | Bank A/C – Dr to Cash A/C (Being cash deposits into bank) | 2,00,000 | 2,00,000 | |
| 3. | Cash A/C – Dr to Bank A/C (Being cash with drawn from bank) | 1,00,000 | 1,00,000 | |
| 4. | Cash A/C – Dr to Bank A/C (Being cash with drawn from bank) | 4,00,000 | 4,00,000 | |
| 5. | Purchase A/C – Dr to Cash A/C (Being goods purchased) | 75,000 | 75,000 | |
| 6. | Goods A/C – Dr to Cash A/C (Being goods purchased from Yadav Store) | 80,000 | 80,000 | |
| 7. | Purchase A/C – Dr to Cash A/C (Being goods purchased on credit) | 90,000 | 90,000 | |
| 8. | Purchase A/C – Dr to Cash A/C to Remaining Cash (Being goods purchased and cash paid) | 2,00,000 | 1,00,0001,00,000 | |
| 9. | Cash A/C – Dr to Sales A/C (Being goods sold) | 3,00,000 | 3,00,000 | |
| 10. | Goods A/C – Dr to Bank A/C (Being goods sold and check receipt for the same) | 20,000 | 20,000 | |
| 11. | Mohan A/C – Dr to Sales A/C (Being goods sold to Mohan) | |||
| 12. | Goods A/C – Cr to Cash A/C – Dr to Remaining A/C Dr (Being goods purchased and cash paid) | 50,00030,000 | 80,000 | |
| 13. | Drawing A/C – Dr to Cash A/C (Being goods withdrawn for personal use) | 50,000 | 50,000 | |
| 14. | Drawing A/C – Dr to Purchase A/C (Being goods withdrawn for domestic use) | 30,000 | 30,000 | |
| 15. | Drawing A/C – Dr to Purchase A/C (Being cash withdrawn for domestic use) | 10,000 | 10,000 | |
| 16. | Furniture A/C – Dr to Cash A/C (Being furniture purchased with cash) | 60,000 | 60,000 | |
| 17. | Computer A/C – Dr to Sales A/C (Being old computer sold) | 20,000 | 20,000 | |
| 18. | Rent A/C – Dr to Cash A/C (Being rent paid through cash) | 10,000 | 10,000 | |
| 19. | Salary A/C – Dr to Cash A/C (Being salary paid through cash) | 80,000 | 80,000 | |
| 20. | Water charge A/C – Dr to Cash A/C (Being water charge paid through cash) | 5,000 | 5,000 | |
| 21. | Commission A/C – Dr to Cash A/C (Being commission received through cash) | 10,000 | 10,000 | |
| 22. | Interest A/C – Dr to Cash A/C (Being interest received through cash) | 30,000 | 30,000 | |
| 23. | Donation A/C – Dr to Cash A/C (Being donation received through cash) | 10,000 | 10,000 | |
| 24. | Cash A/C – Dr Discount A/C – Dr to Creditors A/c (Being cash received for the full settlement) | 18,0002,000 | 20,000 | |
| 25. | Mohan A/C – Dr Discount A/C – Dr to Cash A/c (Being cash paid to Mohan in full settlement) | 28,0002,000 | 30,000 | |
| 26. | Depreciation A/C – Dr to Cash A/C (Being depreciation charge on machinery ) | 10,000 | 10,000 |