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……..