Basic Accounting Terminology

Q1> What is accounting?

ans = an ‘account’ is a statement of transaction relating to one of the two aspects of a business  transaction.

Types of account

  • Personal account
  • Real account
  • Nominal account

Q2> What is personal account ?

For example= Mr. Manoj ,citi bank , Naveen and Sagar ,Customer  and supplier. 

Q3>what is real account?

These are related to the property or assets and cash belonging to a business concern.

For example= land and building , cash- hand ,Goodwill ,etc.

Golden Rule

Particulars  a/c     debit      credit Applied rules
  Furniture a/c     9000     ——Debit what comes in
 To case a/c     ——     9000Credit what goes out

Q4>What is Nominal account?

these are relating to the incomes, expenses,losses and gains of a business concern.

For example: rent, salary,telephone expenses , discount allowed received,etc
DEBIT = All expenses and losses 
CREDIT = All incomes and gains

Golden Rule

Particulars of account      debit      credit Applied rules
Purchase a\c         7000     ——-Debit- all expenses and losses
To cash a/c        ——      7000Credit- all income and gains

Q5> SUBSIDIARY BOOKS & CONTROL ACCOUNTS

Business transaction are first recorded in the journal and then posted to account.

For example , all cash transaction may be recorded in one book, all credit sales transaction in anather book ,and so on .

This section deals with the following special book.

1 cash book

2 purchases book

3 purchase return book

4 sales return

5 journal proper

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