amu7
Major Contributor
Joined: 22 May 2009
Online Status: Offline
Posts: 392
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| Posted: 30 Jul 2010 at 09:05 | IP Logged
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Well this may be the very basic, but this works the best when forming JEs
Always remember that an account can fall only in one of the following 3 types of accounts -
If you know the rules for each of the above types of accounts forming JEs becomes a lot easier.
Real Accounts: Debit what comes in, credit what goes out
Eg: Cash
We know that cash is an asset a/c, so it will always have a debit
balance. When we receive cash, we debit cash a/c which increases the
cash balance. Similarly, if we pay the creditors that will decrease the
cash, so credit it.
Nominal Accounts: Debit all expenses and losses, Credit all income and gains
Eg: salaries, rent received
Personal Accounts: Debit the receiver, Credit the giver
Eg: Partner's capital account
Suppose a partner brings in capital, he is the giver, so we credit his
account. Similarly, for drawings by partner he is the receiver, so we
debit him.
I also agree with Divya that preparing a T account is very useful and makes JEs a lot easier.
I hope this helps.
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Topic: what is the best way to practice JE’s?
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