Unit- 3

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TYPE OF ACCOUNTS AND ITS RULES:There are three types of accounts namely Personal account, Real account and Nominal account.Personal account: It is related to the persons. A person means an individual, company, firm, association of persons, hospitals, bank, educational institutions etc.Rule of journalizing for Personal account: “Debit the receiver and Credit the giver”.

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Real account: It is related to the goods, assets and property. For example: Cash, Building, Plant, Furniture etc.Rule of journalizing for Real account: “Debit what comes in and Credit what goes out”.

Nominal account: It is related with the losses and expenses, gains and incomes. For example: Salary, wages, rent etc. Con…

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Rule of journalizing for Nominal account: “Debit all the losses and expenses and credit all the gains and incomes”.

Note: The above three rules are also known as Golden Rule of accounting.

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Journalizing (Recording)The specimen journal is as follows:

Journal entries in the book of…… (Name of the person)

The journal has five columns, viz. (1) Date; (2) Particulars; (3) Ledger Folio; (4) Amount (Debit); and (5) Amount (Credit) and a brief explanation of the transaction by way of narration is given after passing the journal entry.

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Date Particulars L.F. Amount(Dr.) Amount(Cr.)1 2 3 4 5

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Question.1 – How many columns are in Journal?Answer - There is five columns in Journal.Question.2 – Write the name of the columns of Journal.Answer – (i) Date (ii) Particulars (iii) L.F. (iv) Amount (Dr.) (v) Amount (Cr.)Question.3 – Draw the Performa of Journal. Answer -

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Date Particulars L.F. Amount(Dr.) Amount(Cr.)

1 2 3 4 5

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Question - Journalize the following transactions in the books of “Ahmad”. 2013Jan.1 Started business with cash SR. 10000/-

2013 Jan- 01 Cash a/c Dr. 10000 To Capital a/c 10000 (Being business started

with cash) Con…

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Jan. 1 Purchased goods SR. 1000/-

2013Jan-01 Purchases a/c Dr. 1000

To Cash a/c 1000(Being goods purchasedfor cash) Con….

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Jan. 3 Purchased goods from Adil on credit SR. 1100/-

2013Jan-03 Purchases a/c Dr. 1100

To Adil 1100 (Being goods purchased from Adil on credit)

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Jan. 4 Sold goods SR. 2500/-

2013 Jan-04 Cash a/c Dr. 2500

To Sales a/c 2500 (Being goods sold for cash)

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Jan. 7 Sold goods to Mr. Mohammad on credit SR. 2300/-

2013 Jan-07 Mohammad Dr. 2300 To Sales a/c 2300 (Being goods sold to

Mohammad on credit)

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Jan. 10 Cash paid to Adil SR. 1100

2013 Jan-10 Adil Dr. 1100

To Cash a/c 1100 (Being cash paid to Adil)

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Jan. 13 Cash received from Mr. Mohammad SR. 2300

2013 Jan-13 Cash a/c Dr. 2300 To Mohammad 2300

(Being cash received from Mohammad)

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Jan. 15 Cash deposited into bank SR. 1200/-

2013Jan-15 Bank a/c Dr. 1200 To Cash a/c 1200

(Being cash deposited into bank)

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Jan. 18 Cash withdrawn from bank SR. 900/-

2013Jan-18 Cash a/c Dr. 900

To Bank a/c 900 (Being cash withdrawn

from bank)

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Jan. 19 Purchased furniture for cash SR. 5000/-

2013Jan-19 Furniture a/c Dr. 5000

To cash a/c 5000(Being furniture purchased

for cash)

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Jan. 22 Purchased building for cash SR. 6000/-

2013Jan-22 Building a/c Dr. 6000 To cash a/c 6000

(Being building purchased for cash)

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Jan. 24 Paid salaries SR. 3500/-

2013Jan-24 Salaries a/c Dr. 3500

To cash a/c 3500 (Being Salaries paid)

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Jan. 25 Paid rent SR. 1500/-

2013Jan-25 Rent a/c Dr. 1500

To cash a/c 1500 (Being rent paid)

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Jan. 26 Paid wages SR. 800/- 2013Jan-26 Wages a/c Dr. 800 To cash a/c 800

(Being wages paid)

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Jan. 28 Received interest SR. 600 /-

2013Jan-28 Cash a/c Dr. 600 To Interest a/c 600

(Being interest received)

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Jan. 30 Commission received SR. 500 /-

2013Jan-30 Cash a/c Dr. 500 To Commission a/c 500

(Being commission received)

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