GOLDEN RULES - WAY OF WORKING EXAMPLE

We can take the following transactions and mention which accounts are involved in each case and which of them is to be debited and credited

April 2 Bought goods from AJAY Rs 8000

10 Paid cash to AJAY Rs 5000

21 Sold goods to vikram Rs 3000

25 Received cash from vikram Rs 2000

30 Paid salaries to employees Rs 500

30 Received commission Rs 250

 In the following table, we show the accounts to be debited and credited in the case of each transaction.

Date of transaction	Account to be debited	Account to be credited	Type of account	Reason for debit or credit
Apr - 02	Goods A/c ...................	.................... Ajay A/c	Real Personal	Good come in Ajay is the giver
Apr - 10	Ajay A/c ...............	.................. Cash A/c	Personal Real	Ajay is the receiver. cash goes out
Apr - 21	Vikram A/c ..................	................. Goods A/c	Personal Real	Vikram is the receiver. Goods goes out
Apr - 25	Cash A/c .................	............... Vikram A/c	Real Personal	Cash comes in vikram is the giver
Apr - 30	Salaries A/c ..................	................. Cash A/c	Nominal Real	Expense Cash goes out
Apr - 30	Cash A/c ..................	................. Commission A/c	Real Nominal	Cash come in Income

form of journal, contents of journal entry

Form of the journal

In actual practice, the journal is so ruled that when each transaction is passed thourgh its different columns.it includes the following elements.

Date of transaction

Name ofthe account to be debited

Amount to be debited

Name of the account to be credited

Amount to be credited

Posting references

Narration or explanation