2. Accounting transactions are recorded in a set of books. The following are referred to as the principal books of account: 1) Journal: The Journal contains details of transactions (other than those relating to receipts or payments in cash or through bank), recorded in chronological order. Journal Credit (Rs.) Debit (Rs.) L/F Particulars Date
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4. Debit and Credit All amounts recorded in the books of account are placed either to the debit or credit of an account. For any transaction, which account(s) should be debited and which should be credited is determined by the following rule: DEBIT what comes in, CREDIT what goes out DEBIT the receiver, CREDIT the giver DEBIT all expenses and losses, CREDIT all incomes and gains The implications of amounts being placed to the debit or credit of an account are as follows: An asset has been disposed or a liability has been incurred An asset has been acquired or a liability has been paid/ reduced c) Asset/ Liability An income or a profit has been earned An expense or a loss has been incurred b) Income/ Expenditure The individual/ firm has given some money or other tangible benefit The individual/ firm has received some money or other tangible benefit a) Personal Credit Debit Implication Type of Account
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6. Accounting Process After each transaction At the end of the year Posting into Ledger Recording in Journal/ Cash and Bank Book Generation of Voucher Recording in Subsidiary Book (if applicable) Transaction Compilation of Profit & Loss Account and Balance Sheet Adjustments and Finalisation Entries Generation of Trial Balance Balancing of Ledger/ Cash and Bank Book