Ad Free CAclubindia and Daily Updates on your Mobile. Subscribe Now!

Basic Accounts Difficulties - Common Everyone Help

Kaushik (61 Points)

10 May 2007

I want to know Drawings & deferred revenue expenditure is which type of account viz Real ,Nominal or Personal

Reply
Follow
Share

5 Replies

student (WORKING) (757 Points)
Replied 10 May 2007

Drawing is an asset for the business therefore it wil come under the head [b]Real Accounts.[/b]
Understand in this way that business has to pay back the amt of capital (money invested by the proprietor) to the proprietor on closure therefore it is a liability 4 business .Now think opposite that proprietor withdrew some amt for personal use therefore it wil be liability for bs.
[b]RULES[/b][u][/u][face=Geneva][/face]
[color=blue]NOMINAL:all expenses:Dr
all incomes:Cr
REAL
All assets:Dr
All liabilities:Cr

Personal
Dr the receiver
Cr the giver

Deferred revenue exp r a kind of capital asset.b/c u have to write a portion of it every year.

SEND ME THE REPLY IF U HAV ANY PROBLEM

Upgrade to CAclubindia Pro. Subscribe Now!

student (WORKING) (757 Points)
Replied 10 May 2007

Drawing is an asset for the business therefore it wil come under the head [b]Real Accounts.
Understand in this way that business has to pay back the amt of capital (money invested by the proprietor) to the proprietor on closure therefore it is a liability 4 business .Now think opposite that proprietor withdrew some amt for personal use therefore it wil be liability for bs.
[b]RULES
NOMINAL:all expenses:Dr
all incomes:Cr
REAL
All assets:Dr
All liabilities:Cr

Personal
Dr the receiver
Cr the giver

Deferred revenue exp r a kind of capital asset.b/c u have to write a portion of it every year.

SEND ME THE REPLY IF U HAV ANY PROBLEM

Siddharth Nawal (Financial Analyst) (159 Points)
Replied 10 May 2007

drawing is a personal account as it reprasants capital account. while deffered expenditure is a real account as it a asset of company, which they have done to use later.
this is best upto my knowlegde and i will welcome any further discussion or debate..

siddharth
9820421007 :)

student (WORKING) (757 Points)
Replied 10 May 2007

hi siddharth

how u can say that drawing is a personal A/c .capital is the amt invested by a (person) Proprietor/partner etc in his business. If u remember Accounting entity concept it says that an accounting entity is held to be "separate and distinct from its owners." In other words, according to this assumption, the business and its owners possess diff identity.we think from the pt of view of business & not the proprietor.

Therefore business has to return the same amt to the proprietor therefore it is the liability for the business.
Therefore capital is the liability towards owners .

further arguments r welcome.