Originally posted by : Harish Kumar
	Originally posted by : Jairam J This is not logic.. This is a Golden rule in Accounting.. Debit what comes in..Purchases - Goods comes in Another way to look at it is debit all expenses.. when u r purchasing u incur expense Credit what goes out..Sales -Goods goes out Likewise Sales means income.. so u credit it.. Its like traffic rules..Ride on the left of the road..   ok fine.... you giving me the information about the golden rule of accountancy it is applicable on Journal entry question like Purchases goods........Sold goods and so on...... but in case of Trial Balance question not mention as journal entry type...... In trial balance question we have given (nothing mention about DR. or Cr.) Purchases Rs. 5400 Carriage Rs. 2000 Debtors Rs. 5000 Drawings Rs. 1000 & so on........ Now my question to you in such type of question how we can apply the golden rule of Accountancy

Trail balance is always created by way of journal entries, Trial balance is the Balnce of debit and credit entries of journal entries made in this regard, and the balance of such entries will automatically fetch in Trial Balance.

There is a rule of journal entries, on the basis of which journal entries are made and accordingly, balance are created in debit or credit based on such journal entries and based on such balances trial balance is made which just show the balance of debit and credit.

As the base of double entry system is both debit and credit should be equal, trial balance should having equal balances in debit and credit.

Hope the matter is clear now.

 

Sales is the main source of revenue for any business & the logic is very simple after SUBTRACTING expenses like PURCHASES,comission etc REMAINS OF REVENUE is know as INCOmE & FOR CONCERNS  income REFERS TO NET PROFIT & profit  belongs to capital portion.WHY CAPITAL PORTION ENTITY CONCEPT.In that very much sense when we perform a check of tallying accounts any transaction which adds/increases equity/ laibilities  or decreases expenses/assets shud be CREDITED.In the same way ASSESTS belong to business & EXPENSES TECHNICALLY SPEAKING IS D EXPIRY OF ASSETs SO any increase in them shud DEBITED.

EXAMPLE: SALE IS D OUTCOME OF USING AN ASSET(PRODUCTION) INTURN IS D  OUTCOME OF PURCHASES & PURCHASES THROUGH CASH/BANK/CREDITORS/BILL PAYABLE/OVERDRAFT.

JUST THINK ON THE IMPACT & U CAN PASS ANY ENTRY.......

Originally posted by : Vijayalakshmi.K
	Harish Kumar, are you from commerce background or non-commerce..

non-commerce...................!!
 

Originally posted by : CS Ankur Srivastava
	Trail balance is always created by way of journal entries, Trial balance is the Balnce of debit and credit entries of journal entries made in this regard, and the balance of such entries will automatically fetch in Trial Balance.   There is a rule of journal entries, on the basis of which journal entries are made and accordingly, balance are created in debit or credit based on such journal entries and based on such balances trial balance is made which just show the balance of debit and credit. Hope the matter is clear now.

One thing is not clear now to me. I had always created trail balance on the basis of balances from ledger accounts, not on the basis of journal entries as you mentioned here.
please clarify sir

Dear Deepak ji,

The posting in ledger is done by way if journal entries. The first step of Accounting is Journal Entry then on the basis of journal entry, posting is done in ledgers thereafter the balances of ledger carried to Traial Balance.

Originally posted by : Harish Kumar
	Originally posted by : Vijayalakshmi.K Harish Kumar, are you from commerce background or non-commerce..   non-commerce...................!!

Ok yaar.. I got shocked how a commerce student could ask such a question. Try to study 11th standard book for a while, it will be in simple way.. Hope will be useful to you..

Ok.. many commerce students too had problem remembering these golden rules of accounting and working quickly with them and so I'll tell you the same golden rule in a different language or explain it more..

well there are two words debit and credit. now what is the literal meaning of credit...think about it. well suppose A helps out B in exams then B got good numbers. so B says Its because of you (A) that I passed the exams and you deserve the credit of my good marks. Now, this will means that B owe A for his help.

so when you owe someone he is in credit. so by that logic you can say when someone owes you he is in debit. you can work out the whole dr. cr. thing by this logic alone.

for eg. u purchased good from mr. x and you havent paid him yet. So you owe mr. X then mr X will be credited and by virtue of double entry purchases will be debited as purchases was the one who took something. so the purchases A/C owes Mr. A something.

Just remember to Think Capital A/C as the owner/yourself and every other A/C as some othe person even the expense A/Cs and figure out who owes who and you'll be fine. At the end of the year all the expenses are transferred to p&l A/C and Income too.

well if you use this logic then you wouldn't have any problem in A/Cs. and after some time it will just come naturally...

CIAO

Ketan Agarwal

Dear Harish in beginning Accountancy wuld b tough for u........... bt i think dis subject dont need anythin... it requires only commen sense. U r non-commerce students.. dont worry. jst clear u basics.... The book for CPT in the market is by P. C. Tulsian ( i m nt promoting this buk... i m nt agent of S. Chand) coz best is best.... got this buk n start reading.... i cn assure u dis wuld hlp a lot in CPT even aftr it.... 

if u hv any query then u cn ask on CACLUBINDIA............. dere r so many guys who wuld hlp u

Harish....... dere two types of rules............ students still confused vich is rule if followed while purchasing goods........... one group followed its "Debit what comes in"... treated as assets.... some follows "Dr. All expenses"... they treat purchase of goods as an asset.........