Does the members of this forum agree to the fact that Journal entries can be posted without the help of Golden principles/rules of Accountancy i.,e without apply the rules of Personal, Real Or Nominal account?
11 Replies
CA Anand V Kabra
(Author Teacher Mentor)
(584 Points)
Replied 13 January 2017
Basically Golden Rules are the Soul of Accountancy! by the passage of time we master the art,
but it can not be said that we do not apply the Rules, unknowingly we use them!
Hsk
(Student CA Final )
(172 Points)
Replied 15 January 2017
Golden Rules of accounting are the tradition method. but, we have now 5 heads of accounts
Hsk
(Student CA Final )
(172 Points)
Replied 15 January 2017
assets, liabilities, income, gain and losses on the base of that we pass entries
vinay
(accounting)
(165 Points)
Replied 04 February 2017
I have been working in corporate for last 12 years. Never a single day i applied Golden rules of accountancy. Can any member enlighten who invented "Golden rules of accountancy"? It was not by luca pacioli. Luca pacioli takes credit for double entry system and not Golden rules.
bhavani shanker
(article)
(82 Points)
Replied 04 February 2017
hello vinay can you explain why income comes on credit side?
vinay
(accounting)
(165 Points)
Replied 05 February 2017
Hi Bhavani,
For the purpose of Journal entry - we must totally go by double entry system. Under double entry system, journal entry is recorded based on exchange of value in the transaction. In the case of sales - Exchange involves money and goods. Hence money is debited which is the receiving part and sales (goods/services going out) is credited which is giving part. The understanding of double entry system is sufficient to pass any journal entry i.,e to record exchange of value in the transaction.
Coming to Golden rules - No where available in google who created Golden rules. However Golden rules was followed in Europe and Americans have their own approach called 'American approach' . Both these approaches are discussed in B.S Raman book Fundamentals of accounting. It is much easier to go by American approach than European approach i,e., Golden rules.
I would rather call it Golden formulae than rules as one must try to understand the logic behind framing the golden rules. Else students will get wrong understanding of accounts.
vinay
(accounting)
(165 Points)
Replied 05 February 2017
Hi Bhavani,
For the purpose of Journal entry - we must totally go by double entry system. Under double entry system, journal entry is recorded based on exchange of value in the transaction. In the case of sales - Exchange involves money and goods. Hence money is debited which is the receiving part and sales (goods/services going out) is credited which is giving part. The understanding of double entry system is sufficient to pass any journal entry i.,e to record exchange of value in the transaction.
Coming to Golden rules - No where available in google who created Golden rules. However Golden rules was followed in Europe and Americans have their own approach called 'American approach' . Both these approaches are discussed in B.S Raman book Fundamentals of accounting. It is much easier to go by American approach than European approach i,e., Golden rules.
I would rather call it Golden formulae than rules as one must try to understand the logic behind framing the golden rules. Else students will get wrong understanding of accounts.
bhavani shanker
(article)
(82 Points)
Replied 05 February 2017
under double entry or british appraoch
sales considered as nominal
under american approach or modern approach sales means goods(asset) going out considered as real account
sales considered as nominal
under american approach or modern approach sales means goods(asset) going out considered as real account
vinay
(accounting)
(165 Points)
Replied 05 February 2017
Under American approach the accounts are classified into five:
1) Asset - Debit
2) Expenditure - Debit
3) Liability - Credit
4) Income - Credit
5) Equity - Credit
This is a much better approach than Golden principles as logic behind understanding Golden principles is comprehensive .
CA Ruskin B
(Member)
(2602 Points)
Replied 05 February 2017
the modern approach of increase/decrease is followed widely... people do not necessarily need to know the golden rules...it is outdated...
CA Ruskin B
(Member)
(2602 Points)
Replied 05 February 2017
we need to know only what belongs to income, expense, asset, liabilitu... only these four elements in financial statements
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