Presentation on Double Entry System

1. Presentation on Double Entry System

2. Contents • Introduction • Classification of accounts • Rules of double entry system • Advantages of double entry system • Disadvantages of double entry system

3. Double Entry System Double Entry is the methods of writing every transaction in two aspects- • Debit • Credit

4. Classifications of Accounts • Personal • Impersonal

5. Personal Accounts • Natural Person’s Account • Artificial person’s Account • Representatives Person’s Account

6. Impersonal Account • Real Account • Tangible Real a/c • Intangible Real a/c • Nominal Account

7. Rules of Double Entry System

8. Personal Account Debit Credit Receiver Giver

9. Personal Account Debit Credit Receiver Giver

10. Personal Account Debit Credit Receiver Giver

11. EXAMPLE: RAM PAID 2000 RS. to SHAM Sham a/c dr. 2000 To Ram 2000 (being ram paid to sham)

12. Real Account Debit Credit What Goes Out What Comes In

13. Real Account Debit Credit What Goes Out What Comes In

14. Real Account Debit Credit What Comes In What Goes Out

15. EXAMPLE: Furniture purchased RS. 2000. Furniture a/c dr. 2000 To cash a/c 2000 (being furniture purchased)

16. Nominal account Credit Debit Expenses & Losses Incomes & Gains

17. Nominal account Credit Debit Expenses & Losses Incomes & Gains

18. Nominal account Credit Debit Expenses & Losses Incomes & Gains

19. EXAMPLE: Rent paid Rs. 2000. Rent a/c dr. 2000 To cash a/c 2000 (being rent paid)

20. EXAMPLE: Interest received Rs. 2000. Cash a/c dr. 2000 To interest a/c 2000 (being rent paid)

21. Advantages • Records the aspects of every financial transaction. • Gives accurate information of amount. • Helpful in preventing frauds & errors. • Helpful in preparing the profit and loss account.

22. Disadvantages • Requires the maintenance of multiple books. • System is costly. • There is no guarantee of absolute accuracy of books.

23. Thanks