Page 57 - DCOM101_FINANCIAL_ACCOUNTING_I

Unit 6: Preparation of Journal

First, we will discuss the journalizing of entries of the same natured accounts. This can be Notes

classified into various segments:
1. Transactions only in between the personal accounts
2. Transactions only in between the real accounts
Under the category of transactions which affect only the personal accounts are as follows:

1. Between the persons of the nature
2. Between the persons of the artifi cial relationship
3. Between the persons of representations

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Caution The points to be observed at the moment of journalizing:

1. The nature of the accounts to be identifi ed
2. The accounts to be correlated to the golden rules
3. The entry to be passed through proper debiting and crediting of the accounts
respectively.
The meaning of the transaction should be made explicit for easier understanding through brief
and catchy narration to follow as well as evade the ambiguity in near future.

Example: Mr. Sundar is a debtor who has paid ` 1,500 in the bank A/c

Mr. Sundar Bank

Personal A/cs
Persons of Nature

Giver Receiver

1. Transaction is identified which is in between two different persons under the personal
A/c, they are nothing but persons of nature
2. The benefits are shared in between two persons, viz. Mr. Sundar and Banker who are

nothing but giver and receiver of the benefi ts respectively.
3. It means that Sundar is the giver of ` 1,500 to Banker who is the receiver of the same
` 1,500.
Debit the Receiver Banks Debit the Melvin A/c
Credit the Giver Sundar Credit the Sundar A/c
Final step is to pass the journal entry
Bank A/c Dr `1,500
To Sundar A/c `1,500
(Being cash is paid by Sundar to Bank A/c)

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