Page 25 - DMGT403_ACCOUNTING_FOR_MANAGERS

Accounting for Managers

Notes These governed by the artificial relationship among the members through LIC act, SBI Act
and the Companies Act 1956 and so on respectively.

3. Persons of Representations: This classification represents amount outstanding or prepaid
in connection with the individual transactions.

The personal account is the account of future relationship; to maintain the relationship of
future in two different angles, viz.

(a) Receiver of the benefits from the firm

Example: The credit sale of the goods worth of 1,500 to Mr X.
In this transaction Mr. X is the receiver of the benefits through the credit sale of the firm.
Till the collection of the sale benefits, the firm should maintain the relationship of business
with the Mr. X in the books of accounts.

(b) Giver of the benefits to the firm.

Example: The credit purchase of the goods worth of 3,000 from Mr. Y.
The giver of the goods nothing but the supplier of the goods Mr. Y should be recorded in
the books of the firm till the payment of dues of the credit purchase. The future relationship
is maintained in the books of the accounts till the payment process is over.

Debit the Receiver
Credit the Giver

2.3 Real Account

It is a major classification which highlights the real worth of the assets. This account deals with
especially the movement of assets. It is an account reveals the asset value and movement (taking
place in between the firm and also other parties due to any transactions).
The movement of the assets can be classified into two categories, viz.

1. Assets which are coming into the firm.
2. Assets which are going out of the firm.
Whenever any movement of the assets takes place with reference to any transaction either
coming into the firm or going out of the firm, it should be recorded in accordance with the set
golden rules of this account.

Debit what comes in
Credit what goes out

2.4 Nominal Accounts

This is an account deals with the amount of expenses incurred or incomes earned. It includes all
expenses and losses as well as incomes and gains of the enterprise. This nominal account records
the expenses and incomes which are not carried forwarded to near future.
Debit all the expenses and losses
Credit all incomes and gains

20 LOVELY PROFESSIONAL UNIVERSITY