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Summary

  • Accounting equation: Equity + Liabilities = Assets
  • Traditional approach: accounts are classified as personal, real and nominal
  • Golden rules of accounting:
     
    – Personal accounts: Debit the receiver, Credit the giver
     
    – Real accounts: Debit what comes in, Credit what goes out
     
    – Nominal accounts: Debit all expenses and losses, Credit all incomes and gains
  • Recording the Journal entries
  • Goods used as free samples, for charity or for personal use by owners etc. (other than sales), purchase account is credited




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