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Basic Account Principles
1...there are three types of accounting principles available:-
 
1.Personnel Account:-Deals with person individual often company extra.
* Debit the receiver
* Credit the giver
 
EX:                     Raj a/c                 Dr
                           To cash a/c
                       (Being cash paid)
                       cash a/c                  Dr
                         To shubash a/c 
                       (Being cash received from shubash)
 
2.Real Account:-Real accounts are those which are tangeble in nature an which the business owns.
* Debit what comes in
* Credit what goes out
 
Ex:-                  machinery a/c               dr
                        To cash a/c
               (Being machinery purchased by cash) 
                     
                     purchases a/c                   dr
                             To cash a/c
 
3.Nomial Account:- These are accounts other than personel and real includes expences, losses, incomes and gains.
* Debit all expences and losses
* Credit all incomes and gains
 
Ex:               salaries a/c              dr
                        To cash a/c
                  (Being salaries paid by cash)
                    cash a/c                   dr
                     To sales a/c
 
 
 
2.......Accounting Principles are classified into two categories
A) Accounting concepts
B) Accounting Conventions
 
A) Accounting concepts
1)Business entity concept - business is separet entity from owner
2)Dual Aspect concept - Liabilities = Assets (dr = cr)
3)Going concern concept - business is going to be in existence for an indefinitely long time.
4)Accounting period concept - Indefinite long period is divided into short span for accounting purpose.
5)Cost concept - cost of aquisition of assets is considered for accounting (considering depriciation) and not current price of assets.
6)Money measurement concept - only facts which can be measured in money find place in accounting.
7)Matching concept - expences and costs incurred during period whether paid or not must match the revenue for that particular period.
 
B)Accounting Conventions
1) Convention of conservation
2)Convention of Materiality
3)Convention of Consistency
Category: My articles | Added by: Palakurthi (2010-06-27)
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