Basics of Accounting

Basics of Accounting

Real Account

Under this account all the Assets, Liabilities, Equity of particular company will be mentioned.
Assets 

• The things that are resources owned by a company and which have future economic value that can be measured and can be expressed in dollars. 
• Examples include cash, investments, accounts receivable,inventory, supplies, land, buildings, equipment, and vehicles.

Liabilities

• A liability is simply called as the amount that should be paid by the company. 
• A common example of a liability is accounts payable. 
• Accounts payable arise when a company purchases goods or services on credit from a supplier. 
• When the company pays the supplier, the company's accounts payable is reduced.

Equity

These is the capital kept in a company by the share holders and has to pay back the interest to the share holders in return.

Assets - Liabilities = Equity

Assets = Equity + Liabilities

Golden Rule

Debit what comes in

Credit what goes out

Personal Account

These accounts are related to individuals, firms, companies, etc. A few examples of personal accounts include debtors, creditors, banks, outstanding/prepaid accounts, accounts of credit customers, accounts of goods suppliers, capital, drawings, etc.

Golden Rule

Debit the receiver

Credit the giver

Nominal Account

Accounts which are related to expenses, losses, incomes or gains are called Nominal accounts.

Golden Rule

Debit all expenses & losses

Credit all incomes & gains