3 Golden rules of accounting

In double entry book keeping system of accounting all the accounts can be classified either as :

a) Personal,

b) Real or 

c) Nominal

Three golden rules guide the principle of debit or credit, as per the nature ofthe account, of the impugned transaction.

These threerules are:

1.In case ofpersonal accounts:

  Debitthe receive

  Creditthe giver

2. In caseof real accounts

 Debit whatcomes in

 Creditwhat goes out

3. In caseof personal accounts nominal a/c

 Debit all expenditure and losses

 Credit all the income and gains

The beauty of the above three rules is: they complement each other. 

For example: if, in a transaction where one part involves a Real account and the other part is a personal or a nominal account still all these rules hold good. Hence in themselves they can govern any kind of accounting entry. 

As the business environment is becoming more complex, more and more complex transactions are coming into the public domain. ERP packages like SAP have brought about new paradigms into the domain of accounting with their concept of dummy accounts etc. 

However, pertinent to say, all those will still have to fall within the four-walls (or are there six?) of these three rules. 

I invite all the budding accountants to pour their doubts regarding double entries here so that we will grow as a community and also raise a more informed set of quality accountants. Hope my student friends- whether aspiring to be a CA/ CMA/ CS or already are qualified accountants- are listening :)

Don't Quit

It’s all about Debit and Credit; is it!

The assistant to the chief accountant is puzzled. Most of the time when the chief consults some accounts or is preparing a report and is searching for some answer or something he pulls out his desk drawer, takes out a worn envelope, removes a yellowing sheet of paper, reads it, nods his head, looks around the room with renewed vigor, returns the envelope to the drawer, and then successfully solves the issue or completes the report. The assistant always wonders: what is written in that piece of paper that gives answer to most problems!

After a few years it’s time for the chief to retire and the assistant is considered for filling in his shoes and hence given a promotion (and a raise). He is happy.

After the old man retires and leaves the office the new chief accountant goes and occupies the seat. After sometime he pulls out the drawer and to his wild surprise the greying envelop is still sitting inside the drawer.

He can’t wait to read for himself the message contained in the envelope in the drawer, particularly since he feels so inadequate in replacing the far wiser and more highly esteemed erstwhile incumbent (the old accountant). Surely, he thinks to himself, it must contain the great secret to his success, a wondrous treasure of inspiration and motivation. His fingers tremble anxiously as he removes the mysterious envelope from the drawer, empties its yellowing sheet of paper and reads.

The yellow sheet contains only two lines:

"Debits towards the door”
“Credits toward the window."

After the completion of the 2 day Students' National Convention at Swosti Premium- Bhubaneswar on 29 November 2013.

It was a great event! 

Inauguration of 2 day Students' National Convention at Swosti Premium- Bhubaneswar on 28 November 2013.

Wish you all the best!

Dear friend,

In a weeks’ time- precisely on 15 December 2013- you will face your CPT exams. It’s time to consolidate. However, it’s also time you stilled your nerves.

I wish you all, all the very best and hope you will come out with flying colors.

As for your confidence I can’t think of signing off with a better poem that the following from the inimitable Walter D. Wintle (from his “If you think you can”):

If you think you're outclassed, you are:
You've got to think high to rise.
You've got to be sure of yourself before
You can ever win a prize.
Life's battles don't always go
To the stronger or faster man,
But soon or late the man who wins
Is the one who thinks he can.”

what is destiny?

Good morning!

As we are going to talk at length, and at any rate you will have to endure me over the next many sessions, I will not further exacerbate the situation by launching a long winding harangue now. I would just touch upon one issue: silent resignation.

Now, it has almost become a fad to blame the fate- the destiny- for almost anything and everything.

What is destiny?             

I am not going to give my definition. I came across this somewhere and it is perhaps not attributed to any one: so anonymous. It goes like this:

Sow a thought and reap an action;

Sow an action and you’ll reap a habit;

Sow a habit and you’ll reap a character;

Sow a character and you’ll reap your destiny!