Accounts and recording transaction rule

✅Recording Transaction Rule In accounting, to execute recording transaction it is important to understand the financial accounting rule. According to dual entry concept, there are two ways of a transaction, one is a deduction from the total principal amount and also owed to the owner which is known as a debit. The other transaction is credit which refers to an increase in the total principal amount and also owed to the owner. ✅The three rules are: ➖ Personal Account- Debit the receiver and credit the giver. ➖ Real Account- Debit what comes in and credit what goes out. ➖ Nominal Account- Debit all expenses and losses, credit incomes and gains. ✅The principal of Recording Transaction ➖ Personal account deals with the credit or lending of money by a company. ➖ Real account deals with assets, liabilities and equity. ➖ Nominal account deals with expenses, revenue, gains and losses of a company. ✅Important of Source Documents in Transaction ➖ The documents are the physical evidence for the transaction that took place. ➖ It gives all the necessary and key details like the time, date, amount and the nature of the transaction. ➖ In the court of law, it can act as a proof. ➖ In the auditing process, the documents help in verifying the transaction. ✅Few Examples of Documents ➖ If the sale and purchase of a product are Rs. 1,000 on credit, it is supported by sale and purchase invoice/bill copy ➖ If the sale and purchase of a product are Rs. 5,000, it is supported by a cash memo ➖ If the goods purchased is returned on credit Rs. 400, it is supported by a debit note