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Use of Book Keeping

Book Keeping

Book keeping is the method to record commercial transaction.Commercial transaction means transactions which have their own minority value. In bookkeeping all commercial transaction are written and the book kept safely.
The book keeping is stated or invented by “Lucas Pacioli”. He was an Italian citizen who belongs to Venis (Venis is a city). He invented the bookkeeping in 1494 .

Use of Book Keeping

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In book keeping all commercial transaction are classified in three categories.

1. Personal account: –

those who identified by their own identification is known as personal account. Like individual, bank, company, shop etc.

Types of personal account:-

a. Natural personal account:- Human beings means individual. Like “Ram kumar a/c.”

b. Artificial personal account: – It is created by law or person. Like “company”, “store”, “bank” etc.

c. Representative personal account: – Outstanding income or expenses. Those account which are opened or represent an individual or group of individual is known as representative personal account.

Golden Rule

Debit The receiver

Credit The giver

Use of Book Keeping

2. Real account: –

those things which can be seen, touch, feel and also those things have their own resale value. Is known as real account. Like “computer”, “cash”, “furniture”, “goodwill”etc.

Types of real account.

a. Tangible account: – those things which can be seen, touch, feel and also those things have their own resale value. Like “computer”, ‘air condition” etc.

b. Intangible account:- those things which can’t be seen, touch but we can feel and also those things have their own resale value. Like “trademark”, “patent” etc.

Golden rule

Debit What comes in

Credit What goes out.

Use of Book Keeping

3. Nominal account: –

those things which can’t be seen or touch and also they have not any resale value. Like “rent”, “salary” “expenses”, “wages” etc.

Types of nominal account

a. Direct expenses: – belongs to purchase, production or factory expenses only.

b. Indirect expenses: – other than purchase production or factory.

Golden rule

expenses and loses are Debit

Income and gain are Credit

Use of Book Keeping

 

I hope that you understand my post. if you like this post then share my post, and comment on my post if you have any suggestion or Queries related to Bookkeeping. Thank you!

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