1. Prepared by: Bhushan Thakur, Veer Wajekar College Phunde
DOUBLE-ENTRY SYSTEM
Prepared by: Bhushan Thakur,
Veer Wajekar College Phunde

2. DOUBLE-ENTRY SYSTEM Assets Liabilities Equity
In a double-entry system, equal debits and credits are made in the accounts for each transaction.
Thus, the total debits will always equal the total credits and the accounting equation will always stay in balance.
Assets
Liabilities
Equity

3. Golden Rules of Accounts
Personal Account: Debit the receiver & Credit the giver Real Account: Debit what comes in & Credit what goes out Nominal Account: Debit all expenses and losses Credit all Income and Gains

4. NORMAL BALANCES — ASSETS AND LIABILITIES
Increase Decrease Debit Credit
Decrease Increase Debit Credit
Liabilities
Normal Balance
Normal Balance

5. ILLUSTRATION 2-4 NORMAL BALANCE — OWNER’S CAPITAL
Decrease Increase Debit Credit
Normal Balance

6. NORMAL BALANCES — REVENUES AND EXPENSES
Increase Decrease Debit Credit
Expenses
Revenues
Decrease Increase Debit Credit
Normal Balance
Normal Balance

7. NORMAL BALANCES — REVENUES AND EXPENSES
Decrease Increase Debit Credit
Increase Decrease Debit Credit
Expenses
Normal Balance
Normal Balance

8. EXPANDED BASIC EQUATION AND DEBIT/CREDIT RULES AND EFFECTS
Assets
Liabilities
Owner’s Equity = +
Assets
Dr.
Cr.
Liabilities
Dr.
Cr.
Dr.
Cr.
Owner’s Capital
Dr.
Cr.
Owner’s Drawings = + -
Dr.
Cr.
Revenues
Dr.
Cr.
Expenses + -

9. Thank You