Page 18 - IC26 LIFE INSURANCE FINANCE

Golden Rules of Accounting

(1)Personal Account - Debit the receiver giver.

(2)Real Account - Debit what comes in; Credit what goes out.

(3)Nominal Account - Debit all expenses and Losses, Credit all income and gains.

Accounting Equation Approach

Accounting Equation - Equity + Liability = Assets

According to this equation following rules can be stated.

Account Increase Decrease Account Increase Decrease
Assets Debit Credit Expenses or Losses Debit Credit
Liabilities Credit Debit Revenues or incomes Credit Debit

Owner's Capital Credit Debit

Journal: Transactions are first entered in this book to show which account should be

debited and which credited. The format of journal is given below:

Journal

Date Particulars L.F. Amount (Dr.) Amount (Cr.)

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