General Rules Applied To Three Kinds of Accounts:
The general rule for debit and credit, as applied to the three kinds of accounts, is as follows:
Personal Accounts:
A person, who enters into a business transaction with a business, either receives some benefit from the business or gives some benefit to the business (i.e., he either receives the benefit of the transaction or gives the benefit of the transaction). As such, the account of the person who receives the benefit of the transaction from the business should be debited, and the account of the person who gives the benefit of the transaction to the business should be credited. In other words, the account of the person who receives the benefit of the transaction should be debited, and the account of the person who gives the benefit of the transaction should be credited.
The rule for debiting and crediting personal accounts can be explained with the help of the following examples:
1. Received from Rakesh Rs.2,000.
In this transaction, the personal account involved is Ramesh's account. The personal account of Rakesh gives the benefit of the transaction, i.e., cash. So, Ramesh's Personal Account has to be credited.
2. Paid Ganesh Rs.1,000.
The personal account involved in this transaction is Ganesh's Account. The personal account of Ganesh receives the benefit of the transaction, i.e., cash. So, Ganesh's Personal Account has to be debited.
3. Purchased goods from David on credit Rs.500.
Here, the personal account involved is David's Account. The personal account of David gives the benefit of the transaction, i.e., goods. Therefore, David's Personal Account has to be credited.
4. Sold goods to Henry on credit Rs.600.
In this transaction, the personal account involved is Henry's Account. The personal account of Henry receives the benefit of the transaction, i.e., goods. So, Henry's Personal Account has to be debited.
The general rule for debit and credit, as applied to the three kinds of accounts, is as follows:
Personal Accounts:
A person, who enters into a business transaction with a business, either receives some benefit from the business or gives some benefit to the business (i.e., he either receives the benefit of the transaction or gives the benefit of the transaction). As such, the account of the person who receives the benefit of the transaction from the business should be debited, and the account of the person who gives the benefit of the transaction to the business should be credited. In other words, the account of the person who receives the benefit of the transaction should be debited, and the account of the person who gives the benefit of the transaction should be credited.
The rule for debiting and crediting personal accounts can be explained with the help of the following examples:
1. Received from Rakesh Rs.2,000.
In this transaction, the personal account involved is Ramesh's account. The personal account of Rakesh gives the benefit of the transaction, i.e., cash. So, Ramesh's Personal Account has to be credited.
2. Paid Ganesh Rs.1,000.
The personal account involved in this transaction is Ganesh's Account. The personal account of Ganesh receives the benefit of the transaction, i.e., cash. So, Ganesh's Personal Account has to be debited.
3. Purchased goods from David on credit Rs.500.
Here, the personal account involved is David's Account. The personal account of David gives the benefit of the transaction, i.e., goods. Therefore, David's Personal Account has to be credited.
4. Sold goods to Henry on credit Rs.600.
In this transaction, the personal account involved is Henry's Account. The personal account of Henry receives the benefit of the transaction, i.e., goods. So, Henry's Personal Account has to be debited.
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