General Rules Applied to Three Kinds of Accounts: 2. Real or Asset Accounts.

General Rules Applied to Three Kinds of Accounts: 2. Real or Asset Accounts:

Real or Asset Accounts:

     An asset is a lifeless thing. As such, it cannot receive or give any benefit. It can only come into the business or go out of the business. So, the account of an asset which comes into the business should be debited, and the account of an asset which goes out of the business should be credited.

     The rule for debiting and crediting real accounts may be explained with the help of the following examples:

     1. Received interest Rs.100.
     In this transaction, the asset account involved is Cash Account. Cash comes into the business. So, Cash Account should be debited.

     2. Paid Bhaskar Rs.200.
     In this transaction, the asset account involved is Cash Account. Cash goes out of the business. So, Cash Account should be credited.

     3. Bought furniture from Imran & Co. on credit Rs.500.
     The asset account involved in this transaction is Furniture Account. Furniture comes into the business. Therefore, Furniture Account should be debited.

     4. Sold machinery to Raj Rs.5,000
     The asset account involved in this transaction is Machinery Account. Machinery goes out of the business. So, Machinery Account should be credited.