This is an account deals with the amount of expenses incurred or incomes earned. It
includes all expenses and losses as well as incomes and gains of the enterprise. This
nominal account records the expenses and incomes which are not carried forwarded to
near future.
The process of the accounting in normal practice as follows:
The practice starts with the journalizing of entries. After journalisation, the entries passed
in the journal will be passed into the ledger A/c. The immediate next stage is to prepare
the trial balance.
What is meant by the journal entry ?
It is an entry systematically recorded to the tune of golden rules of accounting in the
journal book is known as journal entries.
How the journal entries are entered?
The journal entries are recorded in the sequential order. The order of recording is
conventionally done on the basis of date. The journal entry usually contains two different
parts, which are nothing but two different accounts affecting the transactions.
Journalising the entries are different from one transaction to another The difference is
only due to nature and characteristics of the transactions. To journalise as easy as possible,
the systematic approach to be adopted to post the transactions without any ambiguity.
Journalising can be generally categorized into following various categories.
l Taking place within the same natured accounts
l Taking part in between accounts of two different in categories
First, we will discuss the journalizing of entries of the same natured accounts. This can
be classified into various segments
l Transactions only in between the personal accounts
l Transactions only in between the real accounts
Under the category of transactions which affect only the personal accounts are as follows:
l Between the persons of the nature
Debit What comes in
Credit What goes out
Debit all the expenses and losses
Credit all incomes and gains
Accounting and Finance
for Managers
l Between the persons of the artificial relationship
l Between the persons of Representations
What are the points to observed at the moment of journalizing ?
l The nature of the accounts to be identified
l The accounts to be correlated to the golden rules
l Once the accounts are finalized, the next stage is to pass the entry through proper
debiting and crediting of the accounts respectively.
The meaning of the transaction should be made explicit for easier understanding through
brief and catchy narration to follow as well as evade the ambiguity in near future.
Mr Sundar is a debtor who has paid Rs 1,500, in the bank A/c

Debit all the expenses and losses
Credit all incomes and gains

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