Check sibling questions
Accounts and Finance
Step 1 Basic of Accounts - Debits and Credits

In Accounts,there are only 2 things

  1. Profit and Loss- Containing Expenses and Incomes
  2. Balance Sheet-Containing Liabilities and Assets



Rules for Accounting

All Expenses- Debit

All Incomes- Credit

All Liabilities- Credit if Increase (Debit if Decrease)

All Assets- Debit if Increase (Credit if Decrease)


If we know these rules, our no entry will be wrong

Profit and Loss






Balance Sheet



Cr (Increase)



Cr (Decrease)




Example 1:-

Internet Bill received from Reliance of Rs 2000

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Example 1 Continued

Suppose Amount paid to Reliance by Cash 2000

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Entry 2

Machine purchased from AB Technologies 50000

Amount paid by cheque

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Example 3

Sales made to Max and Co Rs 30000.

Amount received by NEFT (National Electronic Fund Transfer i.e. amount received directly in bank account)

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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 12 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.