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Golden rule of accounting
Accountancy
For the 1st example the nature of account was mentioned as personal for both transactions but in the demo class they said real and person ... please do explain it
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In the above example owner is investing capital into business so money in the form of cash or bank is coming into business (personal account or real account) and he invested in the form of capital so capital account (personal account) They are 2 approach in accounting 1) traditional approach 2) accounting equation approach According to traditional Approache cash or bank can be either real or personal account Capital is personal account . According to accounting equation approach Cash is asset and capital is a liability Accounting equation Assets = equity or capital - liability Please go through above explanation you can easily understand
Yeah ... in the study material they used traditional approach but whereas on the demo class they used accounting equation approach ... which one has to be followed both are right and how to identify questions based on these 2 approach and answer them
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mifra tajroonYeah ... in the study material they used traditional approach but whereas on the demo class they used accounting equation approach ... which one has to be followed both are right and how to identify questions based on these 2 approach and answer them
Accounting equation is nothing but items used in balancesheet