Majority of the candidates’ attempted this question and their performance was very poor. The expected answers includes:
Q1 (a) Personal Account - It is accounts of persons (natural/artificial/individual/organizations) dealing with the business.
Rule: Dr - The receiver
Cr - The giver
(b) Real Account - This relates to accounts of items that can be seen, touch or
be moved.
Rule: Dr - Increases in value (what comes in)
Cr - Decreases in value (what comes in)
- Nominal Account - This relates to accounts of income and expenditure
of a business.
Rule: Dr - losses and expenses
Cr - incomes and gains
(d) Liabilities Account - It relates to accounts of the indebtedness of a business.
Rule: Dr - decreases in liability
Cr - increases in liability
(e) Assets Account - It relates to the accounts of items owned by the business.
Rule: Dr - increases in assets
Cr - decreases in assets