The Account Dictionary

Every account name that can appear in a Unit 1–3 question, in one place. For each: what type it is, which rule applies, which side it normally sits on, and where it finally lands — Trading A/c, Profit & Loss A/c, or Balance Sheet, and on which side.

Group 1 — Cash, bank and money movement

Account	Type	Bucket	Normal	Lands in	The thing people get wrong
Cash A/c	Real	Asset	Dr	BS — Assets	Used when the words are "cash", "cash memo", or when the mode is not stated at all.
Bank A/c	Personal	Asset	Dr	BS — Assets	Not a real account. A bank is an artificial person. Triggered by cheque, NEFT, RTGS, UPI, net banking, debit card. p. 47
Bank Overdraft A/c	Personal	Liability	Cr	BS — Liabilities	The same Bank A/c, flipped. You owe the bank, so it stops being an asset.
Petty Cash A/c	Real	Asset	Dr	BS — Assets	A small float for small expenses. Still cash.
Bank Charges A/c	Nominal	Expense	Dr	P&L — Dr	Dr Bank Charges / Cr Bank. No cash involved — the bank deducted it itself.
Fixed Deposit A/c	Personal	Asset	Dr	BS — Assets	"Deposit with SBI" in your Trial Balance sheet TB Q3 is this.

⚠ The contra entry — money between your own two pockets

"Cash deposited into bank ₹30,000" and "Cash withdrawn from bank for office use ₹5,000" are contra entries. No income, no expense, no outsider. Only two of your own asset accounts swapping.

Cash deposited into bank ₹30,000

Bank A/c	Dr.	30,000
To Cash A/c			30,000

(Being cash deposited into the bank)

Bank comes in / receives → debit. Cash goes out → credit. Now reverse it for a withdrawal. The trap: "withdrew from bank for personal use" is NOT contra — debit Drawings, because the money has left the business.

Faculty Journal Q5 sets both the Cash Deposit Machine and net banking versions Journal sheet Q5.

Group 2 — Goods: the four accounts that replace "Goods A/c"

There is no Goods Account. If goods move, one of these is the account. p. 51

Account	Type	Bucket	Normal	Lands in	Triggered by
Purchases A/c	Nominal	Expense	Dr	Trading — Dr	"bought goods", "purchased goods", "invoiced goods to us". Only for goods you resell — a machine is not a purchase.
Sales A/c	Nominal	Income	Cr	Trading — Cr	"sold goods", "delivered the goods, customer invoiced".
Purchase Returns A/c = Returns Outward	Nominal	Income-ish	Cr	Deducted from Purchases	"returned goods to [supplier]". Goods you had bought are going back out.
Sales Returns A/c = Returns Inward	Nominal	Expense-ish	Dr	Deducted from Sales	"[customer] returned goods", "goods returned by him". Coming back in.
Opening Stock A/c	Real	Asset	Dr	Trading — Dr	Appears inside the Trial Balance. Last year's unsold goods.
Closing Stock A/c	Real	Asset	Dr	BS — Assets and credited to Trading A/c	Appears outside the Trial Balance, as an adjustment. Valued at cost or market price, whichever is lower — the Conservatism Concept L1 slide 22.

◆ Returns: which one, in one question

Faculty Journal Q4 Journal sheet Q4 sets both in consecutive lines and they are easy to swap by accident:

"Mr Y returned goods worth ₹1,000" — Y is your customer. Goods come back in to you. → Sales Returns A/c Dr. / To Y's A/c.

"Returned goods to Mr A worth ₹2,000" — A is your supplier. Goods go back out. → A's A/c Dr. / To Purchase Returns A/c.

Group 3 — People and the money between you

Account	Type	Bucket	Normal	Lands in	What it means
Debtors A/c = Sundry Debtors, Accounts Receivable, Book Debts	Personal	Asset	Dr	BS — Assets	People who owe you, because you sold them goods on credit. Named individually in journal questions (Laxman's A/c, Mr Y's A/c).
Creditors A/c = Sundry Creditors, Accounts Payable	Personal	Liability	Cr	BS — Liabilities	People you owe, because you bought from them on credit.
Bills Receivable A/c	Personal	Asset	Dr	BS — Assets	A debtor's written promise to pay. Same idea as a debtor, in paper form.
Bills Payable A/c	Personal	Liability	Cr	BS — Liabilities	Your written promise to pay a creditor.
Loan Taken A/c e.g. "Loan from Bharat", "Bank Loan"	Personal	Liability	Cr	BS — Liabilities	Money borrowed. Cash A/c Dr. / To Loan from Bharat A/c.
Loan Given A/c e.g. "Loan to Sita"	Personal	Asset	Dr	BS — Assets	Money lent out. Loan to Sita A/c Dr. / To Cash A/c. Faculty Journal Q1 sets both directions back to back to catch you.
Advance to Supplier A/c a named person's account	Personal	Asset	Dr	BS — Assets	Paid before the service. Recoverable, so the person is a debtor. p. 52
Advance from Customer A/c	Personal	Liability	Cr	BS — Liabilities	Received before the service. Refundable, so they are a creditor.

Group 4 — Bad debts, and the three entries that go with them

Account	Type	Bucket	Normal	Lands in	When it appears
Bad Debts A/c	Nominal	Expense / loss	Dr	P&L — Dr	A debtor will never pay. "Declared insolvent", "written off". Bad Debts A/c Dr. / To Debtor's A/c.
Bad Debts Recovered A/c	Nominal	Income / gain	Cr	P&L — Cr	Money arrives from a debt written off in an earlier year. Cash A/c Dr. / To Bad Debts Recovered A/c. Never credit the debtor — their account was already closed.
Provision for Doubtful Debts A/c	Personal (representative)	Contra-asset	Cr	Deducted from Debtors	An estimate of future bad debts. Adjustment territory — Unit 4, beyond M1, but know the name.

◆ The insolvency question, worked — Faculty Journal Q7

"Jamuna who owed us ₹10,000 is declared insolvent and 25 paise in a rupee is received from her." Journal sheet Q7

"25 paise in a rupee" means you recover 25% — that is ₹2,500. The other ₹7,500 is gone.

15 July 2025 · Jamuna declared insolvent, 25 paise in the rupee received

Cash A/c	Dr.	2,500
Bad Debts A/c	Dr.	7,500
To Jamuna's A/c			10,000

(Being 25 paise in a rupee received from Jamuna on her insolvency and the balance written off as bad)

Jamuna's account must be credited with the full ₹10,000 — her debt is being closed entirely, not partly. The ₹2,500 you got is cash; the ₹7,500 you will never get is an expense. Two debits, one credit, and they balance.

Then in December the sheet adds: "Received cash for a bad debt written off last year ₹7,500." That is a different entry — Cash A/c Dr. / To Bad Debts Recovered A/c. Do not credit Jamuna; her account no longer exists.

Group 5 — Fixed assets and depreciation

Account	Type	Bucket	Normal	Lands in	Notes
Machinery / Plant & Machinery A/c	Real	Asset	Dr	BS — Assets	Debited with cost + carriage + installation + erection + reconditioning, never just the invoice price p. 160.
Furniture A/c · Building A/c · Land A/c · Computer A/c · Motor Van A/c	Real	Asset	Dr	BS — Assets	Same treatment. Land is the one asset that is not depreciated.
Goodwill A/c · Patents A/c · Trademarks A/c	Real (intangible)	Asset	Dr	BS — Assets	Real, not nominal — you can measure them in money even though you cannot touch them p. 47.
Depreciation A/c	Nominal	Expense	Dr	P&L — Dr	The charge for this year. Depreciation A/c Dr. / To Machinery A/c. Then closed: P&L A/c Dr. / To Depreciation A/c.
Provision for Depreciation A/c = Accumulated Depreciation	Personal (representative)	Contra-asset	Cr	Deducted from the asset on the BS	The running total of all past depreciation. Used when the asset account is kept at original cost. Never a debit balance p. 161.
Machinery Disposal A/c	Real	—	—	Its balance → P&L	Opened only when an asset is sold. Collects the WDV, the sale proceeds, and coughs out the profit or loss p. 163.
Profit on Sale of Asset A/c	Nominal	Income	Cr	P&L — Cr	Sale proceeds exceeded the written-down value.
Loss on Sale of Asset A/c	Nominal	Loss	Dr	P&L — Dr	Sale proceeds fell short of the written-down value.

⚠ Repairs vs installation — one goes to the asset, one to the P&L

Your L2 deck sets it as a single question and it is exam-perfect: "We spent $1,500 on machinery — $1,000 for upgrading the machine and $500 for repairs" → $1,000 Capital, $500 Revenue L2 slide 10.

The test: did the spending increase the asset's capacity or extend its life? Then it is part of the asset (capitalised, depreciated over years). Did it merely keep the asset working as before? Then it is Repairs A/c — a nominal expense, charged this year p. 160.

Group 6 — The owner

Account	Type	Bucket	Normal	Lands in	Notes
Capital A/c	Personal	Capital	Cr	BS — Liabilities side	What the business owes its owner. Credited when capital is brought in — in cash or in goods or in assets. Faculty Journal Q4 opens with cash + machinery + goods all at once.
Drawings A/c	Personal	Contra-capital	Dr	Deducted from Capital	Anything the owner takes out — cash, goods, or an asset. Never an expense of the business. Goods drawings are recorded at cost.
Income Tax of Proprietor A/c	Personal	Contra-capital	Dr	Treated as Drawings	The owner's personal tax is not the business's expense — Business Entity Concept.

Group 7 — Expenses (all debit, all P&L or Trading)

Account	Lands in	The distinction that matters
Wages A/c	Trading — Dr	Factory labour — part of the cost of making goods. Goes above the gross-profit line.
Salaries A/c	P&L — Dr	Office staff. Below the line. "Wages and Salaries" combined → Trading. "Salaries and Wages" → P&L. The first word wins.
Carriage Inward A/c = Carriage on Purchases, Freight Inward, Cartage	Trading — Dr	Cost of bringing purchased goods in. Part of what the goods cost you.
Carriage Outward A/c = Carriage on Sales, Freight Outward	P&L — Dr	Cost of delivering sold goods out. A selling expense, nothing to do with cost of goods. Your L2 deck's classify-question sets both L2 slide 12.
Rent A/c · Rates & Taxes A/c	P&L — Dr	Unless the question says "factory rent", which goes to Trading.
Insurance A/c	P&L — Dr	A fire insurance premium is revenue, however large L2 slide 12.
Repairs & Maintenance A/c	P&L — Dr	Restores; does not improve. Contrast with capitalised installation.
Printing & Stationery A/c · Office Expenses A/c · Sundry / Trade Expenses A/c	P&L — Dr	Routine running costs.
Advertisement A/c	P&L — Dr	Also the account used when goods are given as free samples.
Legal Fees A/c	P&L — Dr	Split by purpose: legal cost of collecting debts is revenue; legal cost of acquiring premises is capital and joins the Premises A/c L2 slide 13.
Discount Allowed A/c	P&L — Dr	Cash discount you gave. An expense.
Interest Paid A/c	P&L — Dr	If "Interest" appears in the debit column of a Trial Balance it is interest paid; in the credit column it is interest received L3 slide 18.
Depreciation A/c	P&L — Dr	The only expense with no cash outflow p. 157.
Bad Debts A/c · Loss by Fire A/c · Loss on Sale of Asset A/c	P&L — Dr	Losses behave exactly like expenses.

Group 8 — Incomes (all credit, all P&L)

Account	Lands in	Notes
Sales A/c	Trading — Cr	The only income that goes to the Trading A/c, not the P&L.
Commission Received A/c	P&L — Cr	Credit only once earned. An advance is credited to the payer's personal account instead p. 52.
Rent Received A/c	P&L — Cr	You are the landlord here. Distinct from Rent A/c (paid).
Interest Received A/c	P&L — Cr	Faculty Journal Q1: "Interest received from Vijay ₹1,000" → Cash A/c Dr. / To Interest Received A/c. Not to Vijay's A/c — the interest is earned, not owed back.
Discount Received A/c	P&L — Cr	Cash discount you got from a supplier.
Bad Debts Recovered A/c	P&L — Cr	A windfall from a written-off past debt.
Profit on Sale of Asset A/c	P&L — Cr	Not "Sales" — an asset sale is never revenue from operations.

Group 9 — Representative personal accounts (the outstanding / prepaid family)

These are the accounts that trip up nearly everybody, because the same word is nominal on its own and personal with a prefix p. 48.

Nominal (on its own)	Becomes Personal (with a prefix)	Bucket	Normal	Lands in
Rent A/c expense	Outstanding Rent A/c rent due but unpaid	Liability	Cr	BS — Liabilities
Rent A/c expense	Prepaid Rent A/c rent paid in advance	Asset	Dr	BS — Assets
Salary A/c	Outstanding Salaries A/c · Prepaid Salaries A/c	Liability / Asset	Cr / Dr	BS
Insurance A/c	Outstanding Insurance A/c · Prepaid Insurance A/c	Liability / Asset	Cr / Dr	BS
Interest A/c income	Accrued Interest A/c earned, not yet received	Asset	Dr	BS — Assets
Interest A/c income	Interest Received in Advance A/c unearned	Liability	Cr	BS — Liabilities

The mnemonic that never fails: OUTSTANDING = I still OWE it → liability → credit. PREPAID = they still OWE me the service → asset → debit. Then invert both for income: ACCRUED income = they OWE me → asset. Income RECEIVED IN ADVANCE = I OWE them → liability.

Group 10 — Fictitious assets (the odd ones out)

Account	Type	Normal	Lands in	Why it is strange
Preliminary Expenses A/c	Fictitious asset	Dr	BS — Assets	Money already spent, with nothing tangible to show. Written off to the P&L in instalments over several years p. 48.
Discount on Issue of Shares A/c · Underwriting Commission A/c · Share Issue Expenses A/c	Fictitious asset	Dr	BS — Assets	Same logic.
Heavy Advertisement A/c = Deferred Revenue Expenditure	Fictitious asset	Dr	BS — Assets	Paid now, benefit over several years. Your L2 deck's examples: heavy advertising, R&D, exceptional losses L2 slide 9.

⚠ Fictitious asset ≠ intangible asset

Goodwill and patents are intangible real assets — you cannot touch them but you could sell them. Preliminary expenses are fictitious — you could never sell them; they are only unwritten-off expenditure parked on the assets side. The textbook says so in one line: "Goodwill, patents cannot be called as fictitious assets as these are Intangible assets." p. 48

Group 11 — Corporate accounts (they appear in the L3 Trial Balance)

Account	Bucket	Normal	Lands in	Notes
Share Capital A/c	Capital	Cr	BS — Equity	A company's version of Capital A/c.
Share Premium A/c	Capital / reserve	Cr	BS — Equity	Amount received above face value. Both appear in the L3 deck's Trial Balance L3 slide 20.
Profit & Loss A/c (brought forward)	Capital / reserve	Cr	BS — Equity	Last year's retained profit. A credit balance.
Land & Building — Depreciation A/c	Contra-asset	Cr	Deducted from Land & Building	Exactly the Provision for Depreciation pattern, and it is why it sits in the credit column of that Trial Balance.

Sources

Textbook Ch. 1 §1.11 basic terms pp. 14–17 · Ch. 3 §3.3 classification and rules pp. 46–48 · §3.7 tips for journalising pp. 51–54

Textbook Ch. 7 §7.7–7.9 cost of an asset, depreciation accounting, disposal pp. 160–165

Lecture L2 — assets, liabilities, capital/revenue expenditure and the two classify drills slides 2–13

Lecture L3 — types of accounts, golden rules, the debit/credit balance rule slides 5–6, 16–18

Faculty Journal sheet Q1–Q7 pp. 1–4 · Trial Balance sheet Q1–Q3 p. 1