Which Account? Dr or Cr?
A fixed five-step routine that turns any sentence in any journal question into a correct entry — plus a phrase-book of 90 exam wordings with the entry each one demands. When you are stuck mid-question, this is the page to open.
◆ Why you feel confused — and what actually fixes it
The confusion is never "what is a debit". It is that you are trying to decide both accounts and both sides at once, in your head, under time pressure. The fix is to slow the decision down into five separate questions that each have one obvious answer.
Your textbook gives the first three as a numbered checklist p. 51: "1. Which accounts would be affected? 2. What is the nature of those accounts? 3. Which will be debited or credited, and why?" The two steps below are the ones exams actually punish you for skipping.
The five-step routine
- Name the two things that moved. Read the sentence and ask: what came in, and what went out? Or: what did the business get, and what did it give up? Every transaction has exactly these two halves. Write them down as words first — "goods" and "cash", "a machine" and "a promise to Samit" — before you worry about account names.
- Convert each thing into an account name. This is where most marks are lost, because the account name is often not the word in the question.
· "goods" coming in → Purchases A/c, never Goods A/c
· "goods" going out → Sales A/c
· "cheque" → Bank A/c, never Cash A/c
· "he paid me" → is it Cash, or the person's account, or an income account? Step 4 decides.
· the owner taking anything → Drawings A/c, never Capital A/c directly - Classify each account: Personal, Real or Nominal — or, if you prefer the modern route, Asset / Liability / Capital / Income / Expense. You only need one system. Pick one and stay in it for the whole paper.
- Run the four gate questions (below). These are the ones that separate near-identical wordings. Skip them and you will write plausible, wrong entries.
- Apply the rule, write the entry, write the narration. Debit on the first line with "Dr."; credit on the second, indented, beginning with "To". Then a one-line narration in brackets starting "Being…". Then check: does total debit = total credit?
The four gate questions
Run these in order on every transaction. Each one has a single binary answer and each one changes the entry.
GATE 1 · Cash, bank, or a person?
Ask
Is the money settled right now, or does somebody still owe somebody?
Settled now
Use Cash A/c (or Bank A/c if a cheque/NEFT/UPI/card is named). Ignore any person's name entirely.
Still outstanding
Use the person's own account. They are a debtor if they owe you, a creditor if you owe them.
Question is silent
Treat it as cash. The textbook is explicit: if it were credit, the question would have to name the party so the debt could be collected p. 51.
Give-away cues
for cashin cashpaid cash to
on creditsold to Xpurchased from X
by chequethrough NEFTdebit card
GATE 2 · Has the service or delivery already happened?
Ask
Is this money for something already done, or an advance for something not yet done?
Already done
It is a nominal account — an expense if you paid, an income if you received. Salary paid to Rakesh → Salary A/c, not Rakesh.
Advance
It is a personal account — the money is recoverable or refundable. ₹2,000 paid to Kalyan as advance for repairs → Kalyan's A/c, not Repairs. p. 52
Give-away cues
as advance forin advanceprepaid
outstandingdue but not paidaccrued
GATE 3 · Is it an asset or an expense? (capital vs revenue)
Ask
After the money is spent, is there still something of value left that will be used for more than this year?
Yes — asset
Capital expenditure. Debit the asset account. Includes purchase price plus carriage, installation, erection, reconditioning, legal cost of acquiring, and any upgrade that raises capacity or life.
No — used up
Revenue expenditure. Debit a nominal expense account. Repairs, petrol, electricity, insurance, repainting, carriage on purchases.
Both in one sentence
Split the amount. "₹1,500 on machinery — ₹1,000 upgrading and ₹500 repairs" → ₹1,000 to Machinery A/c, ₹500 to Repairs A/c L2 slide 10.
Give-away cues
installationerectioncartage on machine
extension toupgradingfirst-time painting
repairsrepainting three years latermaintenance
GATE 4 · Is this goods, or something else?
Ask
Is the thing being bought or sold the item this business trades in?
Yes — it is goods
Purchases / Sales / Purchase Returns / Sales Returns. Never "Goods A/c".
No — it is an asset
Use the asset's own name. "Purchased a computer from Kapil ₹50,000" → Computer A/c, not Purchases. Faculty Journal Q2 sets this deliberately right after several goods purchases.
The same item, different business
A car is a fixed asset to a chemist and a purchase to a car dealer. The textbook makes exactly this point p. 17. Read what the business does before classifying.
The phrase-book — 90 exam wordings and their entries
Every wording below comes from your faculty problem sheets, your lecture decks, or the textbook illustrations. Find the phrase; copy the shape.
Starting and financing the businessCapital, loans, drawings
| Wording in the question | Debit | Credit | Why |
|---|---|---|---|
| Started business with cash ₹25,000 | Cash A/c | Capital A/c | Cash comes in (real); the owner is the giver (personal). |
| Commenced business with cash ₹90,000 and goods ₹60,000 | Cash A/c ₹90,000 Purchases A/c ₹60,000 | Capital A/c ₹1,50,000 | Compound entry. Capital may be brought in as goods or assets, not only cash p. 14. |
| X started business with cash ₹5,000, machinery ₹20,000 and goods ₹10,000 | Cash ₹5,000 Machinery ₹20,000 Purchases ₹10,000 | Capital A/c ₹35,000 | Three debits, one credit. Machinery is not Purchases — Gate 4. |
| Additional capital introduced | Cash / Bank A/c | Capital A/c | Same as the opening entry. |
| Loan taken from Bharat ₹10,000 | Cash A/c | Loan from Bharat A/c | Cash in; Bharat is the giver. A liability. |
| Loan given to Sita ₹12,000 | Loan to Sita A/c | Cash A/c | Sita is the receiver; cash goes out. An asset. Faculty Q1 sets both in the same question to catch the reversal. |
| Borrowed from Gaurav ₹30,000 | Cash A/c | Gaurav's Loan A/c | Same as "loan taken". |
| Cash withdrawn for personal use ₹2,500 | Drawings A/c | Cash A/c | Not an expense. Reduces capital. |
| Rahul drew cash for domestic use ₹30,000 | Drawings A/c | Cash A/c | Same. "Domestic", "household", "personal" all mean drawings. |
| Rahul took goods for domestic use ₹30,000 | Drawings A/c | Purchases A/c | Goods leaving for a non-sale reason. Recorded at cost. |
| X took away goods worth ₹1,000 | Drawings A/c | Purchases A/c | Same shape. |
| Withdrew from bank for office use | Cash A/c | Bank A/c | Contra — both are yours. |
| Withdrew from bank for personal use | Drawings A/c | Bank A/c | Not contra — money left the business. |
Buying and selling goodsPurchases, sales, returns, discounts
| Wording in the question | Debit | Credit | Why |
|---|---|---|---|
| Goods purchased from Ram ₹20,000 | Purchases A/c | Ram's A/c | Name given, mode silent, supplier named → credit purchase. |
| Purchased goods for cash from Sachin ₹20,000 | Purchases A/c | Cash A/c | Gate 1: settled now, so Sachin's name is irrelevant. |
| Purchased goods from Amit for cash ₹70,000 | Purchases A/c | Cash A/c | Identical trap, reworded. |
| Buys goods and stores them ₹800 | Purchases A/c | Cash A/c | Mode silent, no party named → cash. |
| Goods sold to Laxman ₹15,000 | Laxman's A/c | Sales A/c | Named customer, no cash mentioned → credit sale. |
| Sold goods to Yuvraj on credit ₹2,000 | Yuvraj's A/c | Sales A/c | Explicit. |
| Invoiced goods to Saurav for cash ₹30,000 | Cash A/c | Sales A/c | "Invoiced" sounds like credit; "for cash" overrides it. Read to the end of the sentence. |
| Receives order from A ₹500 | NO ENTRY | An order is not a transaction — nothing has been exchanged. The L3 illustration includes this line specifically to test you L3 slide 10. | |
| Delivered the goods to A, customer invoiced ₹500 | A's A/c | Sales A/c | Now the sale happens — Realisation Concept. |
| Returned goods of ₹1,000 to Suman | Suman's A/c | Purchase Returns A/c | Going back out to a supplier. |
| Mr Y returned goods worth ₹1,000 | Sales Returns A/c | Y's A/c | Coming back in from a customer. |
| Purchased goods ₹50,000 from Vimal @10% trade discount | Purchases A/c ₹45,000 | Vimal's A/c ₹45,000 | Net amount only. No Trade Discount A/c exists p. 53. |
| Returned goods having list price ₹1,000 to Vimal (10% TD) | Vimal's A/c ₹900 | Purchase Returns A/c ₹900 | The return carries the same trade discount as the purchase. ₹1,000 − 10%. |
| Purchased goods ₹12,000 @5% cash discount from Rakesh | Purchases A/c ₹12,000 | Cash A/c ₹11,400 Discount Received A/c ₹600 | Cash discount is recorded, as an income. Purchases stay at full value. |
| Received ₹24,700 from Shanthi in full settlement of ₹25,000 | Cash A/c ₹24,700 Discount Allowed A/c ₹300 | Shanthi's A/c ₹25,000 | "In full settlement" is the trigger phrase for cash discount. |
| Paid cash to Shiva ₹14,500 in full settlement of ₹15,000 | Shiva's A/c ₹15,000 | Cash A/c ₹14,500 Discount Received A/c ₹500 | Mirror image, from the buyer's side. |
| Sold 5 sarees to A and Co. on credit ₹4,000 | A and Co. A/c | Sales A/c | Quantities are decoration — only the rupee value is recorded. |
| Purchased 20 sarees from Z & Co. and paid through debit card ₹12,000 | Purchases A/c | Bank A/c | Debit card → bank, not cash. |
| Paid X and Co. through NEFT | X and Co. A/c | Bank A/c | Settling an earlier credit purchase. Debiting the creditor cancels the liability. |
Expenses, incomes and money movementThe nominal accounts
| Wording in the question | Debit | Credit | Why |
|---|---|---|---|
| Paid cartage in cash ₹20,000 | Carriage Inward A/c | Cash A/c | Cartage on incoming goods. If the cartage is on a machine, it is capitalised into Machinery A/c instead — Gate 3. |
| Paid salary to office clerk ₹25,000 | Salaries A/c | Cash A/c | Gate 2: service already rendered → nominal. |
| Salary paid to Rakesh ₹1,000 | Salary A/c | Cash A/c | Not Rakesh's A/c. He owes nothing back p. 52. |
| ₹2,000 paid to Kalyan as advance for repairs | Kalyan's A/c | Cash A/c | Not Repairs A/c. No service yet; recoverable. |
| Paid rent to landlord for office ₹50,000 | Rent A/c | Cash A/c | Nominal expense. |
| Rent paid by cheque ₹500 | Rent A/c | Bank A/c | Gate 1. |
| Cheque given to Radha ₹8,000 | Radha's A/c | Bank A/c | No reason stated → settling a debt owed to Radha. She is the receiver. |
| Cheque received from Anand ₹3,000 | Bank A/c | Anand's A/c | Anand is the giver; a debtor clearing his account. |
| Interest received from Vijay ₹1,000 | Cash A/c | Interest Received A/c | Not Vijay's A/c. Income earned, not a debt being repaid. |
| Commission received from Suresh Ltd ₹1,000 | Cash A/c | Commission A/c | Service already given. |
| Advance for commission received from Rao ₹5,000 | Cash A/c | Rao's A/c | Not earned. Refundable → Rao is a creditor p. 53. |
| Stationery purchased and paid through net banking ₹6,000 | Printing & Stationery A/c | Bank A/c | Net banking → Bank. |
| Bank charges levied ₹200 | Bank Charges A/c | Bank A/c | The bank deducted it directly. No cash anywhere. |
| Cash deposited into bank through Cash Deposit Machine ₹30,000 | Bank A/c | Cash A/c | Contra. |
| Outstanding wages ₹200 are paid now | Outstanding Wages A/c | Cash A/c | Debiting the liability cancels it. Not Wages A/c — last year's P&L already carried the expense p. 82. |
Losses, write-offs and fixed assetsThe ones that look like something else
| Wording in the question | Debit | Credit | Why |
|---|---|---|---|
| Goods worth ₹2,000 destroyed in fire | Loss by Fire A/c | Purchases A/c | Goods leaving with no sale. If insured: Dr Insurance Claim A/c for the recoverable part and Loss by Fire A/c for the rest. |
| Distributed goods worth ₹500 as free samples | Advertisement A/c | Purchases A/c | A marketing expense settled in goods. |
| Goods given as charity | Charity A/c | Purchases A/c | Same shape again. |
| Purchased a computer from Kapil ₹50,000 | Computer A/c | Kapil's A/c | Gate 4: a fixed asset, so not Purchases. Credit purchase, so Kapil's account. |
| Purchased machinery from Samit for cash ₹1,00,000 | Machinery A/c | Cash A/c | Asset + settled now. |
| Purchased a second-hand machine for ₹96,000, spent ₹24,000 on cartage, repairs and installation | Machinery A/c ₹1,20,000 | Cash / Bank A/c | All of it capitalised. Depreciation is later computed on ₹1,20,000, not ₹96,000 Dep. sheet Q1. |
| Old furniture ₹800 sold for ₹600 cash | Cash A/c ₹600 Loss on Sale of Furniture A/c ₹200 | Furniture A/c ₹800 | The asset leaves at its book value; the shortfall is a loss p. 83. |
| Typewriter ₹3,000 taken by the owner for home | Drawings A/c | Typewriter A/c | An asset can be drawn, not only cash or goods. |
| Mr Kalyan has to pay ₹15,000 but could pay 45 paisa in a rupee | Cash A/c ₹6,750 Bad Debts A/c ₹8,250 | Kalyan's A/c ₹15,000 | 45% recovered, 55% written off. The debtor's account is closed in full. |
| A debt previously written off as bad, recovered this year ₹350 | Cash A/c | Bad Debts Recovered A/c | An income. The old debtor account is gone — never credit it. |
| Depreciation provided on machinery ₹5,000 | Depreciation A/c | Machinery A/c | Or "To Provision for Depreciation A/c" if the asset is kept at cost p. 160. |
| Depreciation transferred at year end | Profit & Loss A/c | Depreciation A/c | The closing entry that empties the nominal account. |
The transactions that get no entry at all
Exams plant these. Recognising them is worth a mark and costs nothing.
| Event | Why no entry | Concept being tested |
|---|---|---|
| Receiving an order from a customer | Nothing has been exchanged yet. Value only arises on delivery. | Realisation Concept L1 slide 23 |
| Appointing a highly skilled manager | Cannot be measured in money. | Money Measurement Concept L1 slide 20 |
| A quarrel between the production and marketing managers that reduced profits | Same — not monetary. The textbook sets this as an MCQ p. 36. | Money Measurement Concept |
| Land bought at ₹2,55,000 is now worth ₹5,00,000 | A market rise is not a transaction. Keep it at cost. | Cost Concept L1 slide 26 |
| The owner buys an air-conditioner for his home from his own pocket | It is not the business's transaction at all. | Business Entity Concept |
| Signing a contract to buy goods next month | An executory contract. No exchange yet. | Realisation Concept |
Three checks before you move to the next transaction
- Does debit equal credit? If your entry has three lines, two on one side must sum to the third.
- Does the entry make sense as a sentence? Read it aloud: "Cash comes in ₹25,000; the owner gave it." If it does not describe anything real, the accounts are wrong.
- Is the narration written? A journal entry without a narration is incomplete and loses marks even when the accounts are right. Start it "Being…" and mention the mode, the party, and any discount.
ENJournal entries — rules of debit and credit, worked Rajat Arora
HIGolden rules of accounting with examples CA Parag Gupta
◆ Drill this
The routine above is applied to every one of the 7 faculty journal problems, all 60+ transactions, on Unit 02 — How to Solve Anything, each in a two-column why / what to write layout so you can see the gate questions firing.
Sources
Primary Rama Gopal §3.7 Tips for Journalising — parts (A) to (H) pp. 51–54
Faculty Journal problem sheet, Q1–Q7 pp. 1–4
Lecture L3 — journal proforma and the Shyam Enterprises illustration slides 9–11
Lecture L2 — capital vs revenue classification drills slides 10–13