Rules of debit & credit

The rule for recoding the transaction for Capital account is

• Debit what comes in, Credit what goes out

• Debit the receiver, Credit the giver

• Debit all expenses & losses, Credit all revenues & gains

On 31 March, while closing the accounts for the year 2020-21, it was observed that the annual insurance premium for the premises amounting to Rs. 24,000 was paid on 1 January, 2021. The premium for the period 1 April, 2021 to 31 March, 2022 is a:

• personal account

• real account

• nominal account

On 31 March, 2021, while closing the accounts for the year 2020-21, it was observed that the annual rent for the premises amounting to Rs. 2,40,000 was paid on 1 January, 2021. What will be the treatment while recoding this?

• Debit Rent a/c & Credit Bank a/c

• Debit prepaid rent a/c and credit Bank a/c

• Debit prepaid rent a/c & credit Rent a/c

• Debit rent a/c & credit prepaid rent a/c

While balancing Bank account, it was observed that the total of Debit side was Rs. 2,50,000 and that of credit side was Rs.1,70,000. The account will be closed by:

• writing "To balance c/d on the debit side"

• writing "To balance b/d on the debit side"

• writing "By balance c/d on the credit side"

• writing "By balance b/d on the credit side"

While balancing Bank account, it was observed that the total of Debit side was Rs. 2,50,000 and that of credit side was Rs.1,70,000. In this case, the balance will be referred to as:

• Debit balance

• Credit balance

• No balance

Assertion (A) - Capital account can only have a credit balance.

Reason (R) - Capital account is a Real account

• Both A & R are correct and R is the correct explanation for A

• Both A & R are correct but R is not the correct explanation of A

• A is correct but R is incorrect

• both A and R are incorrect

Assertion (A) - Increase in expenses are debited

Reason (R) - Expenses lead to a decrease in capital

• Both A and R are correct and R is the correct explanation of A

• Both A & R are correct but R is not a correct explanation of A

• A is correct but R is incorrect

• Both A & R are incorrect

CD Ltd. took a loan of Rs. 5 crore for expansion of business. For recording this transaction:

• Cash a/c will be debited and Bank a/c will be credited

• Bank Loan a/c will be debited and Capital a/c credited

• Bank loan a/c will be credited & Bank a/c will be debited

• Bank loan a/c will be credited & Bank a/c will be credited

A company took a loan of Rs. 10 crores at an interest rate of 10% p.a. Rs. 20,00,000 was paid as interest on 1 January. to record this transaction:

• Bank a/c will be debited & Interest account will be credited

• Bank a/c will be debited and Bank loan a/c will be credited

• Bank a/c will be credited and capital a/c will be debited

• Bank a/c will be credited and interest a/c will be debited

Modern Furnishing Ltd. bought 5 tables and 20 chairs for their office and paid by cheque. To record this transaction:

• Bank a/c will be debited and stock a/c will be credited

• Bank a/c will be debited and Furniture a/c will be credited

• Bank a/c will be credited & Purchases a/c will be debited

• Bank a/c will be credited & Furniture a/c will be debited