In double entry, every transaction affects:

At least two accounts. One is debited and another is credited.

Rule for personal account:

Debit the receiver, credit the giver. This is the personal account rule.

Nominal account. Expenses are nominal accounts and are debited.

Machinery account is a:

Real account. Assets are real accounts.

Under the modern approach, an increase in liability is:

Credited. Liabilities, capital and incomes are credited when they increase.

Maharashtra State Board · HSC Commerce · Class 11 (Std XI)

Class 11 Book Keeping and Accountancy Chapter 2: Meaning and Fundamentals of Double Entry Book-keeping

Short notes, key concepts, quick revision and practice MCQs with answers

Under the double entry system every transaction has two aspects, a debit and an equal credit. Accounts are classified as personal, real and nominal and follow specific rules.

Key concepts: Meaning and Fundamentals of Double Entry Book-keeping

Double entry system: Each transaction affects at least two accounts; one is debited and the other credited with the same amount.
Types of accounts: Personal (persons/firms), real (assets), nominal (expenses, losses, incomes, gains).
Rules of debit and credit: Personal: debit the receiver, credit the giver. Real: debit what comes in, credit what goes out. Nominal: debit expenses and losses, credit incomes and gains.
Modern approach: Assets and expenses are debited when they increase; liabilities, capital and incomes are credited when they increase.
Advantages: Complete records, arithmetical accuracy checked by trial balance, fraud prevention.

Quick revision: important points

Debit = left side (Dr), Credit = right side (Cr).
Total debits always equal total credits.
Drawings are debited to the owner's account.

Practice MCQs with answers

In double entry, every transaction affects:
1. At least two accounts
2. One account
3. No account
4. Five accounts always
Show answer
Answer: A. At least two accounts
One is debited and another is credited.
Rule for personal account:
1. Debit the receiver, credit the giver
2. Debit what goes out
3. Credit expenses
4. Debit incomes
Show answer
Answer: A. Debit the receiver, credit the giver
This is the personal account rule.
Salary paid is a:
1. Nominal account
2. Real account
3. Personal account
4. Asset
Show answer
Answer: A. Nominal account
Expenses are nominal accounts and are debited.
Machinery account is a:
1. Real account
2. Nominal account
3. Personal account
4. Income account
Show answer
Answer: A. Real account
Assets are real accounts.
Under the modern approach, an increase in liability is:
1. Credited
2. Debited
3. Ignored
4. Deleted
Show answer
Answer: A. Credited
Liabilities, capital and incomes are credited when they increase.

All Class 11 Book Keeping and Accountancy chapters

Chapter 1: Introduction to Book-keeping and Accountancy
Chapter 2: Meaning and Fundamentals of Double Entry Book-keeping
Chapter 3: Journal
Chapter 4: Ledger
Chapter 5: Subsidiary Books
Chapter 6: Bank Reconciliation Statement
Chapter 7: Depreciation
Chapter 8: Rectification of Errors
Chapter 9: Final Accounts of a Proprietary Concern
Chapter 10: Single Entry System

Class 11 Book Keeping and Accountancy notes: all chapters