Rules of Debit and Credit: Real A/c MCQs Quiz | Class 9
This quiz is for Class 9, Subject: Elements of Book-Keeping & Accountancy (Code 254), from Unit 3: Nature of Accounts & Rules for Debit and Credit. It specifically covers the topic of Real Accounts, focusing on the rule: Debit what comes in; credit what goes out. Answer all 10 questions, submit your quiz, and download the PDF answer sheet to review your performance.
Understanding the Golden Rule for Real Accounts
In accountancy, transactions are recorded using a system of debits and credits. The “Golden Rules of Accounting” provide a foundation for this system. This quiz focuses on the rule for Real Accounts, which is fundamental to recording transactions involving assets.
What are Real Accounts?
Real Accounts are related to assets or properties of a business. These are things that the business owns and that have a monetary value. Real accounts can be further classified into two types:
- Tangible Real Accounts: These are assets that have a physical existence and can be touched and seen. Examples include Cash, Machinery, Building, Furniture, and Stock.
- Intangible Real Accounts: These are assets that do not have a physical existence but can be measured in terms of money. Examples include Goodwill, Patents, Trademarks, and Copyrights.
The Golden Rule: Debit What Comes In, Credit What Goes Out
This rule is the cornerstone of recording transactions for all Real Accounts. Let’s break it down with examples.
1. Debit What Comes In
When an asset comes into the business, the account for that asset is debited. “Coming in” means the business is acquiring or receiving the asset.
Example: A business purchases furniture for cash worth Rs. 20,000.
- What comes in? Furniture. Furniture is an asset (a Real Account).
- What goes out? Cash. Cash is also an asset (a Real Account).
- Applying the rule:
- Debit Furniture Account (because it’s coming in).
- Credit Cash Account (because it’s going out).
2. Credit What Goes Out
When an asset goes out of the business, the account for that asset is credited. “Going out” means the business is selling, disposing of, or giving away the asset.
Example: A business sells old machinery for cash worth Rs. 50,000.
- What comes in? Cash. Cash is an asset.
- What goes out? Machinery. Machinery is an asset.
- Applying the rule:
- Debit Cash Account (because it’s coming in).
- Credit Machinery Account (because it’s going out).
Summary of Transactions for Real Accounts
Here’s a simple table to illustrate the application of the rule:
| Transaction | Account to be Debited (Comes In) | Account to be Credited (Goes Out) |
|---|---|---|
| Purchased goods for cash | Purchases A/c (Goods) | Cash A/c |
| Sold goods for cash | Cash A/c | Sales A/c (Goods) |
| Bought a building | Building A/c | Cash/Bank A/c |
| Deposited cash into bank | Bank A/c | Cash A/c |
Quick Revision Points
- Real Accounts deal with assets and properties.
- If an asset’s value increases or it enters the business, its account is debited.
- If an asset’s value decreases or it leaves the business, its account is credited.
- This rule applies to both tangible and intangible assets.
- Always identify the two accounts affected in a transaction and classify them before applying the rule.
Extra Practice Questions
- If the business withdraws cash from the bank for office use, which account will be debited and which will be credited?
- What is the journal entry for purchasing a computer on credit from ‘HCL Ltd.’? (Hint: consider which accounts are affected).
- A company sold its old car. What account should be credited?
- When a business invests in shares of another company by paying cash, which Real Account is debited and which is credited?
- If goods are lost by fire, which account is credited? (Hint: what is going out of the business?).
