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Does golden rules of accounting applies to transfer entries

07 June 2021

For example
salary is an expense
and entry is

p&l a/c dr
To salary a/c.

(does golden rules of accounting . those 3 personal, real, nominal will they apply here?
please explain with the reason
thank you🙂

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4 Replies

CA. Heet Shah (Tax Consultant & Practitioner) (6174 Points)
Replied 07 June 2021

Dr what comes in Cr what goes Out (Salary-Cash goes out)

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 07 June 2021

Debit the receiver and credit the giver - personal
Debit what comes in and credit what goes out- real
Debit expenses and losses, credit income and gains- nominal

the easiest way toidentify is,

salay- nominal account, here it is expense, so debited

payables- real account, it is creditor, so what goes out.

Like this, every line item can be identified.

Ramachandran S (Chartered Accountant) (699 Points)
Replied 16 June 2021

Debit P & L and Credit salary entry is not actually required. If still passed, then, it is transfer from one expense to a summary of income and expenses a/c. Both are nominal accounts. Here, the purpose of this transfer entry is to 'close' the salary expense. and book the same to summary of expenses a/c. The former is akin to income (making expense a/c zero) and the latter is akin to incurring of expense. Hence, Dr. P & L and Cr Salary, both being nominal accounts.

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