Question

On which side will the decrease in the following accounts be recorded? Also, state the nature of the account:

(i) Cash	(ii) Bank Overdraft
(iii) Outstanding Salary paid	(iv) Outstanding Rent
(v) Prepaid Insurance	(vi) Mohan, Proprietor of the business

Answer 1

Name of Accounts		Consequence of decrease	Modern Approach	Traditional Approach
(i)	Cash	Credit	Assets	Real Account
(ii)	Bank Overdraft	Debit	Liability	Personal Account
(iii)	Outstanding Salary Paid	Debit	Liability	Personal Account
(iv)	Outstanding Rent	Debit	Liability	Personal Account
(v)	Prepaid Insurance	Credit	Asset	Personal Account
(vi)	Mohan, proprietor of the business	Debit	Capital	Real Account