3 Principles of Life decoded by a Chartered Accountant from 3 Accounting Principles @CAClubIndia - Vikrmn - CA Vikram Verma - Chartered Accountant Author 3 Principles of Life decoded by a Chartered Accountant from 3 Accounting Principles @CAClubIndia - Vikrmn - CA Vikram Verma - Chartered Accountant Author

3 Principles of Life decoded by a Chartered Accountant from 3 Accounting Principles @CAClubIndia

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I was thinking about life and tried to understand it. No one actually could, nor was I, hence, LOST. 

I got back to work, the endless accounting work.

One thing struck my mind immediately, while I was preparing financials. 

What is Accounting?
The answer was; "It is the philosophy based on three accounting principles."

Eyes glittered with joy, "If life was accounting?" I thought, "Let's apply these principles to life."

After an hour, I came out smiling, from the tornado of entangled life.

I was amazed at the results I got. I would like to share them with you.

Basically, the three principles of Accounting divide all the journal entries into three categories; Personal, Nominal, and Real.

These entries are noted in everyone's own accounting books. Same ways life is also based on entries of give and take that are recorded somewhere.

Here is the application of each principle of accounting to life:

1. Real:

The first principle is based on real things. It's about things, based on just one question, that is "WHAT?"

They say, "Things come, things go; Money is a matter of to and fro."

So, the rule is applied as follows:
Debit what comes in; 
Credit what goes out.

i.e. If you get something debit it; if you give something credit that.

e.g. if you buy a car by paying money, then Car comes in, Money goes out.

So, in your books, entry would be..

Debit Car account (what comes in);
Credit Money account (what goes out).

Now, applying it to Life:

e.g. if you get immense Love from someone, give your heart to that person.

Debit the love; 
Credit the heart.



2. Personal:

The second principle is about persons. It's about people, based on just one question, that is "WHO?"


So, the rule is applied as follows:
Debit The receiver; 
Credit The giver.

i.e If you receive something Debit the person who receives it and Credit the one who gives.

e.g. if you buy a car on installments, then Car comes in, Seller is the creditor.

So, in your books, the entry would be..

Debit Car account (what comes is, Rule 1);
Credit Seller's account. (the giver, Rule 2).

And, in the books of seller..

Debit Buyer's account (the receiver, Rule 2);
Credit Car / Sales account. (what goes out, Rule 1).

Now, applying it to Life:
e.g. if you get happiness from someone then:

The receiver of happiness is indebted;
so give the Credit to the Giver, in form of regards.

Debit Happiness;
Credit Someone.



3. Nominal:

The third principle is for recording profits and losses. It's about non-existing things, that happen due to Real things, based on just one question, that is "HOW?"

So, the rule is applied as follows:
Debit the Expense; 
Credit the Income.

i.e. If you spend, debit it; if you earn, credit that.

e.g. if you get a car on rent then, in your books, you'll write:

Debit the Rent (the expense, Rule 3);
Credit the Owner (the giver, Rule 2).

Now, applying it to Life:
e.g. if someone shows courage, that person gets respect in return.

Debit the courage;
Credit The respect.


Apply* these rules and see the change. Cheers. Vikrmn:

* Conditions Apply ;)

Posted by 
Vikrmn: Author of "10 Alone" (CA Vikram Verma) 10Alone.com
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Hi, Thanks for reading through. Would be happy to see your views and ideas in the comments. For a direct message please free to reach me at v@Vikrmn.com. Cheers

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