(i) Double entry system of book keeping is a scientific and complete system of recording the financial transactions of an organisation.
(ii) According to this system, every transaction has a two fold effect.
(iii) That is, there are two aspects involved, namely, receiving aspect and giving aspect.
(iv) It is denoted by debit (Dr.) and credit (Cr.).
Following are the advantages of double entry system:
(1) Accuracy: In this system, the two aspects of each transaction are recorded in the books of accounts.This helps in checking the accuracy in accounting
(2) Ascertainment of business results: Details regarding expenses, losses, incomes, gains, assets, liabilities, debtors, creditors, etc: are readily available. This helps to ascertain the net profit earned or loss incurred during an accounting period and also to know the financial position as on a particular date.
(3) Comparative study: The business results of the current year can be compared with those of the previous years and also with other business firms. It facilitates business planning for future.
(4) Common acceptance: The business records maintained under this system are accepted by financial institutions, government and others, because it is a systematic and scientific system.

The following steps are followed in journalising
(1) Analyse the transactions and identify the accounts (based on aspects) which are involved in the transaction.
(2) Classify the above accounts under Personal account, Real account or Nominal account
(3) Apply the rules of debit and credit for the above two accounts.
(4) Find which account is to be debited and which account is to be credited by the application of rules of double entry system.
(5) Record the date of transaction in the date column.
(6) Enter the name of the account to be debited in the particulars column very close to the left hand side of the particulars column followed by the abbreviation 'Dr.' at the end in the same line. Against this, the amount to be debited is entered in the debit amount column in the same line.
(7) Write the name of the account to be credited in the second line starting with the word 'To' prefixed a few spaces away from the margin in the particulars column. Against this, the amount to be credited is entered in the credit amount column in the same line.
(8) Write the narration within brackets in the next line in the particulars column.

(i) The relationship of assets with that of liabilities to outsiders and to owners in the equation form is known as accounting equation.
(ii) Under the double entry system of book keeping, every transaction has two fold effect, which causes the changes in assets and liabilities or capital in such a way that an accounting equation is completed and equated
Capital + Liabilities = Assets
(iii) Capital can also be called as owner's equity and liabilities as outsider's equity.
(iv) Accounting equation is a mathematical expression which shows that the total of assets is equal to the total of liabilities and capital.
(v) This is based on the dual aspect concept of accounting.
(vi) As the revenues and expenses will affect capital, the expanded equation may be given as under
Assets = Liabilities + Capital + Revenues - Expenses

Following are the principles of double entry system:
(i) In every business transaction, there are two aspects
(ii) The two aspects involved are the benefit or value receiving aspect and benefit or value giving aspect.
(iii) These two aspects involve minimum two accounts; at least one debit and at least one credit.
(iv) For every debit, there is a corresponding and equivalent credit. If one account is debited the other account must be credited.

(i) Insurance premium paid on the life of the proprietor is a personal account.
(ii) It is spend for the personal use of the proprietor not for the business purpose. Hence Drawings A/c should be debited.
The entry is 

Personal account:
Account relating to persons is called personal account. The personal account may be natural, artificial or representative personal account
a) Natural person's account: Natural person means human beings. Example: Vinoth account, Malini account.
(b) Artificial person's account: Artificial person refers to the persons other than human beings recognised by law as persons. They include business concerns, charitable institutions, etc. Example: BHEL account, Bank account.
(c) Representative personal accounts: These are the accounts which represent persons natural or artificial or a group of persons. Example: Outstanding salaries account, Prepaid rent account. When expenses are outstanding, it is payable to a person. Hence, it represents a person.

Account is the systematic presentation of all material information regarding a particular person or item at one place, under one head, under accounting equation approach, accounts are classified into five categories. They are,
(i) Asset Account : Any physical thing or right owned that has a monetary value is called asset. These assets are grouped and shown separately.
For example, Land and Buildings account, plant and machinery account.
(ii) Liability Account : Financial obligations of the enterprise towards outsiders are shown under separate heads as liabilities. For example, creditors account, expenses outstanding account.
(iii) Capital Account : Financial obligations of a business enterprise towards its owners are grouped under this category. For example, Capital contributed by owner,
(iv) Revenue Account : Accounts relating to revenues of an enterprise are grouped under this category.
For example, Revenues from sale of goods, Rent received.
(v) Expenses Account : Expenses incurred and losses suffered for earning revenue are grouped under this category.
For example, Purchase of goods, Salaries paid.