What are the Golden Rules of Accounting?

There are 3 golden rules of accounting which are also known as debit and credit rules of accounting. These 3 rules are the foundation principles of accounting which are of great help when it comes to posting in journal and ledger.

  1. Rule number 1 – Debit the receiver and Credit the giver (applicable for personal account)
  2. Rule number 2 – Debit what comes in and Credit what goes out (applicable for real account)
  3. Rule number 3 – Debit all expenses and losses and Credit all incomes and gains (applicable for nominal account)
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  • Tanveer Md Masood

    All accounting tansactions are conducted by adhering to the three basic rules or golden principle of accounting known as golden rules of accounts. Real account means debit what comes in credit what goes out. Nominal accounts states that debit all expenses and losses credit all gains and income. The third rule is that of personal account- meaning debit the reciever of benefit and credit the giver of benefit. For instance if the company recieves any cash by sale of furniture then we need to cash is coming in – cash acccount would be debited and since the sale is taking by selling furniture which is an asset we need to credit furniture – cash account debit,,, to furniture account. Likewise if cash sales is made and no source of such sale is mentioned what we need to do is debit cash account and credit sales account. Again, if mr.x receives cash by the sale of almirah, thenjournal entry would cash account would be debited to furniture account. If x recives cheque from y, then it would come under personal account, x account debit to y ccount.

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