The golden rules of Accounting are the basis of recording all day-to-day financial business transactions. In which book we record all these transactions is known as Journal Book. The Journal book is maintained in chronological order (i.e. Date wise). To understand the Golden Rules of account, first, we have to know the type of account because rules are applied to the transaction on the basis of the type of account.
The three Golden Rules of Accounting: –
1. Real Accounts
Debit: What comes in
Credit: What goes out
2. Personal Accounts
Debit:- The Receiver
Credit: The Giver
3. Nominal Accounts
Debit:- All Expenses and Losses
Credit:- All income and gains
Know how to apply the golden rules of accounting on any transaction:
Points to be remembered: –
The steps involved in the application of the Golden Rules of Accounting are shown below: –
Step No. Description
1st Scan and select affected Accounts(From the transaction)
2nd Select What type of Accounts these are (separately)
3rd Select the rule which will be applied to these accounts
4th What will be the effect of this transaction on these accounts
5th Which condition of the golden rule is applied to these accounts
6th Now, In the end, you got the name of the Debit and the credit account.
0:00 Introduction to Golden Rules of Accounting
Topics covered in the Videos
1:10 Real Account
2:18 Personal Account
3:15 Nominal Account
4:33 How to apply the Golden Rules of Accounting
5:16 Example of Real Rule
10:39 Example of Personal Rule
14:02 Example of Nominal Rule
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