Golden Rules of accounting

 Golden Rules of accounting

1. Real accounts,

- Debit - what comes in , eg. if additional machinazry or asset purchased,

- Credit - what goes out , eg. if a piece of assets or machinary sold out, dispossed off.

(This also brings a concluision that assets brings a debit balance, where liabilities brings a credit balance)

2. Nominal Accounts

- Debit - all expenses/losses, eg.- rent paid, salary paid, 

- Credit - All incomes and gains, eg, commission received , discount received, 

(This also brings a conclusion, expenses accounts equals to a debit balance and income accounts always a credit balance).

3. Personal accounts,

- Debit - Debit the receiver, eg cash given by ravi to shyam, hence shyam account will be debited,

             Shyam                     A/c                 Dr.

             Ravi's                      A/c             

- Credit -  Credit the Giver , eg. in the sa,me example Ravi is the giver hence ,  Ravi will be credited.

Accounting Rules :- Examples