What are the three golden rules of accounting?
Answers
Answer:
The Golden Rules of Accounting
Debit The Receiver, Credit The Giver. This principle is used in the case of personal accounts. ...
Debit What Comes In, Credit What Goes Out. This principle is applied in case of real accounts. ...
Debit All Expenses And Losses, Credit All Incomes And Gains.
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Answer:
The difficult part here is to learn or by heart the 3 Golden Rules of accounting. There is a solution to this at the last. There are 3 accounts Personal, Real & Nominal. Let's discuss how to consider journal entries w.r.t each account.
Personal Account- Debit the Receiver, Credit the Giver.
Example- Assume you have sold an asset to your friend. Your friend who received the asset becomes the Receiver. Since he paid cash to you, so your Account is Credited.
Friend A/c – Dr.
To Your A/c
Real Account- Debit What Comes In, Credit What Goes Out.
Example- Reversing the above example, suppose you buy an asset that may be mobile from your friend. Mobile that you receive in the form of the asset makes Asset Account Debited. You give cash for that, so Credit the Cash Account.
Asset A/C – Dr
To Cash A/C
Nominal Account- Debit All Expenses and Losses, Credit All Incomes and Gains.
Example- You are selling an asset to your friend at profit. A cash account is Debited, and Profit gets Credited as you earned profit so Credit for all the Income & Gains.
Cash A/C – Dr
To Profit on Sale of Asset
To know a trick to remember these Rules forever go to
Refer to link-https://www.finmargin.com/golden-rules-of-accounting/