Different makeup products are used for different purposes like lipsticks are used to enhance lip color, while eyeliners are used to enhance eyes. Thus we have different types of accounts each one with different purposes in accounting. Golden rules of Accounting or Bookkeeping rules lays the foundation of Journal Entries.
There are mainly three types of accounts in accounting: Real, Personal, and Nominal Accounts. There are 3 Golden Rules of Accounting associated with these 3 accounts. Let us study all the three Golden rules of Accounting with examples.
Let us study all the three Golden rules of Accounting with examples.
- Personal Account- Debit the Receiver, Credit the Giver
- Real Account– Debit What Comes In, Credit What Goes Out
- Nominal Account– Debit All Expenses and Losses, Credit All Incomes and Gains.
A personal account is related to a person, individual. Thus personal account is mostly denoted by names of people
A real account is related to a tangible product or asset. Anything which can be touched.
The nominal account is related to profit & losses. Mostly financial figures.
The Challenge is how to memorize the journal entries using the above logic forever. There is a simple trick to remember these rules forever and apply the logic correctly in all journal entries.
To know those tricks click below
Golden Rules of Accounting / Bookkeeping — Learn in 3 Easy steps FinMargin
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