Ever wondered what the 3 golden rules of accounting were? Well here are three rules of accounting and what they do:
- Personal Account – Debit the receiver and credit the giver
- Real Account – Debit what comes in and Credit what goes out
- Nominal Account – Debit all expenses and loss and credit all income and gain
Personal Account – Debit the receiver and credit the giver
The personal account is for people who keeps the business dealings. If they receive anything from the business then it would show up in the person account that they have received it. Where it is known as a receiver in the business books it would show up on the in the debit side. This rule tells you that that to debit the receivers personal account and credit the giver’s personal account.
Real Account – Debit what comes in and Credit what comes out
When it comes to real account, this means it will relate to property. That could either mean it come into the business or go from the business. If any property goods come into the business the account of that property or its goods would show up in the debit side of the books for the business. If any of the property or its goods goes out from the business then in the business books it would show up on the credit side of the accounts.
Nominal Account – Debit all expenses and loss and credit all income and gain
Every business will have business expenses, loss, income and gains and you will need to keep an account for these and these things will be put into the nominal account. When the business pay out for expenses or have some kind of losses, they will need to debit this in their business books. When a business starts to get income or any gains then they will need to credited this into their books.
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