To understand the Golden Rules of Accounting we must first understand the types of accounts. The account classification applies to all the types of general ledgers. There are three types of accounts includes real account, personal account and nominal account. A golden rule for personal accounts is to debit the recipient and pay the giver. Individual, business, and company accounts are all examples of personal accounts. By debiting the recipient, it is said that the person accepting products on credit will be debited, and the person offering will be paid. These rules of accounting also includes: debit what comes in, credit what goes out, debit all expenses and losses and credit all incomes and gains etc. To apply these rules one must first ascertain the type of account and then apply these rules. All transactions of an entity must be accounted for. To account these transactions the entity must pass journal entries which will then summarise into ledgers.

Saket Kumar

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