Scribd Logo
Upload

Welcome to Scribd!

  • 27 views

    Golden Rules of Accounting... : Debit and Credit

    Uploaded by

    Madye Mj
    The document discusses the golden rules of accounting including debit and credit rules for personal, real, and nominal accounts. It explains that every debit transaction must have a corresponding credit transaction and increases or decreases in assets, liabilities, owner's capital, expenses, losses, revenue, and income affect whether items are debited or credited.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Golden Rules of Accounting... : Debit and Credit

    Uploaded by

    Madye Mj
    27 views3 pages
    The document discusses the golden rules of accounting including debit and credit rules for personal, real, and nominal accounts. It explains that every debit transaction must have a corresponding credit transaction and increases or decreases in assets, liabilities, owner's capital, expenses, losses, revenue, and income affect whether items are debited or credited.

    Original Description:

    golden rules

    Original Title

    Account

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses the golden rules of accounting including debit and credit rules for personal, real, and nominal accounts. It explains that every debit transaction must have a corresponding credit transaction and increases or decreases in assets, liabilities, owner's capital, expenses, losses, revenue, and income affect whether items are debited or credited.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    27 views3 pages

    Golden Rules of Accounting... : Debit and Credit

    Uploaded by

    Madye Mj
    The document discusses the golden rules of accounting including debit and credit rules for personal, real, and nominal accounts. It explains that every debit transaction must have a corresponding credit transaction and increases or decreases in assets, liabilities, owner's capital, expenses, losses, revenue, and income affect whether items are debited or credited.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Golden rules of accounting...

    Debit and Credit



    When we speak about accounting, first thing that comes into our mind is
    'Debit and Credit'.

    There was a famous quote by an unknown author. Summary of that
    quote is "an accountant is a person who knows what to debit and what to
    credit.

    Debit and credit are the two aspects of every financial transaction. Every
    debit transaction must have a corresponding credit transaction(s) and
    vice versa.

    Golden rules of accounting

    There are three types of accounts.

    1.Personal account
    2.Real account
    3.Nominal account

    Let us know debit and credit rules of these accounts.

    1.Personal account:-
    Debit - The Receiver
    Credit - The Giver

    2.Real account:-
    Debit - What comes in
    Credit - What goes out

    3.Nominal account:-
    Debit - All expenses and losses
    Credit - All incomes and gains


    Important to know about debit and credit...

    Let us see, the affect on debit and credit, when there is an increase or
    decrease in assets or liabilities...



    From the above picture it can be understood that
    Increase in the Assets are debits;decrease in credits.
    Increase in liabilities are credits; decrease in debits.
    Increase in owner's capital are credits; decrease in debits.
    Increase in expense/losses are debits; decrease in credits.
    Increase in revenue/income are credits; decrease in debits.

    It should be noted that an increase in assets is favorable to the firm, but
    an increase in expenses is no so, even though, in both cases, the
    increase will be recorded on the debit side. Similarly, an increase in
    liabilities is not favorable, but an increase in revenue is, both will be
    recorded on the credit side.

    You might also like