The golden rules in accounting or rules of debit and credit

Journal Entries cannot be recorded without some rules. The rules which are used to record a journal entry are called Golden rules of Accounting. It means debit the person who receives something from the business

1. The Golden Rules in Accounting OR Rules of Debit and Credit Presented by: John Tirkey

2. Why we need Golden Rules of Accounting ??? Journal Entries cannot be recorded without some rules. The rules which are used to record a journal entry are called Golden rules of Accounting.

3. Types of Account 1. Personal account 2. Real account 3.Nominal account

4. Personal Account Examples of Personal Account : Capital account Mahajan and Sons Ltd account Ram’s account Golden Rule of accounting in case of Personal Account : “Debit the Receiver Credit the Giver”

5. Debit the Receiver It means debit the person who receives something from the business Example – Cash paid to Ram Here Ram’s account will be debited as Ram has received cash from the business

6. Credit the Giver It means Crediting the person who has given something to the business. Example – Cash received from Mahajan Ltd . Here Mahajan’s Ltd. Account will be credited as Mahajan Ltd has given cash into the business.

7. Real Account Examples of Real Account: Cash account Stock account Machinery account Furniture account “Debit what comes In Credit what goes Out”

8. Debit What Comes In It means Debiting the assets coming into the business. Examples –Cash received from Ram Here Cash Account will be debited as Cash is coming into the business

9. Credit What Goes Out It means Crediting the assets going out from the business. Example – Machinery sold to Ram Here Machinery Account will be credited as Machinery is going out from the business.

10. Nominal Account Examples of Nominal Account Salary account Interest Received account Loss on sale of asset account “Debit all expenses and losses Credit all Income and Gain”

11. Debit all Expenses and Losses It means Debting all Expenses and Losses incurring in the Business Examples – Salary paid in cash Here Salary Account will be debited as Business is giving salary which is an expense

12. Credit all Income and Gains It means Crediting all Income and Gains earned by the Business. Example- Interest Received from Bank Here Interest received Account will be credited as Business is receiving cash from bank which is an Income.

13. Thankyou