What are the Golden Rules of Accounting?
Financial transactions revolve around the system of dual entry. Every transaction affects at least two accounts, one is debited and the other one is credited. Golden Rules of Accounting provides the rules that help in identifying which account needs to be debited and which account needs to be credited.
All the accounts are classified into three major types; i.e., Personal, Real & Nominal under the Golden Rules of Accounting. It provides a set of three principles for these three accounts that allow proper recording of transactions in the books of accounts. According to the Golden Rules of Accounting, one needs to first determine the type of accounts affected by each transaction and then apply the principle to record transactions.
Table of Content
- Types of Accounts
- 1. Personal Account
- 2. Real Account
- 3. Nominal Account
- Example on Rules of Accounting
- Benefits of the Golden Rules of Accounting
- Conclusion
- 3 Golden Rules of Accounting – FAQs
3 Golden Rules of Accounting – Types, Examples & more
Accounting is the process of measuring and recording all the financial transactions that happen in a financial year. It includes summarizing, analyzing, and recording the data. It helps in getting a clear picture of the financial position of the business by seeing the value of a company’s assets and liabilities.
Identifying and systematically recording accounting transactions in the appropriate books of accounts is known as bookkeeping. The Golden Rules of Accounting serve as the basis for recording all business transactions.
In this article, we will discuss the three Golden Rules of Accounting along with their types and examples.
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