The Golden Rules of Accounting are essential for determining whether an account should be debited or credited in any transaction. These rules are based on the type of account involved and form the foundation of the double-entry accounting system.
| Rules | Debit Aspect | Credit Aspect |
| Personal Account | Debit the Receiver | Credit the Giver |
| Real Account | Debit What Comes In | Credit What Goes Out |
| Nominal Account | Debit All Expenses and Losses | Credit All Incomes and Gains |
ü Personal Account:
A Personal Account refers to individuals, firms, or entities with whom the business deals. When the business receives something, the person is debited (receiver); when it gives something, the person is credited (giver).
Examples:
- Received ₹10,000 from customer Ramesh → Ramesh A/c Cr.
- Loan borrowed from Axis Bank → Axis Bank A/c Cr.
- Advance paid to supplier Ram & Co. → Ram & Co. A/c Dr.
ü Real Account:
A Real Account involves business assets — both tangible (like furniture) and intangible (like goodwill). When an asset comes in, it is debited; when it goes out, it is credited. These accounts appear on the balance sheet and are not closed yearly.
Examples:
- Purchased machinery for ₹50,000 → Machinery A/c Dr.
- Cash deposited into bank account → Bank A/c Dr., Cash A/c Cr.
- Sold old wooden furniture → Furniture A/c Cr.
ü Nominal Account:
A Nominal Account relates to business incomes, gains, expenses, and losses. Expenses and losses are debited; incomes and gains are credited. These accounts affect profit and are transferred to the Profit & Loss Account at year-end.
Examples:
- Paid monthly rent ₹8,000 → Rent A/c Dr.
- Received interest income ₹2,500 → Interest Received A/c Cr.
- Earned brokerage commission ₹3,000 → Commission A/c Cr.