3 Golden Rules of accounting are made for understanding the basics of rules for posting journal Entry. Every accountant should know about the nature of transaction and where it should be recorded. http://izzihub.com/golden-rules-of-accounting/

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3 Golden Rules of
Accounting

2. • It is a systematic process of
identifying, recording, measuring,
classifying, verifying, summarizing,
interpreting and communicating the
financial information.

3. • Accounting is not only recording
the transaction but it also have
wide range of measuring and
analysis the reports for cost
cutting and increasing profit.

4. • So the basic and most important step is recording the
journal entry in the books of accounts.
• Every Accountant should have strong command over
Debit and Credit for posting the entry.

5. For better and Quick
understanding, 3 rules are
described for Debit and
Credit for recording.

6. Dr: What's Comes in
Cr: What's Goes out
Dr: All Expense and Losses
Cr: All Income and Profit
Dr: Receiver
Cr: Giver

7. These three rules are based on 3 different types of accounts
for better understanding, which are as mention below.
• Real Account (Its Relate with Capital Expenditure i.e. Assets)
• Personal Account (Its refer to Person or organization Account)
• Nominal Account (These are Revenue nature and relate to income Statement
Items)

8. Rule No 1
Debit What come in ---- Credit What Goes out

9. • Rule No 2,
Debit The receiver and Credit Giver
When organization buy or sell something on credit basis
then Personal Account come into existence.
• Like furniture bought from ABC & Co on Credit. Then
Journal Entry will be Debit Furniture and Credit ABC &
Co that is Giver.
• Building sold to XYZ on credit. Here Journal Entry is
Debit XYZ that is Receiver and Building are Credited.
.

10. Rule No 3,
Debit All Expense and Losses ---- Credit Income and profit
This Rule is related with Income statement items.
• Debit all revenues nature Expenses.
Like, Salaries, Wages, Utility bills, Losses,
Tax, Rent
• Credit All income, interest and Profit