• surajit bhowmick

3 Golden Rules of Accounting

Updated: Jan 1

3 Golden Rules is the first thing that you learn in the Commerce field. As a Commerce student, it is a necessity to remember these 3 Golden Rules. This Rule helps you throughout your career and makes it easy to record each transaction. So, let's begin with 3 Golden Rules of Accounting.

These Golden Rules are classified into three types.

  • Personal   

  • Real 

  • Normal

Now you may wonder what these three types mean? Isn't it?

Let's go through these types.

Golden Rule of Accounting

Personal A/C:

Personal a/c are accounts of persons. These persons may be natural persons, artificial person, or representative persons

Natural persons: Raj A/C, Surjit A/C, Kapil A/C, Shubham A/c, etc.

Artificial persons:  A person in the eye of the law, such as partnership firms, companies, corporate bodies, an association of persons, etc. is known as an Artificial Person.

Representative Persons: A person who represents you in the front of other person is known as Representative Persons.

Golden Rule for this A/C

" Debit the receiver

Credit the giver "


Real A/C:

A Real A/C is related to Assets and Liabilities other than a person. It may be tangible or intangible. For example, Machiner is tangible Assets where Royalty is Intangible Assets.

These accounts never close at year-end and carried forward. For example, the value of Machinery is carried in the next financial year unless you have sold to another person.

Golden Rule for this A/C

" Debit what comes in

Credit what goes out "

Normal A/C:

These accounts record all the expenses, loss, profit, and gain. For example, Interest A/C.

Golden Rule for this A/C

" Debit all expenses and losses

Credit all income and gains "

Few Example:

1) salary paid ₹100

Salary A/C               Dr       To Cash A/C Here Salary is your expense that’s why it is on debit side and cash goes out that’s why it is on credit side

2) Goods sold worth ₹500 Cash A/C                 Dr     To Sale A/C Here Sale is your Profit that’s why it is on credit side and cash comes in that’s why it is on debit side

3) Purchase goods worth ₹600 Purchase A/C        Dr       To Cash A/C Here Purchase is your expense that’s why it is on  Debit side and Cash goes out that’s why it is on credit side

4) Receive interest ₹100 from bank Cash A/C          Dr         To Bank A/C Here Cash comes in that’s why it is on debit side and Bank is the giver that’s why is on credit side

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