Three Golden Rules of Accounts

1. For Personal account

Personal accounts pertain to individuals or organization

Eg: customers, vendors, salary accounts of employees, drawings and capital accounts of owners, etc.

DEBIT THE RECEIVER

CREDIT THE GIVER

2. For Real Account

Real accounts which do not close at the end of the year. Related to Assets and LIability.

Tangible or Intangible Eg:-  Machinery, Buildings, Goodwill, Patent rights, etc.

DEBIT WHAT COMES IN

CREDIT WHAT GOES OUT

3. For Nominal Account

A nominal account that closes at the end of the year.

Income, Expense, Profit and Loss

DEBIT ALL EXPENSE AND LOSS

CREDIT ALL INCOME AND GAINS