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What are the 3 Basic Rules in Accounting.
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Answer Posted / kiran b. suryavanshi
1) Real Account:- Debit what come in, Credit what goes out.
2) Nominal Accounts: - Debit all expenses and losses, Credit all incomes and revenues.
3) Personal Accounts - Debit the receiver, Credit the giver.
ccount:-
Real Accounts:
The real accounts related to accounts that are intangible like assets, reserves, capital, and liabilities whose balances are carried to next operational cycle are real accounts. The accounting rule that is used for this type of accounts are "debit what comes in" and "credit what goes out". Say, if a building is bought from a person, debit the amount from the building account (real account) and credit it to the person account (personal account). Other scenario would be to sell a product on credit to a person, so credit the amount to product account(real account), debit it from the persons account(personal account).
Nominal Accounts:
The Nominal accounts are temporary accounts which are closed at the end of each year by moving their balances to Permanent accounts. Accounts that come under this type are expenses, gains, revenues, losses. The balance of these accounts becomes assets or losses at the end of year and moved to permanent accounts. The accounting rule that is used for this type of accounts is "Debit all expenses and losses" and "credit all incomes and gains". While paying the salary to the employees in cash, the amount is debited from the salary account (nominal account). If a discount is got from a company then it is credited to the discounts account.
Personal Accounts:
The Personal accounts are accounts that are related to a person or an organization. The accounting rule that is used for this type of accounts is "debit the benefit receiver" and "credit the benefit giver". If some cash was paid to a person X. Then according to the rule the amount is debited from the person "X" accounts (personal account) and credit to the cash account. If a product is bought on credit from a company "Y", then the amount is credited to company "Y" account (personal account) and debited from the product account (Real Account).
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