GOLDEN RULES OF ACCOUNTING

PERSONAL ACCOUNT – These are accounts of parties with whom the business is a
carried on. Personal accounts may be:
· Accounts of natural or physical persons. Ex: Rama Account, Krishna Account
· Accounts of artificial or legal persons. Ex: ABC & Co.
· Representative personal account. Ex: O/S Expenses Account, O/S income
Account, Prepaid Expenses Account, Income Received in Advance.

Rules of Accounting:
Debit the Receiver
Credit the Giver

Real Account – These are asset accounts that appear in the Balance Sheet. They
are referred to as Real Account (or Permanent Accounts) as these are owned by
businesses and the balances in these accounts at the end of an accounting period
will be carried over to the next period. Ex: Cash Account, Land Account, Building
Account etc.

Rules of Accounting:
Debit what comes in
Credit what goes out

Nominal Account – These are accounts of expenses and losses which a business
incurs and income & gains which a business earn in the course of business. Ex: Rent
Account, Interest Account.

Rules of Accounting:
Debit all expenses and losses
Credit all income and gains