What are the golden rules of accounting?

Question

Accepted Answer

The golden rules of accounting are fundamental principles guiding the recording of financial transactions.

1. Debit the receiver, credit the giver: This rule applies to personal accounts. For example, if you pay a supplier, you debit the supplier's account and credit your cash account.
2. Debit what comes in, credit what goes out: This rule is for real accounts. For instance, when you purchase equipment, you debit the equipment account and credit cash or bank.
3. Debit expenses and losses, credit income and gains: This rule is for nominal accounts. For example, when you earn revenue, you debit the cash or accounts receivable and credit the revenue account.

Interview Questions Asked to Junior Accountant & Admin at Other Companies