Golden rule of journal entry

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vikas

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07 September 2014 golden rule of journal entries

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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07 September 2014 1) 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

2) 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

3) 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 gain

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