Golden rule of accounting // what is golden rule? example & types of accounts

GOLDEN RULES OF ACCOUNTING

Golden rules of accounting are the main rules of accounting.Without golden rules accounting journal is not possible.But first we have to learn about types of accounts because without learning this we can't understand golden rules.So here we discussed about types of accounts:-

TYPES OF ACCOUNTS

To do any journal entries first we have to know about accounts .In accountancy there are three types of account.

1. REAL ACCOUNTS
2. PERSONAL ACCOUNTS
3. NOMINAL ACCOUNTS

They are discussed below 

1.PERSONAL ACCOUNT

Personal account is a general ledger account which is related with persons like individuals.There are many examples of personal account releted with our daily life like,RAM A/C,MR.X A/C,BANK A/C ETC..

 2.REALCCOUNT

Real account also a general account.Which accounts are related with assets,called real account.Here assets means tangble and intangble both.Real accounts always have a debit balance.Some exmples of real accounts are Machinery A/C,Furniture A/C,Stock A/C ETC.

3.NOMINAL ACCOUNT

Accounting  are related with incomes, expenses,gains and losses is called nominal account.Examples of nominal accounts are Purchase A/C,Sales A/C,ETC.

GOLDEN RULES 

There are three separate type of golden rules for each types of accounts .Golden rules are discussed below

REAL ACCOUNTS RULE :

• Debit what assets comes into business/recevier.
• Credit what assets gose out from into business / given.

PERSONAL ACCOUNTS:

• Debit what comes into the business.
• Credit what gose out from business.

Nominal ACCOUNTS:

• All expenses and loss of the business on debit.
• All incomes and gains of the business on credit.

GOLDEN RULE OF ACCOUNTING CHART

So,we learn all golden rules of accounting.Now its time to do some illustrations for better understanding.

ILLUSTRATIONS

1. Mr.Bose started her business whit cash amounting  ₹80,0000

• Cash account is a real account because comes in and capital account is a personal account because giver

So according to the golden rule:

Cash A/c     dr.      ₹80,000

   To capital A/c                  ₹80,0000

2.Purchased a furniture for ₹80,000 in cash

• Furniture account is a real account because comes in and cash account is a real account because goes out

So according to the golden rule:

Furniture A/c   dr.   ₹80,000

   To cash A/c                        ₹80,0000

3. Purchased goods from Mr.Mondal ₹ 80,000

• Purchase account is a nominal account because example and cash account is a real account because goes out

So according to the golden rule:

Purchase A/c   dr.   ₹80,000

   To cash A/c                         ₹80,0000

4. Withdraw cash from business for personal use ₹50,000

• Drawing account is a personal account because receiver and cash account is a real account because goes out

So according to the golden rule:

Drawing A/c   dr.    ₹80,000

   To cash A/c                        ₹80,0000

CONCLUSION:-
Here we know that how to record any financial transaction.First we have to find which accounts are involved their,then distinguise types of the accounts .After that we apply golden rules of accounting and then do journals and ledgers.Altogether if you don't know the golden rules of the accounting you won't able to accurately account for the transaction.