Every economic establishment must produce its financial data to all its stakeholders. For this presentation, it must record for all its financial transactions. Since economic establishments are compared to comprehend their financial positions, there has to be conformity in accounting. To bring about conformity and to account for the transactions accurately there are 3 Golden Rules of Accounting.
Students will learn these Golden Rules Of Accounting in the Class 11 Accountancy. Class 11 provides a fundamental basic information regarding the subjects and concepts.
To comprehend the Golden Rules of Accounting, we must first comprehend the types of accounts.
Below mentioned are 3 types of accounts :
- Real Account: A Real Account is a general ledger account associated with Assets and Liabilities other than personal accounts. These are that sort of accounts that don’t close at year end and are carried forwarded (c/f).
- Personal Account: A Personal account is a General ledger account associated to all persons like individuals, enterprises, and associations.
- Nominal Account: A Nominal account is a General ledger account concerning to all income, expenses, losses and gains.
Golden Rules Of Accounting
| Types of Account | Golden Rules |
| Real Account | ❏ Debit what comes in
❏ Credit what goes out |
| Personal Account | ❏ Debit the receiver
❏ Credit the Giver |
| Nominal Account | ❏ Debit the expenses or losses
❏ Credit the incomes or gains |
Illustrations :
| Transaction | Accounts involved | Type of Accounts |
| Deposit Rs.20,000 in Bank | Bank Account
Cash Account |
Real Account
Real Account |
| Purchased goods worth Rs.75,000 from Mango Ltd. | Purchase Account
Mango Ltd. Account |
Nominal Account
Personal Account |
| Sold goods worth Rs. 25,000 to Grape Ltd. | Sales Account
Grape Ltd. Account |
Nominal Account
Personal Account |
| Paid Rs.20,000 as rent | Rent Account
Bank Account |
Nominal Account
Real Account |
| Earned Rs.10,000 as interest on Bank account | Interest received
Bank Account |
Nominal Account
Real Account |
The above mentioned are the Golden Rules Of Accounting. Students will learn the continued version of class 11 in the Class 12 Accountancy.