Golden Rule of Account

                         Golden Rule of Account

Accounting:- Accounting is the systematic and comprehensive recording of financial transactions pertaining to a business, and it also refers to the process of summarizing, analysing and reporting these transactions to oversight agencies and tax collection entities. Accounting is one of the key functions for almost any business; it may be handled by a bookkeeper and accountant at small firms or by sizable finance departments with dozens of employee’s at large companies.

               

Personal Account:-A personal account is an account for use by an individual for that person's own needs. It is a relative term to differentiate them from those accounts for corporate or business use. The term "personal account" may be used generically for financial accounts at banks and for service accounts such as accounts with the phone company, or even for email accounts

 Example- It can be a person (individual), Company or Firm.

Real accounts:- reflect the current and ongoing financial status of a company because they carry their balance forward into the next accounting period. These accounts are typically reported on the balance sheet at the end of the year as assets, liabilities, or equity.

Example:- Cash, Building, Furniture, Machinery etc.

Nominal Account:- Nominal accounts in accounting are the temporary account, such as the income statement accounts. In other words it can be define as, nominal accounts are the accounts that report revenue, expenses, gains, and losses. The owner's drawing account is also a temporary account, even though it is not an income statement account.


Nominal are closed at the end of each accounting year. This means that their account balances are transferred to a permanent account. This closing process allows the nominal accounts to start the next accounting year with zero balances.

Simply it can be define as.

Personal account	Real account	Nominal account
1.Person 2. Firm 3. Company Etc	1. Cash 2. Building 3. Furniture 4. Machinery etc	1. Expenses & losses 2. Income and gain

 

                     Golden Rule Of Account

Personal Account	Real Account	Nominal Account
Debit the receiver               Credit the Giver	Debit what comes in        Credit what goes out	Debit All expense        Credit all income & gain