There are 3 RULES OF ACCOUNTING on which entire accounts depends upon. Understanding the rules of Accounting is making your foundation in Accounts strong, whereby any transaction can be solved immediately.
1. Personal Accounts
Accounts recording transaction with persons or firms are known as Personal accounts. Accounts recording transaction which do not effect particular person, but effects business in general are known as Impersonal A/c’s Impersonal A/c’s may be either Real Accounts or Nominal Accounts.
- Cr-The Giver
2. Real Accounts :
Real Accounts are those accounts of property or possession.
Goods Accounts, Cash Account, Bank Account, Office Furniture Accounts.
- Dr-What Comes in
- Cr-What Goes out
3. Nominal or Fictitious Accounts
Records Expenses, gains & losses.
Rent A/c Salaries A/c Advertising A/c
Interest Recd A/c
Commission Recd A/c
- Dr-All Expenses & Losses
- Cr-All Income & Gains