Golden Rules of Accounting(Debit and Credit Rule) in Financial Accounting

on

Golden Rules of Accounting is a basic Rule which describes, how to find Debit Ledgers and Credit Ledgers in a Business transaction.

This Rule is also popularly known as Debit and Credit Rule/Principles of Accounting/Basic Rules of Accounting.

Commonly,two Accounting Approaches are used in Financial Accounting for Debiting and Crediting of Ledger Accounts.

  1. Traditional/British Approach

  2. Accounting Equation/Modern/American Approach

Debit and Credit - The Base Pillar of Financial Accounting

 1)    Traditional Approach of Debit and Credit Rules

Principles/Golden Rules of Accounting/Debit and Credit Rule in Double Entry System of Book-keeping in Accounting

Three Golden Rules/Basic Rules of Accounting for Debiting and Crediting of Ledger Accounts are

  • Receiver is Debit and Giver is Credit 

  • What comes in is Debit and What goes out is Credit 

  • All Expenses and Losses are Debit and All Incomes and Gains are Credit

Three Golden Rules of Accounting/Debit and Credit Rule/Principles of Accounting/Basic Rules of Accounting

 2)    Accounting Equation Approach of Debit and Credit Rules

Debit and Credit Rule - Accounting Equation Approach.

Accounting Equation is 


Assets - Liabilities = Capital/Equity

                            Or

Assets = Liabilities + Capital/Equity

                            Or

Comments

Post a Comment