FINANCIAL ACCOUNTING part 03

 

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FINANCIAL ACCOUNTING 

part 03

Golden rules of accounting

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There are three types of accounts:

• Real Account

• Personal Account

• Nominal Account 

• Real Account

A Real Account is a general ledger account relating to Assets and Liabilities other than people accounts. 

An example: Bank Account. 

• Personal Account

A Personal Account is a General ledger account connected to all persons like individuals, firms and associations. 

An example: Creditor Account. 

• Nominal account

A Nominal account is a General ledger account pertaining to all income, expenses, losses and gains. 

An example: Interest Account.

1.For Assets: Debit for Increase and Credit for Decrease

2.For Liability: Debit Decrease and Credit Increase

3.For expenses: Debit for Increase and Credit for Decrease

4.For Income : Debit Decrease and Credit Increase

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