Golden rules of accounting

Question

Accepted Answer

Golden rules of accounting are basic principles that guide the accounting process.

The first golden rule is the rule of debit and credit.
The second golden rule is the rule of assets and liabilities.
The third golden rule is the rule of income and expenses.
These rules help ensure accuracy and consistency in financial reporting.
For example, the rule of debit and credit states that for every debit entry, there must be a corresponding credit entry.
Similarly, the rule of assets and liabilities states that assets must always equal liabilities plus equity.
And the rule of income and expenses states that revenue should be recognized when earned and expenses should be recognized when incurred.

Accepted Answer

1) Rule One. "Debit what comes in - credit what goes out." This legislation applies to existing accounts. ...
2) Rule Two. "Credit the giver and Debit the Receiver." It is a rule for personal accounts. ...
3) Rule Three. "Credit all income and debit all expenses."

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