Golden rules of accounting

Question

Accepted Answer

The golden rules of accounting are basic principles that guide the recording of financial transactions.

The first golden rule is the Debit-credit rule, which states that for every debit entry, there must be a corresponding credit entry.
The second golden rule is the Real account rule, which states that all assets and liabilities have a debit and credit side respectively.
The third golden rule is the Nominal account rule, which states that all revenue and expense accounts have a debit and credit side respectively.
These rules ensure that the accounting equation (Assets = Liabilities + Equity) remains balanced.
For example, if a company purchases inventory for cash, the inventory account will be debited (increased) and the cash account will be credited (decreased).

Top HR questions asked in Hetero Drugs Internal Audit Officer