What are the three golden rules

Question

Accepted Answer

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

The first golden rule is the rule of personal accounts, which states that 'Debit the receiver, credit the giver'. For example, when cash is received from a customer, the cash account is debited and the customer's account is credited.
The second golden rule is the rule of real accounts, which states that 'Debit what comes in, credit what goes out'. For example, when goods are purchased, the inventory account is debited and the cash account is credited.
The third golden rule is the rule of nominal accounts, which states that 'Debit all expenses and losses, credit all incomes and gains'. For example, when an expense like rent is paid, the rent expense account is debited and the cash account is credited.

Accepted Answer

Debit what comes in, credit what goes out

Debit all expenses and losses and credit all incomes and gains.

Debit the receiver, credit the giver

Top IBM Finance & Admin Business Analyst interview questions & answers