What are golden rules of accounting

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Accepted Answer

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

The first golden rule is the Debit and 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 assets have a debit balance, while liabilities and equity have a credit balance.
The third golden rule is the Nominal Account rule, which states that expenses and losses have a debit balance, while income and gains have a credit balance.
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) while the cash account will be credited (decreased).

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