Three Golden rule of Accountancy

1. Personal Account: This rule is applied to all person and firm 's name for e.g ABC Ltd, Debtors,Creditors

Rule: Dr. the receiver, cr. the giver

For e.g

Mohan Pay 2000 Rs to x Ltd company

Entry:

X Ltd A/C Dr 2000

To Mohan 2000

2. Real Account : This rule is applied to all Assets of the company like Machinery, cash in hand , Furniture, Land and Building ,goodwill , Patent,copyright

Rule : Dr. What comes in ,Cr what goes out

For e.g

purchase machinery pf Rs 100000/

Entry:

Machinery A/c Dr 100000

To Cash 100000

3 Nominal Account : This rule is applied to all expenses and income of the business.for eg salary , rent recieved, discount paid , advertisement, stationery, interest received .

Rule : Dr all expenses and losses and Cr all income and gains

for e.g

Salary paid Rs 50000

Entry:

Salary A/c Dr 50000

To Cash 50000