FUNDAMENTAL ACCOUNTING RULES

The traditional accounts are classified as follows, The golden rules applicable to these traditional accounts are FUNDAMENTAL ACCOUNTING RULES

PERSONAL a/c: Personal a/c shows the balances due to or due from persons or organisation.
GOLDRN RULE OR FUNDAMENTAL RULE:
• DEBIT THE RECIEVER.
• CREDIT THE GIVER.
Eg. 1)cash received from Mr.X:here giver is Mr.X so X a/c must be credited.
2)cash paid to Mr.X:here cash reciever is Mr.X so X a/c must be debited.

 REAL a/c: The real a/c shows the balances of the items in balancesheet like fised assets,capital,.etc
GOLDRN RULE OR FUNDAMENTAL RULE:
• DEBIT WHAT COMES IN .
• CREDIT WHAT GO OUT.
Eg: Purchase of fixedasset for cash:here fixed asset a/c has to be debited and cash must be credited.
Fixed asset a/c dr
TO cash a/c
 NOMINAL a/c: These accounts provide relavent information for preparing financial statements.the validity of these accounts confined to one accounting period only.
GOLDRN RULE OR FUNDAMENTAL RULE:
• DEBIT EXPENSES and LOSSES.
• CREDIT INCOMES and GAINS.
Eg: Payment of salaries is an expense :so salarie must be debited.
Reciept of rent income:here rent must be credited.

 VALUATION a/c: These are some specialtype of a/c’s like Prov.for depreciation,prov.for debtors..etc
GOLDRN RULE OR FUNDAMENTAL RULES:
• If fixedassets are shown at cost in the balancr sheet ,then the Prov.for depreciation must be shown in liability side.

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