Rules of Account

Accounting rules

All account heads are classifies in three account head, These are Real Account, Personal Account, Nominal Account.  It is helpful for maintain of systematic account. The Institute of charted accountant is a bigger institute of India provided three basic rules for accounting.

Following are description of each rule with exam

1)    Real Account

Rule                                 Debit what comes in

                                        Credit what goes out

For Example: Mr. Ram is purchased a motor cycle for the worth of Rs. 20000/-Above example is an applicable real account rule. Following entry is wrote of Mr. Ram in his books of account. 

            Furniture account                     Dr

                                        To Cash account                         Cr

2)    Personal Account

Rule                                 Debit the receiver

                                         Credit the giver

For Example: Mr. Ram paid cash to Mr. Vijay for Rs. 5000/-

Above example is an applicable for Personal account. Following entry is wrote of Mr. Ram in his books of accounts. 

                                        Mr. Vijay Account                           Dr

                                        To Cash account                              Cr

3)    Nominal Account

Rule                              Debit all expenses & Losses 

                                     Credit all income & gains

For Example: Mr. Ram paid wages for Rs. 15000/-for business purpose

Above example is an applicable for Nominal account. Following entry is wrote of Mr. Ram in his books of account.

                                       Wages Account                                     Dr

                                        To Cash account                                   Cr