Rules for reporting transactions in Double Entry system are predefined and these rules are called Golden Rules of Accounting.
These rules are used to report all the three main types of accounts viz: Personal, Real and Nominal accounts according to the nature of transactions.
Golden Rules of Accounting
Personal Accounts
For Personal Accounts, the receiver is always recorded as Debit side and the giver is recorded as Credit.
Real Accounts
For Real Accounts, what comes into business is debited and what goes out is credited.
Nominal Accounts
In Nominal accounts, as it reports expenses, incomes, losses and gains, any type of expenses/loss are debited and incomes/gain is credited.
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