What are the gold rules of accounting?

There are three gold rules of accounting. Everyone applies to a different type of account: nominal, personal and real. The rules outline how debit and credits should be addressed in the main book for each type of transaction. As a group, one of the three generally accepted accounting principles (GAAP) are a code of behavior for the American institute of certified public accountants. This group includes not only individuals but also companies and other organizations. The rule for this group is that the donor should be credited and the receiver should be written off.

Real accounts are covered with second gold rules of accounting. This type of account concerns assets. These can be tangible assets such as equipment or furniture or intangible assets such as copyright and patents. The rule for this kind of account is to attribute what the account is from the account, what comes. These accounts include temporary income and expenses such as sales and purchases. The rule for this type of account is credit gain or income and loss of debit orexpenditure.

Within the third of the generally accepted accounting principles, the three gold rules of accounting help to clarify the details of how to manage main books for transactions. The rules emphasize the importance of not only recording all transactions, but also their correct categorization. By entering information in the right place and the way, the accounts will be accurate and easier in the future. Records will also be more useful for research and long -term evaluation tools.

The other two generally accepted accounting principles are that it is necessary to record each transaction and second, this double input is the preferred method of recording transactions. The number one rule emphasizes that it is not acceptable to miss the entry into the transaction, whether intentionally or unintentionally. The second rule states the importance of entering information for both parties of the transaction: what is lost and what is obtained.

In total, these three general accounting rulesAnd GAAP provides clarity and instructions on how to handle the two most important concepts in accounting: debits and credits. The loan is any kind of asset, while the debit is anything that is removed from the asset column. For example, when an individual buys a pencil, this purchase increases the value of owned items in the Asset column, while removing the cash assets from the account. The three gold rules of accounting are essentially another articulation of this umbrella concept.