Avail the advantage of their quick understanding with easy examples
A budding chartered accountant should be an expert in the golden rules of accounting. Any and every account follows these golden rules.
Read our blog to become
familiar with these standards of accounting.
So you are thinking of being an accountant, a number crusher, and a bookkeeper. If you wish to become an accountancy wizard, you should know that an accountant handles all the financial records of a company or organisation.
A specific set of rules has been established to bring uniformity in the maintenance of accounts and the necessary calculations regarding finances. These core fundamentals
are called the Golden Rules of Accounting.
, And they form the foundation of all the transactions. To comprehend the golden rules of accounting, you require a firm grasp of Debit and Credit and their role in different accounts.
The different types of accounts are:
deals with persons and artificial judicial accounts like companies, government organisations, etc. The personal accounting rules can be comprehended better if you know the types of personal accounts.
Natural Personal Account:
are for real human beings, including debtors,
Artificial Personal Account:
includes all businesses, as they are a separate legal entity in the law. They are different from humans. Examples are Social Club Account, Disaster Relief Charitable Trust Account, etc.
Representative Personal Account:
representing a person or a group like Capital Account, Prepaid Expenses account, Outstanding Liability Account and so on.
in the golden rules of accounting, these are the accounts not related to persons or individuals.
includes all the accounts related to a company’s assets, including tangible accounts (related to things that are physical)like Furniture Account, Machinery Account; and intangible accounts ( like Intellectual Property Account, Patent Account.
covers the accounts related to revenue, expenses, and losses: Travel Account, Rent Paid Account, Wages Account.
The golden rules of accounts have to be understood in the context of these accounts. We have prepared an easy way for you to remember the rules and how they vary for each account.