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  1. Double entry book-keeping system is based on Debit and Credit. Having knowledge of these two terms is basic step for accounting. In a transaction, what will be debited and credited is must to know. For making things simpler , there are three basic rules of accounting widely known as “Golden Rules of Accounting” but based on types of account, listed hereunder –

    Ø Personal Account- In business, there are transactions which includes person, that may be natural or artificial. Accounts dealing with persons are known as personal account. Rule for personal account is:

     

    “ Debit the receiver, credit the giver”.

     

    Ø Real account- Accounts which are related to assets or liabilities of business are known as real accounts. Rule for real account is:

     

    “ Debit what comes in, credit what goes out”.

     

    Ø Nominal account– This account deals with income, expenses, losses and gains of business. Rule for nominal account is:

     

    “Debit all expenses and losses, credit all incomes and gains”.

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