3 Golden Rules of Accounting
(Class 12 Accountancy – MP Board)
The Golden Rules of Accounting help students to record journal entries correctly.
These rules are the base of accounting and are very important for MP Board examinations.
Before applying the rules, first identify the type of account.
🔷 Types of Accounts
There are three types of accounts:
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Personal Account
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Real Account
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Nominal Account
🔹 1. Personal Account
📌 Meaning
Personal Account relates to persons or institutions.
These include:
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Natural Persons – Ram, Shyam, Mohan
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Artificial Persons – Bank, Company, Firm
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Representative Persons – Outstanding Salary, Prepaid Rent
📜 Rule
👉 Debit the Receiver
👉 Credit the Giver
🧠 Explanation
-
The person who receives benefit is debited
-
The person who gives benefit is credited
✍️ Examples
Example 1:
Paid salary to Ramesh ₹8,000
✔ Ramesh A/c → Debit
✔ Cash A/c → Credit
Example 2:
Received cash from Mohan ₹5,000
✔ Cash A/c → Debit
✔ Mohan A/c → Credit
🔹 2. Real Account
📌 Meaning
Real Accounts relate to assets or properties of the business.
Examples:
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Cash
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Furniture
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Machinery
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Building
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Stock
📜 Rule
👉 Debit what comes in
👉 Credit what goes out
🧠 Explanation
-
Asset coming into business → Debit
-
Asset going out of business → Credit
✍️ Examples
Example 1:
Purchased furniture for cash ₹25,000
✔ Furniture A/c → Debit
✔ Cash A/c → Credit
Example 2:
Sold old machinery for cash
✔ Cash A/c → Debit
✔ Machinery A/c → Credit
🔹 3. Nominal Account
📌 Meaning
Nominal Accounts relate to expenses, losses, incomes, and gains.
Examples:
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Expenses – Rent, Salary, Wages
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Losses – Loss by fire
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Incomes – Commission received
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Gains – Profit on sale of asset
📜 Rule
👉 Debit all Expenses & Losses
👉 Credit all Incomes & Gains
🧠 Explanation
-
Expenses & losses decrease capital → Debit
-
Incomes & gains increase capital → Credit
✍️ Examples
Example 1:
Paid rent ₹6,000
✔ Rent A/c → Debit
✔ Cash A/c → Credit
Example 2:
Received commission ₹4,000
✔ Cash A/c → Debit
✔ Commission A/c → Credit
📝 Steps to Pass Journal Entry (MP Board Pattern)
📌 Step 1: Identify the two accounts involved
📌 Step 2: Classify the accounts
📌 Step 3: Apply the golden rule
📌 Step 4: Write proper journal entry
⭐ Easy Memory Trick (Exam Friendly)
👤 Personal Account → Receiver / Giver
🏠 Real Account → Comes in / Goes out
💰 Nominal Account → Expense / Income
🎯 Exam Importance (MP Board)
✔ Frequently asked 2, 3 & 5 mark questions
✔ Useful for Partnership Accounts & Company Accounts
✔ Helps in scoring full marks in journal entries
📚 Class 12 Accountancy – MP Board
📌 Important for Board Exams
📝 Best for revision before exam
