Debit and Credit Rules, Cash and Credit Transaction Finding Rules.

Golden Rules of Debit and Credit

Personal Account:

             Debit : The Receiver

             Credit : The Giver

Real Account:

               Debit : What comes in

             Credit : What goes out

Nominal Account:

               Debit : All Expenses and Losses

             Credit : All Income and Gains

Cash and Credit Transactions Finding Rules:

Sometimes transactions are worded in such a way that it becomes difficult to decide whether they are cash or credit transactions. The following rules will make the position clear:1. A transaction is regard as a cash transaction if:2. A transaction is regarded as a credit transaction if:(a) The word "cash" is mentioned in the transaction. For example Bought goods for cash Rs. 5000 from A.(b) The name of the seller or buyer is not mentioned in the transaction. For example, Bought goods Rs. 5000.(a). The words "on credit" or "on account" are mentioned in the transaction. For example, Bought goods worth Rs. 5000 on credit.(b). The name of the seller or buyer is mentioned in the transaction and the word "Cash" is not mentioned. For example, Bought goods from A worth Rs. 5000.Every business transaction brings a double change in the financial position of the business. It brings a change in the assets, liabilities, owner's equity, expenses or revenues of a business.