Sunday, May 29, 2022
  • About Us
  • Contact Us
  • Terms & Conditions
  • Privacy Policy

CACube

"Finance- from confusion to clarity"

  • Post Question
  • MCQ Quiz
  • Read here
  • Income Tax Rates & Due dates
    • FY 2022-23
    • FY 2021-22
    • FY 2020-21
    • FY 2019-20
    • FY 2018-19
    • FY 2017-18
    • FY 2016-17
  • Presentations
  • Imp Links
    • GST Rates
    • Income Tax updates (Notifications)
    • GST Returns & Due dates
    • GST Updates (CBIC)
    • Tax Calendar
    • RBI Policy Rates
    • Downloads

Golden Rule of Accouting

Question Bank › Category: Finance & Economy › Golden Rule of Accouting
0 Vote Up Vote Down
Jyoti asked 2 years ago

What is financial accounting and what is the golden rule of accounting. 

Share this:

  • Email
  • WhatsApp
  • Print
Question Tags: Account
3 Answers
0 Vote Up Vote Down
A. Kumar answered 2 years ago

Financial Accounting
Financial Accounting is –

  • Analyzing
  • Recording 
  • Quantifying
  • Accumulating 
  • Summarizing
  • Classifying
  • Reporting and
  • Interpreting

all financial information related to the business. Every business needs to maintain proper accounting records so that all the stakeholders of business like owner, lender, customer, vendor, income tax department, sales tax department etc. should have a clear view of the all the transactions of the business. It is the duty of accountant to record property all business transactions. Only financial transactions are record and events having no financial dealing are not recorded like if the manager of factory got ill then this is an important event as production may get effected. But this event is not directly having any financial value/transaction hence it is not recorded.
In Financial accounting, All financial transactions are recorded with double entry accounting system. In double entry accounting system each financial transaction is having both debit & credit effect to different accounts. Hence total of all debits will always equal to the total of all credits. This feature of double entry accounting system makes it easy to track error of accounting. 
Golden Rule sof Accounting
As per double entry accounting system, accounts are of three types:-

  1. Personal Accounts : Like All name a/c, customer a/c, Vendor a/c, prepaid or outstanding a/c etc.
  2. Real Accounts: Like all assets a/c, cash a/c, bank a/c etc.
  3. Nominal Accounts: Like all expenses and income a/c, rent a/c, interest a/c etc.

All three types of accounts have different golden rules of accounting. It means accounts related to any of above category is treated with a different rule. Hence we have Three golden rule of accounting as given below:-

  1. Personal Accounts :  Debit the Receiver, Credit the Giver.
  2. Real Accounts: Debit what comes in and Credit what goes out.
  3. Nominal Accounts: Debit all expenses and losses and Credit all income & gains. 

In double entry accounting system, all journal entries are recorded following the above three golden rules of accounting. Hence these rules are basis of financial accounting. 

Share this:

  • Email
  • WhatsApp
  • Print
0 Vote Up Vote Down
Jyoti answered 2 years ago

Thanks for explaining concept of financial accounting. Please clarity whether rules & standards (accounting standards) of financial accounting are also applicable to cost accounting of not.

Share this:

  • Email
  • WhatsApp
  • Print
0 Vote Up Vote Down
A. Kumar answered 2 years ago

Knowledge of cost accounting is most important in making pricing decisions , make or buy decision and product mix decisions. 
There are 24 Cost Accounting Standards issued by Institute of Cost Accountants of India for cost accounting. In addition to it there are GACAP (Generally accepted cost accounting principles) to bring uniformity in cost accounting records of various organisations. 
Click here to see list of Cost Accounting Standards (CAS) & GACAP.
Click here for pdf file of CAS (Cost Accounting Standards)

Share this:

  • Email
  • WhatsApp
  • Print
Your Answer

8 + 12 =

Recent Articles

  • List of 136 incomes on which tax is not required to be paid in India. (Complete List of exempt income along with sections and conditions)

    February 11, 2022February 11, 2022 Jupiter
  • Advance tax: Are you required to pay Advance tax? What are consequences for not paying Advance tax?

    February 7, 2022February 7, 2022 Jupiter
  • Income tax due dates for FY 2022-23(AY 2023-24)

    February 5, 2022February 8, 2022 Jupiter
  • Rates of TCS for FY 2022-23 (1st April 2022 to 31st march 2023)

    February 5, 2022February 8, 2022 Jupiter
  • Rates of TDS (tax deducted at source) for FY 2022-23 (1st April 2022 to 31st March-2023)

    February 4, 2022February 8, 2022 Jupiter
  • Rates of Income Tax for FY 2021-22 (Assessment year 2022-23)

    February 4, 2022February 10, 2022 Jupiter
  • Important Highlights of Tax Proposals in Union Budget 2022 (FY 2022-23)

    January 30, 2022February 8, 2022 Jupiter

Solved Questions

  • HSN or SAC code in Works contract under GST asked by Mohan Amdekar
  • Trading in Future & options, and intra day trading, how to treat in Income tax Return. asked by Ashish Gupta
  • Is Audit u/s 44AB required if turnover is less than one crore and profit is less than 6%/8% for FY 2017-18. asked by Ashish Gupta
  • What is the difference between crossed cheque and bearer cheque? asked by Manish
  • Provisional and projected financial statements asked by Kollipara sundaraiah

Click the tag to go to related Blogs….

Aadhaar (2) Banking (17) Bonus (1) Break even Rate of Return (1) Budget (5) Career (4) corona (2) Digital Signature (1) Economy (21) GK (4) GST (35) Hypothecation (1) ICAI (2) Income Tax (48) IND-AS (1) Inflation (1) Investment (20) Law (5) Mortgage (1) Motivation (1) Pledge (1) ppt (6) Provident Fund (2) Quiz (4) Service Tax (4) Works Contract (3)

Tax calendar

May 2022
SMTWTFS
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30 31     
« Apr   Jun »
CACube | Theme: Education Master by ThemeEgg.
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • About Us
error: Content is protected !!
loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.

Insert/edit link

Enter the destination URL

Or link to existing content

    No search term specified. Showing recent items. Search or use up and down arrow keys to select an item.