The “golden rules of accounting” are basic principles that govern the process of recording financial transactions and keeping accurate accounts. These guidelines are designed to maintain the consistency and accuracy of financial information. There are three golden rules of accounting:

• Debit What Comes In, Credit What Goes Out (or Debit the Receiver, Credit the Giver): Asset accounts (such as cash, inventory, and equipment) are subject to this rule. An asset is credited when it declines and debited when it increases. For instance, money is credited (decreased) when it is paid and debited (raised) when it is received.
• Debit Expenses and Losses, Credit Incomes and Gains: Accounts pertaining to earnings and expenses are covered under this rule. An expense or loss is debited when it happens, while a gain or revenue is credited. For example, a company’s revenue account gets credited when it makes money, and its expense account gets debited when it incurs expenses.
• Debit the Receiver, Credit the Giver (or Debit What Comes In, Credit What Goes Out): This rule is commonly applied to personal accounts, such as individuals or entities. When dealing with personal accounts, debit the receiver of the benefit and credit the giver. For example, if a company receives a loan, the loan account is debited (receiver), and if it pays back the loan, the loan account is credited (giver).

It’s important to note that these rules are basic guidelines and may not cover all scenarios, especially in complex transactions. Additionally, they are part of the traditional double-entry accounting system, where every transaction has equal debits and credits to maintain the accounting equation (Assets = Liabilities + Equity). Modern accounting systems often use software that automates the double-entry process, but the underlying principles of the golden rules remain relevant.