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BASICS OF ACCOUNTING
#1
DOUBLE ENTRY SYSTEM


3 TYPES OF ACCOUNTS:
REAL: ASSETS OF BUSINESS, TANGIBLE AND IDENTIFIABLE.
PERSONAL: THEY ARE HEADED WITH THE NAME OF PERSON/BUSINESS/FIRM. DEBTORS OR CREDITORS.
NOMINAL: THEY RECORD TRANSACTIONS OF INTANGIBLES SUCH AS RENT EXPENSES.

BASIC RULES OF ACCOUNTING
RULES:
REAL : DEBIT THE ACCOUNT WHEN WE PURCHASE AN ASSET & CREDIT WHEN WE SELL OR DEPRECIATE.
PERSONAL : DEBIT THE RECEIVER OF GOODS & CREDIT THE GIVER OF GOODS.
NOMINAL : DEBIT LOSSES & EXPENSES, CREDIT INCOMES & GAINS. IN A LEDGER, ASSETS OR LOSSES HAVE DEBIT BALANCE WHILE LIABILITIES OR GAINS HAVE CREDIT BALANCE.
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