Anybody who is interested in accountancy should first know the 4 basic but very important rules of accounting, which are the foundation on which the whole accounting system is based. Given below are the 4 rules of accounting –
1. Debit the receiver and Credit to giver.
2. Debit what comes in and Credit what goes out.
3. Debit all expenses and Credit all revenues.
4. Debit all Losses and Credit all Gains.
The First rule is applied for Personal accounts; it refers to the accounts which relate to an individual, firm, company.
The second rule is applied for Real accounts which include the accounts of all things whose value can be measured in terms of money.
As far as third and fourth rule are concerned they are applied to Nominal accounts, which include account of all expenses and incomes.