The rule regarding PERSONAL ACCOUNT is :a)Debit what comes in, credit what goes out.b)Debit all expenses and losses, credit all incomes and gainsc)Debit the receiver, credit the giverd)NoneCorrect answer is option 'C'. Can you explain this answer?

Question

Answer

Personal Account:

The accounts relating to induviduals, firms, associations or companies are known as personal account.

Three golden rules of Personal Accounting:

Debit is the receiver.

Credit is the giver.

An example of this kind of transaction is Vendor/Customer relations.

eg - When business receives any sum it is debited and vice versa

Answer

C: Debit the receiver, credit the giver

In double-entry accounting, the general rule for personal accounts is to debit the receiver and credit the giver. Personal accounts are accounts that relate to individuals or organizations that are not part of the business. Examples of personal accounts include customers, suppliers, and owner's equity accounts.

The rule to debit the receiver and credit the giver applies to transactions involving the transfer of assets or the settlement of liabilities. For example, if a business receives cash from a customer, it would debit the cash account to increase its value and credit the customer's account to reduce the amount owed. If the business pays a supplier for goods or services, it would debit the supplier's account to reduce the amount owed and credit the cash account to reduce its value.

Option A is incorrect because the rule to debit what comes in and credit what goes out applies to real accounts, which are accounts that relate to assets, liabilities, and capital. Option B is incorrect because the rule to debit all expenses and losses and credit all incomes and gains applies to nominal accounts, which are accounts that relate to revenues, expenses, and gains or losses. Option D is incorrect because there is a specific rule for personal accounts in double-entry accounting.

It is important to understand the different types of accounts and the rules for recording transactions in order to accurately prepare financial statements and effectively manage a business.

Answer

C: Debit the receiver, credit the giver

In double-entry accounting, the general rule for personal accounts is to debit the receiver and credit the giver. Personal accounts are accounts that relate to individuals or organizations that are not part of the business. Examples of personal accounts include customers, suppliers, and owner's equity accounts.

The rule to debit the receiver and credit the giver applies to transactions involving the transfer of assets or the settlement of liabilities. For example, if a business receives cash from a customer, it would debit the cash account to increase its value and credit the customer's account to reduce the amount owed. If the business pays a supplier for goods or services, it would debit the supplier's account to reduce the amount owed and credit the cash account to reduce its value.

Option A is incorrect because the rule to debit what comes in and credit what goes out applies to real accounts, which are accounts that relate to assets, liabilities, and capital. Option B is incorrect because the rule to debit all expenses and losses and credit all incomes and gains applies to nominal accounts, which are accounts that relate to revenues, expenses, and gains or losses. Option D is incorrect because there is a specific rule for personal accounts in double-entry accounting.

It is important to understand the different types of accounts and the rules for recording transactions in order to accurately prepare financial statements and effectively manage a business.

Answer

The rule regarding PERSONAL ACCOUNT is:

c) Debit the receiver, credit the giver

Explanation:

Personal accounts are accounts that represent individuals or entities with whom a business has a direct relationship. These accounts include the accounts of individuals, firms, companies, and organizations. The rule for personal accounts is to debit the receiver and credit the giver.

Debit the Receiver:
When an amount is received from a person or entity, it is recorded on the debit side of the personal account. This means that the receiver's account is debited to increase its balance. The receiver could be an individual or an organization from whom the business has received something, such as cash, goods, or services.

Credit the Giver:
When an amount is given or paid to a person or entity, it is recorded on the credit side of the personal account. This means that the giver's account is credited to increase its balance. The giver could be an individual or an organization to whom the business has given something, such as cash, goods, or services.

This rule follows the principle of double-entry bookkeeping, which states that every transaction has an equal and opposite effect on at least two accounts. By debiting the receiver and crediting the giver, the accounting equation (Assets = Liabilities + Equity) remains in balance.

Example:
Let's consider an example of a business receiving cash from a customer. In this case, the customer's account would be debited (increased) as the business is receiving cash from them. Simultaneously, the cash account would be credited (increased) as the business is receiving cash. This ensures that both sides of the accounting equation are balanced.

In summary, the rule for personal accounts is to debit the receiver and credit the giver. This helps maintain the accuracy and integrity of the accounting records by ensuring that all transactions are properly recorded and accounted for.

Similar Commerce Doubts

What is the nature of realisation account , if it is a nominal account then why are assets debited and liabilities credited because the rule of nominal account is debit all expenses and losses , credit all income and gains ?

Which of the following accounts can be classified as a real account?

Income and expenses related to the prize fund is show in : A.Income and expenditure account B.Assets side of the balance sheet C.Liabilities side of the balance sheet D.Cash account?

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