3 Golden Rules for Accounting

Many small and new businesses struggle with their accounts; numbers do not match; receipts go missing; confusion grows. The owner feels stressed because one small mistake can spread through the whole record.

This becomes worse when transactions pile up. A small error today can turn into a big issue during audits or tax checks. Problems with cash flow, wrong reports, or penalties can follow. It starts to feel like accounting is a heavy load that never ends.

JCA (Jitendra Chartered Accountants) teaches you a strategy that works for most businesses; the three golden rules of accounting help you record every entry the right way. These rules make the process clear, steady, and easy to follow. You can also seek our professional accounting services in the UAE to keep clean records, track your money with confidence, and avoid grave mistakes.

Understanding the Three Types of Accounts

Before applying the 3 golden rules, you need to know the three main account types used in basic accounting:

• Personal Accounts – linked to people, companies, or groups.
• Real Accounts – linked to assets that the business owns, like cash, equipment, or furniture.
• Nominal Accounts – linked to income, gains, expenses, and losses that occur during the year.

Every transaction in accounting affects two sides: one side is debited, and the other is credited. The golden rules help you decide which side to use.

1. Debit the Receiver, Credit the Giver (Personal Accounts)

This rule applies when a person or organisation gives or receives something.

• When your business receives something, the receiver is debited.
• When your business gives something, the giver is credited.

This rule helps track dealings with customers, suppliers, partners, or any other party your business interacts with.

Simple Example

You buy goods worth 1,000 from a supplier.

• Your Purchase account gets debited because you received the goods.
• The supplier’s account gets credited because they gave the goods.

This keeps a clean record of who provided items and who received them. It also helps track future payments, dues, and settlements with each party.

Need more detail? Seek assistance from accounting firms in Dubai, like JCA. Our team at JCA ensures your entries follow correct accounting rules from day one

2. Debit What Comes In, Credit What Goes Out (Real Accounts)

Real accounts deal with assets that stay with the business for a long time. These accounts do not close at year-end. Assets like cash, tools, furniture, land, machines, and vehicles fall into this group.

This rule keeps asset movement clear:

• When an asset enters the business, you debit the account.
• When an asset leaves the business, you credit the account.

Simple Example

You pay 2,500 in cash to buy furniture.

• The Furniture account is debited because the furniture came into the business.
• The Cash account is credited because the money went out.

This helps you track what the company owns and how those assets change over time. It also prevents confusion about missing items or unexplained changes in asset value.

3. Debit Expenses and Losses, Credit Income and Gains (Nominal Accounts)

Nominal accounts show what the business earns and what it spends. These accounts start fresh each financial year.

This rule is simple:

• When the business faces an expense or loss, that account is debited.
• When the business earns income or gains, that account is credited.

Simple Example

You spend 3,000 on purchases.

• The Expense account is debited because you spent money.
• The Cash account is credited because money left the business.

This rule helps measure profit, loss, and performance. It also ensures all earning and spending activities are captured clearly before reports are made.

Still confused? Get help in person from expert accounting firms in the UAE. JCA supports SMEs with complete bookkeeping, audits, and compliance support

Why These Golden Rules Matter

The golden rules are not just old principles.

1. Clean and Organised Records

Every entry has a clear direction. This reduces confusion and keeps your books tidy.

2. True Business Value

Investors and lenders trust records that are neat and accurate. It helps them see the real state of your business.

7. Protection From Mistakes

Clear rules reduce the chance of missed entries, wrong postings, or mixed-up accounts.

A Simple Way to Stay Consistent

The golden rules may look technical at first, but they are easy to use once you understand the pattern. Every account fits into one of the three types. Every transaction follows the same debit-credit logic. With practice, the process becomes second nature.

Many businesses rely on software now, but the software still follows these same rules in the background. Understanding them gives you better control over your accounts and helps you spot mistakes early.

• Moreover, you can also seek accounting services in Dubai if your accounting team is insufficient or you need help. With 25 years of experience in the UAE, JCA ensures accuracy and peace of mind002E

How can Jitendra Chartered Accountants (JCA) help?

JCA is a professional accounting firm in the UAE that aims to help businesses thrive without struggling with accounting problems. Our qualified accountants make sure that your records are accurate and your books are transparent, minimising the chances of errors. If you are having a problem with your accounting, feel free to contact our experts now!