Golden Rule of Accounting

Introduction of the Golden Rule of Accounting

The "Golden Rule of Accounting" is a fundamental principle in accounting that guides how transactions are recorded and classified in financial statements. It is also known as the "Rule of Three" and is based on the principles of double-entry bookkeeping.

The Golden Rule states that: "Debits must equal credits."

In other words, for every transaction recorded in the accounting system, the total amount debited must always be equal to the total amount credited. This ensures that the accounting equation remains balanced, where:

Assets = Liabilities + Equity

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