I keep getting confused about when to debit and when to credit. My teacher mentioned personal, real and nominal accounts but I can't remember which rule goes where.
There are three types of accounts, each with its own golden rule. For Personal accounts (persons, firms, banks): debit the receiver, credit the giver. So if you pay cash to Ram, Ram is the receiver, so debit Ram. For Real accounts (assets like cash, machinery, furniture): debit what comes in, credit what goes out. If cash comes in, debit cash. For Nominal accounts (expenses, losses, incomes, gains like salary, rent, commission): debit all expenses and losses, credit all incomes and gains. So salary paid is an expense, hence debit salary. A quick trick: first identify the two accounts involved in a transaction, classify each one, then apply its rule. Practising 10-15 transactions makes this automatic.
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