The total business transactions are divided in to three They are Transactions related to persons, Transactions related to Things, Transactions related to incomes & expenditures. In accountancy we have three types of accounts they are - personal, real, nominal Personal accounts refers to all the transactions related to natural persons, artificial persons and representative persons ex:- rama, ravi, Indian bank, outstanding rent. ,. First category of transactions belongs to personal accounts RULE: debit the receiver and credit the giver Real accounts include things in the business i.e. assets. Second category of transactions related to Real accounts ex: buildings, machinery, cash etc. RULE: Debit what comes in and credit what goes out Nominal accounts includes all the transactions related to expenditures, incomes, losses, and profits. Ex: - rent paid, rent received, bad debts, profit on sale of an asset.

RULE: Debit all expenses and losses and credit all incomes and profits