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CMA Foundation · Fundamentals of Financial and Cost Accounting · Journal and Ledger

Under the traditional (English) rules of debit and credit, which of the following is correct for a Personal Account?

For a personal account the rule is to debit the receiver and credit the giver. The person or entity who receives a benefit from the business is debited, and the one who gives a benefit is credited. The other rules belong to real and nominal accounts.

  1. ADebit what comes in, credit what goes out
  2. BDebit the receiver, credit the giverCorrect
  3. CDebit expenses and losses, credit incomes and gains
  4. DDebit all assets, credit all liabilities

Explanation

Personal accounts follow the rule 'debit the receiver, credit the giver'. 'Debit what comes in, credit what goes out' applies to real accounts, and the expenses/incomes rule applies to nominal accounts.

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