The left side of an account is called Debit and the right side of an account credit. Again, entering an amount on the left side of an account is called debiting the account; making an entry on the right side is crediting the account. Here are the rules of debit and credit stated below:
But rules of debit and credit mean the lows of debiting and crediting an account. Therefore, rules of debit and credit state why an account is debited, and why an account is credited.
Rules of debit and credit
1. Assets accounts are increased by debits and decreased by credits.
2. Expenses accounts are increased by debits and decreased by credits
3. Drawing accounts are increased by debits and decreased by credits
4. Liability accounts are decreased by debits and increased by credits
5. Revenue accounts are decreased by debits and increased by credits
6. Owner’s equity accounts are decreased by debt and increased by credit
7. Assets, expenses, drawings are increased by debit and decreased by credit,
8. Liabilities, revenues; capitals are increased by credit and decreased by debit.
Related Content of Accounting:
- Some Core Concepts of Accounting
- Definition of adjusting entries
- Types of accounts from the view point of accounting equation
- 8 Essential Features of Business Transaction
- Internal and external users of accounting information