Rules of Debit and Credit
Debit means left side of an account, and credit means right side of an account. But rules of debit and credit mean the laws of debiting end crediting an account. Therefore, rules of debit and credit state that why an account is debited, and why an account is credited.
The rules of debit and credit stated below:
- Assets accounts are increased by debits and decreased by credits.
- Expense accounts are increased by debits and decreased by credits.
- Drawing accounts are increased by debits and decreased by credits.
- Liability accounts are decreased by debits and increased by credits.
- Revenue accounts are decreased by debits and increased by credits.
- Owner’s equity accounts are decreased by debits and increased by
