Within a easier way it might be explained as when an quantity is entered around the left side of an account, it can be a debit plus the account is mentioned to become debited. When an account is entered around the suitable side, it can be a credit, plus the account is mentioned to become credited. Right here are standard debit & credit rule:
Accounting for Debits and Credits
Assets & Expenses
_________________
Dr Cr
(Increases) (Decreases)
_________________
Dr Cr
(Increases) (Decreases)
Liabilities, Capital and Income
___________________________
Dr Cr
(Decreases) (Increases)
An account contains a debit balance once the sum of its debits is greater then the sum of the its credits: it provides a credit balance when the sum of the credits is the greater. In doubleentry accounting, that is in almost general use, there are actually equal debit and credit entries for every single transaction. In which only two accounts might be affected, the debit & credit amounts are the same. If more than two accounts will be affected, the overall of the debit entries must the same to the total of the credit entries.
Debits and Credits
Double-entry bookkeeping is controlled by the accounting formula. If income
equals expenses, the following standard formula must be true:
Assets = liabilities + equity
At any time, income may not equal expenses. If so the equation is often
further extended, so that the (expanded) equation turns into:
Assets = liabilities + equity + (revenue - expenses)Samples of debits and credits
Purchase of a Computer
Debit Computer account is increased (Fixed asset account)
Credit Creditors account is increased (Liability account)
Credit Creditors account is increased (Liability account)
Paying supplier for the Computer
Debit Creditors account is reduced (Liability account).
Credit Bank account is reduced (Asset account) .
See Also:
Debit Creditors account is reduced (Liability account).
Credit Bank account is reduced (Asset account) .
See Also:
