Question

Question:

What are the rules of Debit and Cradit?​

Answer 1

Answer:

If there is something that runs the world of accounting, it is the rules debit and credit. Without these rules, the world of accounting would be a haphazard mess. It is important that the accounts should be maintained properly on these rules, in order to ensure the accuracy of results displayed by such books of accounts.

The following are the rules of debit and credit which guide the system of accounts, they are known as the Golden Rules of accountancy:

First: Debit what comes in, Credit what goes out.

Second: Debit all expenses and losses, Credit all incomes and gains.

Third: Debit the receiver, Credit the giver.

A debit and credit entry have a broad impact on different accounts. For example, in

Asset accounts, a debit increases the balance and a credit decreases the balance.

Liability accounts, a debit decreases the balance and a credit increases the balance.

Equity accounts, a debit decreases the balance and a credit increases the balance.

Revenue accounts, a debit decreases the balance and a credit increases the balance

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