Question

what do you understand by debit and credit? Do you think debit always stand for decrease in amount and credit for increase?​

Answer 1

Answer:

HI MATE

HERE'S THE ANSWER

Explanation:

Credit means addition of money.

Debit means withdrawing of money.

No. Debits increase assets and expenses. Credits increase revenue, liabilities and equity. And of course I'm sure you can see that debits decrease revenue, liabilities and equity and credits decrease assets and expenses.

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Answer 2

long answers

Explanation:

Not always — only for your income statement accounts. For your balance sheet accounts, such as cash, a debit entry will increase the account balance. This must be true in order for the fundamental equation of accounting — total debits equals total credits — to hold for a set of books, at the level of each individual transaction.

Here’s an example. Let’s say you are a sole proprietor carpet cleaning business. You go to a customer’s home, clean the carpet, and collect your service charge. The amount received would then be debited to your cash account, and credited to your revenue received account.

Each account would have its running balance increased by the amount of the service charge received. To a beginning bookkeeping student, this may look like a redundancy, and in a way, it is. That’s why this method is called “double-entry bookkeeping”. It’s the default standard for almost all businesses.