Question

What are the rules for debit and credit related to following accounts
a)Asset account
b)capital account
c)liabilities account
d)Reveneue account

Note:please don't answer, if you don't know. Will give down thumb if answered wrong

Answer 1

Answer : It is modern approach of accounting where the rules of debit and credit are :

A: ASSET ACCOUNT :

RULE OF ASSET ACCOUNT : " DEBIT THE INCREASE CREDIT THE DECREASE"

When there is increase in the amount of an asset, the asset should be debited where as when there is a decrease in the value of an asset ,it should be credited.

Example of Increase in Asset : A business purchased a machineary of $50,000

B . CAPITAL ACCOUNT :

RULE OF CAPITAL ACCOUNT : " CREDIT THE INCREASE DEBIT THE DECREASE"

When there is increase in the amount of capital , the capital account should be credited where as when there is decrease in the amount of capital, the capital account should be debited.

Example of Increase in the capital : The owner of the business bring additional capital in the business.

C. LIABILITIES ACCOUNT :

RULE OF LIABILITIES ACCOUNT : " CREDIT THE INCREASE DEBIT THE DECREASE"

When there is increase in the amount of Liability , the liability account should be credited where as when there is decrease in the amount of liability, the liability account should be debited.

Example of Increase in liability : Goods purchased on credit from supplier than there is increase in creditors.

D . REVENUE ACCOUNT :

RULE OF REVENUE ACCOUNT : " CREDIT THE INCREASE DEBIT THE DECREASE"

When there is increase in the amount of revenue , the revenue account should be credited where as when there is decrease in the amount of revenue, the revenue account should be debited.

Example of Revenue Account : Good sold on cash $20,000