Debit Credit Rules

In financial accounting debit and credit are simply the left and right side of a T-Account respectively. They are used to indicate the increase or decrease in certain accounts. When there is a change in an account, that change is indicated by either debiting or crediting that account according to following rules:


  1. The owner brings cash from his personal account into the business
    Cash (an asset) is increased thus debit Cash
    Owner capital (an equity) is increased thus credit Owners' Capital
  2. Office supplies are purchased on account
    Office Supplies (an asset) is increased thus debit Office Supplies
    Accounts Payable (a liability) is increased thus credit Accounts Payable
  3. Wages payable are paid
    Wages Payable (a liability) is decreased thus debit Wages Payable
    Cash (an asset) is decreased thus credit Cash
  4. Revenue is earned but not yet received
    Accounts Receivable (an asset) is increased thus debit Accounts Receivable
    Revenue (a revenue) is increased thus credit Revenue

Written by Irfanullah Jan