Determining Debit and Credit in Accounting_Easy Rules of Debit and Credit

Learn easily how to determine debit and credit in accounting….

Assets, Expenses/losses, and Drawings are Debit.

If they increase, they will be Debit.

If they decrease, they will be Credit

Liabilities, Incomes/Revenues/Gains, and Capital are Credit.

If they increase, they will be Credit

If they decrease, they will be Debit

Assets:
Current Assets: Cash, Inventory, Accounts Receivable (Trade Debtors), Notes Receivable, Prepaid expenses, Accrued Revenue Supplies, Prepaid Insurance, Short-term Investment, etc.

Long-Term Assets: Equipment, Furniture and Fixtures, Land, Building, Car, Vehicle, Plant and Machineries, Long-term investment, Air Conditioner, etc.

Expenses:
Salaries and Wages Expense, Travel Expense, Rent Expense, Miscellaneous Expense, Advertising Expense, Supplies Expense, Depreciation Expense, Insurance Expense, Interest Expense, Utilities Expense, Maintenance and Repairs Expense, Property Tax Expense, Cost of Goods Sold, Operating Expenses, Freight-in, Freight-out, Purchases, Rent Expenses, Travelling and Conveyance expenses etc.

Owner’s Drawings:  Anything taken from a business by its owners

Revenue/Income/Gains:
Sales Revenue, Service Revenue, Fees Earned, Interest Revenue, Commission Revenue etc.

Liabilities:

Current Liability:  Notes Payable, Accounts Payable (Trade Creditors), Salaries and Wages Payable,
Interest Payable, Unearned Revenue, Short-term Loan, Accrued Expenses, Property Taxes Payable, etc.

Long-term Liability:  Mortgage Payable, Long-term Loan, Bond, Debenture etc.

Owner’s Capital: Cash or other assets provided into a business by the owners