Incomes Debit Or Credit

Here we will study about Accounting Question that, “Incomes Debit Or Credit”?

You may also be interested in “Expenses Debit Or Credit”

When Income increases, we Credit it and when it decreases, we Debit it. When the business earns revenues, the business Credit it in the relevant Income Account. As income is the result of Profitable activities of Owners of the business, so income is adjusted with the Owner’s Equity or Equity in the Balance Sheet. So, income account has no balance and it is closed by transferring to Income Statement or Profit And Loss Account or Statement of Comprehensive Income at the End of Current Accounting Period.

Following Closing Accounting Journal Entry is Passed in case of all of the Incomes of the business:

                         Incomes / Revenues a/c   XXX

                                        Income Statement / Profit And Loss a/c   XXX

(Income Closed By Transferring To Income Statement At The End of Current Accouning Period)

So, when Income increases we Credit it and when decreases, we Debit it. Moreover, Income Account has no balance since it is adjusted with the Owner’s Equity or Equity in The Balance Sheet and as a result transferred to Income Statement or Profit And Loss Account.