The Debit And Credit Side of An Account
The Debit and Credit side of An Account shows increase and decrease or reveals Left or Right Side in an account or Ledger. Both Debit and Credit Sides of Different Types of Accounts are based on the Rules of Debit And Credit while preparing Journal Entries posted to Ledger Accounts or Books of accounts. Ideally, Debit Side is for Assets, Expenses and Losses while Credit Side for Liabilities, Equity and Revenues and Gains / Profits.
Normally, When assets, expenses or losses increase these are on Debit Sides while Liabilities, Equity and Gains on Credit sides. However,
when assets, expenses or losses are on credit side, then these are on unfavourable side and these are decreasing or setting off or closed at the end of accounting.
For example, an old furniture sold out due to obsolescence or improved technology. All expenses are closed to Income Summary Statement. Similarly, when Liabilities, Equity and Revenues or Gains decrease, then these are on Debit side and these are decreasing or pay off by the business (in case of Liabilities) or returned to the business by the customers (in case of revenues when Goods / Products Returned to the business).
For example, an old furniture sold out due to obsolescence or improved technology. All expenses are closed to Income Summary Statement. Similarly, when Liabilities, Equity and Revenues or Gains decrease, then these are on Debit side and these are decreasing or pay off by the business (in case of Liabilities) or returned to the business by the customers (in case of revenues when Goods / Products Returned to the business).
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