Why Assets Are Debited And Liabilities Are Credited

 

Because the normal or usual or favorable or positive balance of Assets is debit balance, according to the Rules of Debit And Credit. When assets acquired by the business usually through cash or bank account, we debit asset account as it these are increased or come into business as resources while cash or bank account is decreased, so we credit cash or bank account at the same time. It is also acquired through a liability account which increases the value of both asset and liability accounts in the books of accounts.

On the hand, liabilities are credited as these are increased, we credit these according to the generally accepted rules of debit and credit. When a liability is created, it is payable by the business to outsiders within specified time period. So, it is a burden or obligation of the business to pay to outsiders. As a result, it is a outflow for the business to pay to suppliers, banks or other financial institutions for the Credit Purchases or loan.