Why Are Revenues Credited And Expenses Debited

 

As it is defined and set in the Rules of Debit And Credit. It is universally accepted that the usual, normal, favorable and positive balance of revenues or income is credit balance while negative, unusual or unfavorable balance is debit balance.

When revenues earned by business, then it is a positive sign for business profits and as a result owner equity or equity increases. It is inflows for the business activities.

Similarly, expenses are also debit in universally accounting accepted rules of debit and credit.. These have positive, favorable and normal balances on debit side of relevant expenses’s accounts. When expenses increase, we debit these and when decrease, we credit these.

Expenses are outflows for the business activities such as Salaries Expense paid to employees resulted the outflows of cash from the business resources and ultimately, the business received services from staff in order to earn profits from business operations.