Why Are Revenues Credited And Expenses Debited
As it is defi ned and set in t he Rules of Debit And Credit . It is universally accepted t hat the usual, normal, favorab le and positive b ala nce of revenues or income is credit b ala nce w hile negative, unusual or unfavorab le b ala nce is deb it b ala nce. W he n revenues earned b y b usi ness, t he n it is a positive sign for b usi ness profits an d as a result ow ner equity or equity increases. It is inflows for t he b usi ness activities. Similarly, expenses are also deb it i n universally accounting accepted rules of deb it a nd credit.. T hese have positive, favora b le a nd normal b ala nces o n deb it side of relevant expenses’s accounts. W he n expenses increase, we deb it these a nd w he n decrease, we credit t hese. Expe nses are outflows for t he b usi ness activities suc h as Salaries Expense paid to employees resulted t he outflows of cash from the b usi ness resources and ultimately, t he b usi ness received services from staff in order to earn