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Debits Increase Assets And Decrease Liabilities According to  Rules of Debit And Credit , with every debit amount added to an asset account, it increases it as it is a normal, usual, positive or favorable balance for asset accounts while with every debit amount added to a liability account, it decreases it as it is unusual, unfavorable or negative for liability accounts. Credits Decrease Assets And Increase Liabilities Credit Decrease Assets and Increase Liabilities as negative, unusual or unfavorable balance for assets is credit and credit balance for liabilities is normal, usual, positive or favourable, so liabilities increase with a credit amount. For example, a company purchased asset of Rs. 50000 on account increased the asset account as it is increasing, so we debit it and increased creditor / accounts payable as a liability account, so we credit such liability account. Following journal entry is recorded as shown below:           ...

  Because the normal or usual or favorab le or positive b ala nce of Assets is deb it b ala nce, accordin g to the Rules of Debit And Credit . W he n assets acquired b y the b usi ness usually t h roug h cas h or b a nk account, we deb it asset accou nt as it t h ese are increased or come into b usi ness as resources w h ile cas h or b a nk account is decreased, so we credit cas h or b a nk account at t h e same time. It is also acquired t h roug h a liab ility accou nt w hich i ncreases t h e value of b oth asset a nd liab ility accou nts in t he b ooks of accou nts. On t he ha nd, liab ilities are credited as these are i ncreased, we credit t hese accordi ng to t he g enerally accepted rules of deb it a nd credit. W he n a liab ility is created, it is paya b le b y the b usi ness to outsiders wit hi n specified time period. So, it is a b urde n or ob ligatio n of t he b usi ness to pay to outsiders. As a result, it is a outflow for t he b usi ness to pay to sup...