DEBIT or CREDIT

Posted in CategoryIntroductions
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    Bunmi Mercy 3 years ago

    As simple as the word debit and credit sound, it has led to reversal of accounting entries. Debit and credit are the bedrock of the accounting profession. To be an expert in the finance/accounting industry your knowledge of debit and credit must be topnotch, this is because every other management and final accounts are built on the simple act of debiting and crediting.

     

    So, what is debit and what is credit?

    Debit in accounting is simple an accounting entry that gives rise to an increase in asset and expense and a decrease in equity, liability and income.

    Credit in accounting is simple an accounting entry that gives rise to an increase in equity, liability and income and a decrease in asset and expense.

     

    General rule:

    1.    ALL ASSET AND EXPENSE HAVE A DEBIT BALANCE

    2.    ALL EQUITY, LIABILITY AND INCOME HAVE A CREDIT BALANCE

     

    When should I Debit and Credit (Asset and expense)?

    Debit=> If you want to increase the value of an asset or expense

    Credit=>If you want to decrease the value of an asset or expense you credit

     

    When should I Debit and Credit Equity (Liability and Income)?

    Debit=> If you want to decrease the value of Equity, Liability and income

    Credit=> If you want to increase the value of Equity, Liability and Income

     

    As you advance in your career, ensure you steadfastly hold on to these basic principles, it will go a long way in making you outstanding the in industry.

     

    Have any questions or need any clarification? I am always in the comment session! 

  • I
    Itoro 3 years ago

    Thanks for this! As easy as it may sound, it is very essential as we always go back to this at some point in our career.

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