Debit and credit rules
Debit and credit rules Debits and credits are the opposing sides of an accounting journal entry . They are used to change the ending balances in the general ledger accounts. The rules governing the use of debits and credits in a journal entry are as follows: Rule 1: All accounts that normally contain a debit balance will increase in amount when a debit (left column) is added to them, and reduced when a credit (right column) is added to them. The types of accounts to which this rule applies are expenses , assets , and dividends. Rule 2: All accounts that normally contain a credit balance will increase in amount when a credit (right column) is added to them, and reduced when a debit (left column) is added to them. The types of accounts to which this rule applies are liabilities , revenues , and equity . Rule 3: Contra accounts reduce the balances of the accounts with which they are paired. This means tha...
