Rules of Basic Accounting - Debit and Credit Rules of Accounting

 Rules of Accounting :

Following are the basic rules that you should keep in mind while recording business transactions :

ELEMENTS	INCREASE	DECREASE
1.      ASSETS	Debit	Credit
2.      EXPENSES	Debit	Credit
3.      REVENUES	Credit	Debit
4.      LIABILITY	Credit	Debit
5.      CAPITAL	Credit	Credit

 

Now , I am going to telling you about all these elements so don’t worry .

So first of fall :

 

What is Assets ?

Assets are our business resources and we can also say that its our economic resources as well.  It is used in business. For instance if you are starting your business with any supposed name such as Zaid shopping store . Your business has some assets  like table, chair, any furniture , machines, tools and equipment, cash , goods  etc.  So, these all things is your assets. Now, I will explain  its rule . anything that we paid in advance is also our assets . like we  firstly pay fee  in universities, then we studied. So , advances is also your asset.

 

 

Rule of Assets :

You should always remember that whenever your asset is increased, it will be debited and whenever its decreased, it will be credited. Simple is that when we have purchased any assets so it means that your asset is increased, so according to rules we will debited the assets and when you sold your asset, so it means that it is decreased, so it will be credited.

What is Expenses ?

Expenses means that expenses which you spent for the aim of  acquiring profit. For instance in your Zaid shopping store you will have multiple expenses such as raw material expenses, paying salaries to workers, electricity expenses etc.

Rule of Expenses :

It is also based on same rule of assets as I have explained prior. Whenever expenses increased , expenses will be debited and whenever expenses decreases, it will be credited.

 

Note :

·       Assets and expenses having same rule of debiting and crediting.

·       Liabilities, revenues and capital these three elements having same rules of debiting and crediting . theses all having opposite rule .

What is Revenues ?

In simple words , revenues is your income. For instance sales etc.

 Rule of Revenues :

Always remember that whenever your revenue or income  is increased, it will be credited and whenever its decreased, it will be debited. Simple is that when we  received  any  income so it means that your  income is increased, so according to rules we will  credited  the  revenues and when your income is decreased , so it will be debited.

 

What is Liability :

Labiality is your responsibility of paying something , dues and charges. For instance your business loan, receiving payment in advance, purchase things on credit basis etc.

Rule of  Liability :

Whenever your  lability is increased, it will be credited and whenever its decreased, it will be debited. Simple is that when we pay  any  charges or loan so it means that your liability  is reduced so debited the lability and when you purchase anything in advance so it is your responsibility to pay , so in this case your lability is increased , lability will be credited.

 What is Capital :

Capital is your investments which you invested for doing business.

Rule of Capital :

It is based on the same rules of lability and revenue . when capital is increased,  it will be credited and when decreased , it will be debited.

 

 

 NOW , IT IS YOUR TASK FIRST OF FALL , REMEMBER THESE RULES FIRSTLY BECAUSE WITHOUT THESE RULES YOU ARE NOT ABLE TO RECORD OR ENTER THE BUSINESS TRANSACTIONS