What Is credit and debit
Solution :-
Debit means 'Owed to Proprietor' which implies that money has been owed by the others from the business. For example; Loan given to Jay Rs 30,000. Here, Jay had to pay the firm Rs 30,000, which is an asset for the business. Thus, increase in asset is debited.
Credit means 'Owed by Proprietor' which implies that money has been owed by the business from the third parties.
For example; Loan taken from Jayant for Rs 50,000. Here, Jayant had to receive Rs 50,000 from the business, which is liability for firm. Thus, increase in liability is credited.
For properly recording transactions and events, you should understand the Rules of debit and credit.
There are five types of accounts:
Assets- If assets increase, they are debited and if assets decrease, they are credited.
Expense- All the expenses have debit balance. If an expense in incurred, it must be debited.
Liability- Increase in liability is credited and decrease in liability is debited.
Income- All the incomes have credit balance. If an income is earned, it must be credited.
Capital- Capital has credit balance. Increase in capital is credited and decrease in capital is debited.
Debit means 'Owed to Proprietor' which implies that money has been owed by the others from the business. For example; Loan given to Jay Rs 30,000. Here, Jay had to pay the firm Rs 30,000, which is an asset for the business. Thus, increase in asset is debited.
Credit means 'Owed by Proprietor' which implies that money has been owed by the business from the third parties.
For example; Loan taken from Jayant for Rs 50,000. Here, Jayant had to receive Rs 50,000 from the business, which is liability for firm. Thus, increase in liability is credited.
For properly recording transactions and events, you should understand the Rules of debit and credit.
There are five types of accounts:
Assets- If assets increase, they are debited and if assets decrease, they are credited.
Expense- All the expenses have debit balance. If an expense in incurred, it must be debited.
Liability- Increase in liability is credited and decrease in liability is debited.
Income- All the incomes have credit balance. If an income is earned, it must be credited.
Capital- Capital has credit balance. Increase in capital is credited and decrease in capital is debited.