The Rule Of Debit And Credit

Key features of Debit & Credit or Double Entry System:

1. Accounting transactions are recorded by using an accounting system.
2. Accounting systems are designed to show the increases and decreases in accounts in the financial statements.
3. There are five major accounts in financial statements:

• Assets
• Liabilities
• Owner’s Equity namely Capital & Drawing
• Revenues
• Expenses

The rules of debit(Dr) and credit(Cr) apply to these accounts:

Accounts Debit Credit Normal Balance

Assets Increase Decrease Debit

Liabilities Decrease Increase Credit

Capital Decrease Increase Credit

Drawings Increase Decrease Debit

Revenues Decrease Increase Credit

Expenses Increase Decrease Debit