Debit and Credit

What is Debit and Credit

The debit and credit basically are relative terms used in accounting. There is no literal meaning of those terms rather these terms are used as basic classification bases for accounting transaction. Each transaction has two aspects one is debit and other is credit. in simple words one can say that every transaction is break down into debit and credit.

This is important to remember that every debit has a credit with equal amount. This is very basic rule for the debit and credit and whole accounting reporting structure is based on this rule. if this rule is violated then it is impossible to prepare accurate financial statement.

The debit and credit can be written in short form as Dr. and Cr. respectively 

Example of Debit and Credit

Mr. A Purchased 200 sugar and paid the amount in cash.

The transaction will be recorded in books of accounts as under

Purchases A/C  (Debit)

Cash         A/C  (Credit)

What are Rules of Debit and Credit

Rules of Debit and Credit for Expenses and Assets
	Increase	Decrease
Expenses	Debit	Credit
Assets	Debit	Credit
Rules of Debit Credit for income and liabilities
	Increase	Decrease
Incomes	Credit	Debit
Liabilities	Credit	Debit
Equity	Credit	Debit