What is debit side and credit Side

What is Debit Side and Credit side

In accounting the debit and credit is a very basic rule for classification. This rule provides bases for the classification and preparation of financial statement. The transaction after recording is posted into ledger and then a summary of ledger is reflected in trial balance. in trial balance the debit side represents either the asset or expenses and credit side represent either income or liability.

In balance sheet only asset and liability appears therefor the assets are also know as asset side and liabilities are known as credit side. The terminology of debit side and credit side is typically used for balance sheet. The financial position may be reflected by saying that a company has a very strong debit side. This means that company has a very good asset base.

The debit side concept must not be confused with the debit and credit rule . The asset may be debit or credit at transaction level but asset must be reflected on debit side of balance sheet and similarly the liability may be debit and credited at transaction level but will appear on credit side in balance sheet and trial balance.