Q.1 Write reply for this artices The logic of debiting and crediting is related to the accounting
Question:
Q.1 Write reply for this artices
The logic of debiting and crediting is related to the accounting equation, which is expressed as "Assets = Liabilities + Owner's Equity." Accounting is based on the double-entry system, which means a dual effect on every business transaction recorded. A debit side must have a corresponding credit side entry and vice versa. Total debits must always equal the total credits.
Do debits always increase an account? Do credits always decrease an account?
No. The account type determines how increases and decreases in it are recorded. Increases in assets are recorded as debits, while decreases are recorded as credits. Conversely, increases in liabilities and owner's equity are recorded by credits, and decreases are entered as debits. The rules on income and expenses are based on their relationship to the owner's equity. Income increases the owner's equity, and expenses decrease the owner's equity. Therefore, increases in income are recorded as credits and decrease as debits. Increases in expenses are recorded as debits and decreases as credits.
Examples:
Purchase of asset on account-Increases assets (debit) and increases liability (credit)
Purchases of the building by issuing stocks-Increases assets (debit) and increases owner's equity (credit)
Payment of liability-Decreases assets (credit) and decreases liability (debit)
Payment of rent expenses-Increases expense (debit) and decreases assets (credit)