Rules of Debit & Credit

• To debit:

  1. Increase assets (I + A = IA)
  2. Decrease liabilities (D + L = DL)
  3. Decrease capital (D + C = DC)
• Capital is decreased due to:

  • Withdrawal of assets by the owner
  • Increase in expenses & losses
  • Decrease in income
• To credit:

  1. Decrease assets (D + A = DA)
  2. Increase liabilities (I + L = IL)
  3. Increase capital (I + C = IC)
• Capital is increased due to:

  • Investment by the owner
  • Decrease in expenses & losses
  • Increase in income