Debits and Credits in Accounting

Debits and credits are the accounting terminologies which are used to describe the increase or decrease in the financial components. Any movement in these components can be specified by using the term debits and credits. In T-accounts, left column represents debits while right column represents credits.

 Rules of Debits and Credits

There are five components of financial statements
• Asset
• Liability
• Capital
• Expense
• Revenue

Each Component has its own criteria for debits and credits. Sometimes students may face a general problem in specifying when to use debit or credit terminology so to tackle these problems there is a general rule. See the Table A below

 In table you can notice when there is increase in asset and expense they are debited and when there is a decrease they are credited. On the other hand Liability, Capital and Revenue, when they are increased they are credited and debited when decreased.

Illustration: 1