PPT SUMMARY- DEBIT AND CREDIT

Debits and Credit- The Double Entry System

Accounting is based on double-entry system
which means the dual effect of a business
transaction is recorded. Each transaction affects at
least two accounts.
- The total debits for a transaction must be
always equal the total credits.
- Account may be defined as a detailed record
of the increases, decreases and the balance of
each element that appears in an entity’s
financial statements.
- An account is debited when an amount is
entered on the left side of the account and
credited on the right side.

 Drawings/ Withdrawals, expenses and Asset

(DEA)
- Increases in Drawings/withdrawals, expenses
and asset (DEA) are recorded as debits
(Debit +)
- Decreases in Drawings/withdrawals,
expenses and assets (DEA) are recorded as
credits (credit -)
- Normal balance= “Debit”

 Liabilities, equity/owner’s equity and

revenue (LER)
- Increases in liabilities, equity/owner’s equity
and revenue (LER) are recorded as debits
(Debit-)
- Normal balance= “Credit”