Question
Asked Feb 1, 2019

Are expenses of any kind a Debit account? Are they, a debit account because Owner's Equity is a Credit account? Is there ever a situation where expenses would be credited instead of debited?

check_circleExpert Solution

1. Are expenses of any kind a Debit account?

Yes. All kinds of expenses are to be debited. In double entry book keeping we debit expense/loss accounts. In traditonal accounting we use to follow the principal of, "debit what goes out" and thus expenses were debited back then as well.

2. Are they, a debit account because Owner's Equity is a Credit account?

Yes. Expenses are debited and later on posted to income statement where they ultimately cause the reduction in the credit balance of the owner's equity. 

To illustrate, let's assume that a company pays cash of $500 at the time it incurs a necessary repair expense. Here cash is paid and thus, cash needs to be reduced in the books. This will be recorded with a $500 credit to Cash. (because the asset Cash normally has a debit balance). Since every entry must have the amounts of the debits equal to the amounts of the credits, a $500 debit will be recorded in the account Repairs Expense. (A debit entry in an expense account ultimately causes the credit balance in an owner's equity capital account to decrease.)

3. Is there ever a situation where expenses would be credited instead of debited?

There are a very few exceptions to this. They are as follows :

A. The accountant or the management do not have actual precise data for how much a particular expense is. In absence of actual values, management estimates expenses to comply with accounting standards.In later periods, however, these expenses are adjusted to actual values which may credit expense ledgers. To reverse the expense entry the...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour*

See Solution
*Response times may vary by subject and question
Tagged in

Business

Accounting

Related Accounting Q&A

Find answers to questions asked by student like you

Show more Q&A add
question_answer

Q: FB Manufacturing Company is a partnership among Yolando Gonzalez, Willies Todd, and Linda Walkers. T...

A: Partnership: A partnership is that type of business in which two or more person share loss and profi...

question_answer

Q: The pretax financial income (or loss) figures for Martinez Company are as follows. 2012   $148,00...

A: Income tax expense:  Income tax expense is an expense for the company which is equal to a certain pe...

question_answer

Q: Every year Blue Industries manufactures 7,300 units of part 231 for use in its production cycle. The...

A: a) Compute the total relevant cost to make part 231: 

question_answer

Q: The following data were taken from the financial statements of Gates Inc. for the current fiscal yea...

A: Prepare comparitive balance sheet for Gates Incorporation: 

question_answer

Q: I'm having trouble finding the missing values for the on company and off company sections, letters a...

A: Click to see the answer

question_answer

Q: WHAT IS THE EQUITY INVESTMENT?

A: Equity: Equity refers to that part of the company’s capital which is raised by issuing equity shares...

question_answer

Q: Cheyenne Corp. was organized on January 1, 2017. It is authorized to issue 21,000 shares of 7%, $53 ...

A: The journal entries for the transactions are as follows :

question_answer

Q: Coca Cola acquired 70% of Pepsi on 1/1/14. During 2014, Coca Cola made many inventory sales to Pepsi...

A: Click to see the answer

question_answer

Q: Financial data for Joel de Paris, Inc., for last year follow:   Joel de Paris, Inc.Balance Sheet ...

A: 1. Operating assets comprise of assets which are used by the business in ordinary course to generate...