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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Rules of debit and credit

The following table summarizes the rules of debit and credit. For each of the items (a) through (1), indicate whether the proper answer is a debit or a credit.

Chapter 2, Problem 2.4EX, Rules of debit and credit The following table summarizes the rules of debit and credit. For each of

To determine

Normal balance:

Normal balance refers to the excess of amount on one side, over the amount on the other side in an account. The excess amount of debit side over the credit side is shown as the normal debit balance. The excess amount of credit side over the debit side is shown as the normal credit balance.

Type of account Normal balance
Asset account Debit balance
Liability account Credit balance
Expense account Debit balance
Revenue account Credit balance
Dividend account Debit balance

Table (1)

Rules of debit and credit:

“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.

Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.

To indicate: Whether the proper answer is debit or credit.

Explanation

  • In balance sheet accounts, when there is an increase in assets, it should be debited. When there is a decrease in assets, it should be credited. The asset account shows a normal balance of debit. Similarly, when there is an increase in liability, it should be credited.  When there is a decrease in liability, it should be debited. The liability account shows a normal balance of credit.
  • When capital is increased, it should be credited. Similarly, when capital is decreased, it should be debited. The capital account shows a normal balance of credit...

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