RULES OF DEBIT AND CREDIT

 Today we are discussing about the rules of Debit (Dr.) and Credit (Cr.) of accounts. Debit word comes from the Latin word 'Debitum' and credit words comes from the word 'credere'.

Debit and Credit are  two important terms of accountancy. In dual aspect theory ,every transaction has two sides Debit and Credit. Debit and Credit is determined by the following rules 

Debit -what comes in

Credit -what goes Out 

 Income - Credit

Expenses -Debit

For better understanding the rules of Debit and Credit,we can see the following example :-

1) Machinery purchased In cash RS 50000

In the Above transaction , machinery comes in to the business and cash goes out from business , so here MachineryA/c -Debit and Cash A/c-Credit by Rs 50000 

2. Land & Building sold to ABC CO. in RS 300000

In the above transaction we can see Cash received against the sales of land & Building, here cash comes into the business and Land & Building goes out from the business.

So, CashA/c- Dr. And Land & Building A/c

3. Rent paid of Rs 500 by cash 

In this transaction Rent is an expenses & and for payment of rent cash goes out from business so, Rent A/c - Debit and Cash A/c -Credit 

4.Discount received Rs 250

In the Above transaction Discount received is an income and cash comes in to the business so, 

Cash a/c - Debit and Discount received A/C -Credit