Question

Prior to beginning work on this discussion forum, read Chapter 3: The Accounting Information System and Chapter 4: Accrual Accounting Concepts in your course text.

In your initial post,

• Define debits and credits.
• Explain how debits and credits are used to record business transactions.
• Is it true that debits always increase and credits always decrease? Why or why not?

Answer 1

1.Debit in journal entry means increase in assets of organisation or decrease in liability while credit is just reversal of debit,in accounting accounting credit means increase in liabilities of organisation or decrease in asset of organisation.

2. Generally debit and credit are used to record the accounting transaction under double entry system. When we want to increase an assets and decrease a liability we will use debit and credit is vice versa.

Eg. Journal for Credit sale

Debtor a/c debit sales credit (Asset means debtors increase by debiting it and sale which become part of revenue i.e. liability is credited.)

3. Yes it is true that for debit there is credit as the journal entry follow the rule of double entry system.