Rules of Accounting- Debit and Credit rules of Accounting :

Rules of Accounting :

Following are the basic rules that you should keep in mind while recording business transactions :

Now , I am going to telling you about all these elements so don’t worry .

So first of fall : Read more

What is Assets ?

Assets are our business resources and we can also say that its our economic resources as well. It is used in business. For instance if you are starting your business with any supposed name such as Zaid shopping store . Your business has some assets like table, chair, any furniture , machines, tools and equipment, cash , goods etc. So, these all things is your assets. Now, I will explain its rule . anything that we paid in advance is also our assets . like we firstly pay fee in universities, then we studied. So , advances is also your asset.

Rule of Assets :

You should always remember that whenever your asset is increased, it will be debited and whenever its decreased, it will be credited. Simple is that when we have purchased any assets so it means that your asset is increased, so according to rules we will debited the assets and when you sold your asset, so it means that it is decreased, so it will be credited.

What is Expenses ?

Expenses means that expenses which you spent for the aim of acquiring profit. For instance in your Zaid shopping store you will have multiple expenses such as raw material expenses, paying salaries to workers, electricity expenses etc.

Rule of Expenses :

It is also based on same rule of assets as I have explained prior. Whenever expenses increased , expenses will be debited and whenever expenses decreases, it will be credited.

Note :

· Assets and expenses having same rule of debiting and crediting.

· Liabilities, revenues and capital these three elements having same rules of debiting and crediting . theses all having opposite rule .

What is Revenues ?

In simple words , revenues is your income. For instance sales etc.

Rule of Revenues :

Always remember that whenever your revenue or income is increased, it will be credited and whenever its decreased, it will be debited. Simple is that when we received any income so it means that your income is increased, so according to rules we will credited the revenues and when your income is decreased , so it will be debited.

What is Liability :

Labiality is your responsibility of paying something , dues and charges. For instance your business loan, receiving payment in advance, purchase things on credit basis etc.

Rule of Liability :

Whenever your lability is increased, it will be credited and whenever its decreased, it will be debited. Simple is that when we pay any charges or loan so it means that your liability is reduced so debited the lability and when you purchase anything in advance so it is your responsibility to pay , so in this case your lability is increased , lability will be credited.

What is Capital :

Capital is your investments which you invested for doing business.

Rule of Capital :

It is based on the same rules of lability and revenue . when capital is increased, it will be credited and when decreased , it will be debited.

NOW , IT IS YOUR TASK FIRST OF FALL , REMEMBER THESE RULES FIRSTLY BECAUSE WITHOUT THESE RULES YOU ARE NOT ABLE TO RECORD OR ENTRY THE BUSINESS TRANSACTIONS