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Lesson-1 7

The document outlines the rules of debit and credit in accounting, specifying how they affect various accounts. Debits increase assets, expenses, and drawing accounts, while credits increase liabilities, equity, and revenues, maintaining the balance of the accounting equation. It also includes activities for analyzing transactions using T-accounts to apply these rules.

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blaxfruit2009
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36 views2 pages

Lesson-1 7

The document outlines the rules of debit and credit in accounting, specifying how they affect various accounts. Debits increase assets, expenses, and drawing accounts, while credits increase liabilities, equity, and revenues, maintaining the balance of the accounting equation. It also includes activities for analyzing transactions using T-accounts to apply these rules.

Uploaded by

blaxfruit2009
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Lesson 1.

7 Rules of Debit and Credit

In accounting, debits and credits follow specific rules to record financial transactions. Debits increase
asset, expense, drawing and dividend accounts, while credits increase liability, equity, and revenue
accounts. For every debit, there must be a corresponding and equal credit. These rules ensure the
accounting equation (Assets = Liabilities + Equity) always balance.

Rules of Debit and Credit


ACCOUNT NORMAL BALANCE Decrease by
(increase)
Assets Debit Credit
Liabilities Credit Debit
Owner’s Equity
•Capital Credit Debit
•Drawing Debit Credit
Revenues Credit Debit
Expenses Debit Credit
Contra-valuation accounts
•Allowance for Doubtful Accounts Credit Debit
•Accumulated Depreciation Credit Debit
Activity 1.5 Analyze the effect of the following transactions on the accounting equation. Apply
the rules of debit and credit using T-accounts.
Owner’s
Transaction Assets Liabilities Equity
(+C+R-E-W)
[Link] owner invested cash,P120,000
2. The company bought equipment, P40,000

3. The company paid for the supplies bought,P7,500

4. The company hired employees,P5,000 weekly salary


[Link] company received cash for services rendered, P6,500
[Link] company paid salary of the employee, P5,000
[Link] company billed a customer for services rendered,P5,700
[Link] owner withdrew cash for personal use,P3,000
9. The company collected the amount billed to a
customer, P5,700
10. The company paid utilities,P6,800
Activity 1.6 Analyze the effect of the following transactions on the accounting equation. Apply the rules
of debit and credit using T-accounts.
Owner’s
Transaction Assets Liabilities Equity
(+C+R-E-W)
[Link] company received payment for services rendered, P20,000
2. The owner invested a machine , P75,000
3. The company paid 2 months advance office rental,P12,000
4. The company received cash from bank loan ,P100,000
[Link] company rendered service on account,P4,500
[Link] company received billing statement from Globe, Tanza
Water District and Meralco, P9,800
[Link] company received payment for services rendered on
account, P4,500
[Link] company received a promissory note for services
rendered,P7,600
9. The company received 2 month advance payment from
client,P8,000
10. The company bought supplies on account, P5,300

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