Rules For Debiting And Crediting Of An Account

               Rules For Debiting And Credting

There are two types of changes in an account, e.g. either there will be increase or there will be decrease. Take the example of cash (an asset), either there is flow of cash or there is outflow of cash. To record these two types of changes, every account  is devided in two sides. Increase is recorded on the one side and the decrease is recorded on the other side.

The specimen of an account is shown bellow:

                   Dr.                 TITLE OF AN ACCOUNT                Cr.

                                          ‖

              left side                         ‖                right side    

                 Or                                                         Or

                debit side                                        credit side

When a chnage take place in an account, either it will it will be recorded on the left side (debit side) or on the right side (credit side). Amounts  recorded on the left side of an account, regardless of the account title, are called debits and the accounts said to be debited. Amounts recorded on the right side of an accounts are called credits, and the account are called credited.

All the accounts are kept in a register known as "LEDGER". Recording business transactions in various account in ledger is in fact 2nd phase of accounting cycle (1st phase is JOURNAL).

All the accounts maintained in the ledger of the business are classified into five;

1. Accounts of Assets.
2. Accounts of liabilities.
3. Accounts of Owner's Equity.
4. Accounts of Expences. 
5. Accounts of revenue.