The Rules of Debit and Credit: An Overview

Some accounting students are not yet aware on the rules on debits and credit, which are summarized below:

Rules for Asset Accounts

1. Assets accounts are increased by debits.

2. Assets accounts are decreased by credits.

3. The normal balance is a debit balance.

Rules for Liability and Owner’s Equity Accounts:

1. Liability and capital accounts are increased by credits.

2. Liability and capital accounts are decreased by debits.

3. The normal balance is a credit balance.