Basic Rules of Debit Credit

Basic Rules of Debit Credit

Rules of Debit Credit of recording of transaction are

        1.    Every Debit has a Credit

First basic rule of debit & credit is two aspects every transaction one is Debit and other Credit. This rule is also expressed as every debit has a credit. This rule is more like a Newton rule that every action has a reaction. In simple term you can say that when there is debit, there will always be a credit.

       2.    Debit = Credit

Second rule Debit & credit is equal impact of debit and credit. It means debit impact of transaction is equal Credit impact. Again we can remember that every action has equal reaction, but in opposite direction. Similarly a debit effect has equal credit effect. In simple term when you debit an item with an amount, you would require to also credit another item with same amount.

      3.    Example of Recording with Basic Rules

Salary $ 200 paid in cash.

Date	Particulars	Dr.	Cr.
	Salary  a/c	$ 200
	Cash  a/c		$ 200

      4.    Specific Rules

Besides basic rules explained above, there are some specific rule for debit & credit for each element of financial statement (assets, liabilities, expense, income). An increase in asset & expenses will be debited, while a decrease in assets & expenses will be credited.