Do credits increase revenue accounts?
Jackson Reed
Updated on January 20, 2026
A credit is an entry made on the right side of an account. It either increases equity, liability, or revenue accounts or decreases an asset or expense account. Record the corresponding credit for the purchase of a new computer by crediting your expense account.
What happens when you credit a revenue account?
Since the normal balance for owner’s equity is a credit balance, revenues must be recorded as a credit. At the end of the accounting year, the credit balances in the revenue accounts will be closed and transferred to the owner’s capital account, thereby increasing owner’s equity.
What account increases with a credit?
Debits and credits chart
| Debit | Credit |
|---|---|
| Increases an asset account | Decreases an asset account |
| Increases an expense account | Decreases an expense account |
| Decreases a liability account | Increases a liability account |
| Decreases an equity account | Increases an equity account |
Is revenue a credit account?
In bookkeeping, revenues are credits because revenues cause owner’s equity or stockholders’ equity to increase. Therefore, when a company earns revenues, it will debit an asset account (such as Accounts Receivable) and will need to credit another account such as Service Revenues.
What is considered a revenue account?
What is a Revenue Account? Revenues are the assets earned by a company’s operations and business activities. In other words, revenues include the cash or receivables received by a company for the sale of its goods or services. The revenue account is an equity account with a credit balance.
How does a debit increase a revenue account?
To increase revenue accounts, credit the corresponding sub-account. Decrease revenue accounts with a debit. Say you make a $200 sale to a customer who pays with credit. Through the sale, you increase your Revenue account through a credit. And, increase your Accounts Receivable account through a debit.
How do debits and credits affect your account?
Credits increase Equity Accounts. Debits decrease Equity Accounts. Income accounts have credit balances. Credits increase Income Accounts. Debits decrease Income Accounts. Cost of Goods Sold accounts have debit balances. Debits increase Cost of Goods Sold accounts. Credits decrease Cost of Goods Sold accounts.
Do you have to put a credit in a revenue account?
Since revenues cause an increase to the owner’s equity credit balance, a credit entry will be required. However, at the time that the revenue is recorded, the amount will be entered as a credit in a revenue account.
Do you use increase or decrease in accounting?
However, we do not use the concept of increase or decrease in accounting. We use the words “debit” and “credit” instead of increase or decrease. The meaning of debit and credit will change depending on the account type.
