What are the three rules of debit and credit?
Sarah Martinez
Updated on January 19, 2026
Take a look at the three main rules of accounting: Debit the receiver and credit the giver. Debit what comes in and credit what goes out. Debit expenses and losses, credit income and gains.
Why are the rules of debit and credit?
Rules of Credits by Account Opposite to debits, the “credit rule” state that all accounts that normally contain a credit balance will increase in amount when a credit is added to them and reduce when a debit is added to them. The types of accounts to which this rule applies are liabilities, equity, and income.
What are the modern rules of debit and credit?
Rules of Debit and Credit under the Modern Approach
| Asset Accounts | Debit the increase; Credit the decrease |
|---|---|
| Liabilities Accounts | Credit the Increase; Debit the decrease |
| Capital Accounts | Credit the Increase; Debit the decrease |
| Revenue Accounts | Credit the Increase; Debit the decrease |
What are the rules of debit and Credit Accounting?
Revenue/Income accounts: Rule: An increase is recorded on the credit side and a decrease is recorded on the debit side of all revenue accounts. (5). Capital/Equity accounts: Rule: An increase is recorded on the credit side and a decrease is recorded on the debit side of all equity accounts.
How does a credit and a debit work?
A debit increases the balance and a credit decreases the balance. The basic rules of debits and credits are: All accounts that usually have a debit balance will increase when a debit (left-hand side) is added, and decrease when a credit (right-hand side) is added. Debit accounts include assets, expenses and dividends (draw).
Which is the right side of an account debit or credit?
In accounting, debit refers to the left hand side of any account and credit refers to the right hand side. Asset, expenses and losses accounts normally have debit balances; liability, income and capital accounts normally have credit balances.
Is the normal balance of an account debit or credit?
If, on the other hand, the normal balance of an account is credit, we shall record any increase in that account on the credit side and any decrease on the debit side. The normal balance of all asset and expense accounts is debit where as the normal balance of all liabilities, and equity (or capital) accounts is credit.
