If
a transaction has the effect of decreasing an asset, is the decrease
recorded as a debit or as a credit? If the transaction has the effect
of decreasing a liability, is the decrease recorded as a debit or as
a credit?
If a transaction has the effect of decreasing an asset, is the decrease recorded as a debit or as a credit? If the transaction has the effect of decreasing a liability, is the decrease recorded as a debit or as a credit?
If a
transaction has a decreasing effect on an asset, then this decrease
is recorded as credit. This is because, as all assets have debit
balance and if assets decrease, then it is credited. For example,
sale of furniture results in decrease in furniture (asset); so, the
sale of furniture will be credited.
If a
transaction has a decreasing effect on a liability, then this
decrease is recorded as debit. This is because all liabilities have
credit balance. If the liability increases, then it is credited and
if the liability decreases, then it is debited. For example, payment
to the creditors results in a decrease in the creditors (liability);
so, the creditors account will be debited.
If a transaction has a decreasing effect on an asset, then this decrease is recorded as credit. This is because, as all assets have debit balance and if assets decrease, then it is credited. For example, sale of furniture results in decrease in furniture (asset); so, the sale of furniture will be credited.
If a transaction has a decreasing effect on a liability, then this decrease is recorded as debit. This is because all liabilities have credit balance. If the liability increases, then it is credited and if the liability decreases, then it is debited. For example, payment to the creditors results in a decrease in the creditors (liability); so, the creditors account will be debited.
