Chapter 2, Problem 2DQ

To determine

Debit: A debit, in an accounting term refers to the left side of an account. The term debit can be denoted by (Dr). The amounts which are recorded on the left side of the account are known as debiting.

Credit: A credit, in an accounting term refers to the right side of an account. The term credit can be denoted as (Cr). The amounts which are recorded on the right side of the account are known as crediting.

Rules of debit and credit:

“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.

Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.

To Explain: The termdebit and credit signify increase and decrease or signify either.