Rules of accountancy Debit what comes in credit what goes out Debit the receiver credit the giver

Question

Accepted Answer

Rules of accountancy dictate that debits represent what comes in and credits represent what goes out, as well as debiting the receiver and crediting the giver.

Debit what comes in, credit what goes out - this means that when money or assets come into the business, it is recorded as a debit, and when they go out, it is recorded as a credit.
Debit the receiver, credit the giver - this principle is used when recording transactions involving the transfer of money or assets between parties. The receiver is debited, and the giver is credited.
These rules are fundamental in double-entry accounting, ensuring that the accounting equation (Assets = Liabilities + Equity) remains balanced.
Examples: When a business receives cash from a customer, cash account is debited (what comes in) and accounts receivable account is credited (what goes out). When a business pays cash to a supplier, accounts payable account is debited (receiver) and cash account is credited (giver).

Accepted Answer

Real Account

Rules of accountancy Debit what comes in credit what goes out Debit the receiver credit the giver

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