MGT101 Assignment#01 Solution Spring 2013
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  • Rules of debit and credit are as under:

Increase in asset is debit
Decrease in asset is credit

Increase in expense is debit
Decrease in expense is credit

Increase in income is credit
Decrease in income is debit

Increase in liability is credit
Decrease in liability is debit

Increase in capital is credit
Decrease in capital is debit

  • What are the rules for debit and credit in accounting?

There are three Golden Rules for Debit & Credit, whole accounting is depend on these three rules :- 1. Debit what comes in & Credit what goes out. 2. Debit the receiver & Credit the giver. 3. Debit all loss/expenses & Credit all gains/profits. Regards Jawad
increase in asset is debit & decrease in asset is credit
The above rules do not always apply, It is not as simple as Debit is what comes in and Credit is what goes out. If you pay a bill, yes you "Credit" the cash that is going out, but you also Debit the expense account (the opposite side).
The basic rules are, for every Debit there must be an equal Credit and (of course) for every Credit there must be an equal Debit. Debits and Credits MUST BALANCE, ALWAYS!
The terms Debit and Credit literally mean
Debit = Left side of the accounting columns
Credit = Right side of the accounting columns
Also look at Revenue, if you GET money for doing a job or selling a product, there are TWO Sides that must Equal, if you receive cash you (Debit) Cash, but at the same time you must also (Credit) Income (Revenue).
Assets increase with a Debit (as do expense accounts)
Liabilities increase with a Credit (as do Owners Equity or Capital accounts)Permalink  Reply by + M.Tariq Malik + on Wednesday
DateAccounts InvolvedDebit Rs.Credit Rs.
Applied Rule of Debit and Credit with respect to the nature of account
March 01Bank

Capital
900,000
900000
Increase in asset a/c

Increase in owner’s equity a/c
March 01Advance rent

bank
90,000
90,000
Increase in asset a/c

Decrease in asset a/c
March 01Equipment

Cash

Ammar rental
280,000
170,000

110,000
Increase in asset a/c

Decrease in asset a/c

Increase in liability a/c
March 04Office supplies

Office furniture

Asher & co.
5000

50,000



55,000
Increase in asset a/c

Increase in asset a/c

Increase in liability a/c
March 08Cash

Rent received
10,000
10,000
Increase in asset a/c

Increase in income a/c
March 10M/S ABC

Rent
5000
5000
Increase in asset a/c

Increase in income a/c
March 17Repairing & maintenance


cash
3400


3400
Increase in expense a/c



Decrease in asset a/c
March 27Bank charges

Bank
150
150
Increase in expense a/c

Decrease in asset a/c
March 30Bank

M/S ABC
10,000
10,000
Increase in asset a/c

Decrease in asset a/c
March 31Salaries

cash
3600
3600
Increase in expense a/c

Decrease in asset a/c
DateAccounts InvolvedDebit Rs.Credit Rs.
Applied Rule of Debit and Credit with respect to the nature of account
March 01Bank

Capital
900,000
900000
Increase in asset a/c

Increase in owner’s equity a/c
March 01Advance rent

bank
90,000
90,000
Increase in asset a/c

Decrease in asset a/c
March 01Equipment

Cash

Ammar rental
280,000
170,000

110,000
Increase in asset a/c

Decrease in asset a/c

Increase in liability a/c
March 04Office supplies

Office furniture

Asher & co.
5000

50,000



55,000
Increase in asset a/c

Increase in asset a/c

Increase in liability a/c
March 08Cash

Rent received
10,000
10,000
Increase in asset a/c

Increase in income a/c
March 10M/S ABC

Rent
5000
5000
Increase in asset a/c

Increase in income a/c
March 17Repairing & maintenance


cash
3400


3400
Increase in expense a/c



Decrease in asset a/c
March 27Bank charges

Bank
150
150
Increase in expense a/c

Decrease in asset a/c
March 30Bank

M/S ABC
10,000
10,000
Increase in asset a/c

Decrease in asset a/c
March 31Salaries

cash
3600
3600
Increase in expense a/c

Decrease in asset a/c


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