From my vast experience, it is quite evident that person who has clear basics about debit and credit rule, can rule the accountancy world. So today we are going to discuss about debit and credit rule

⭐ Debit and Credit Rules in Accounting (Explained in Detail)

Accounting follows the Double Entry System, which means every transaction has two sides:

• Debit (Dr)
• Credit (Cr)

For every transaction, Total Debit = Total Credit

But how do we know which account to debit and which to credit?

To understand this, we divide all accounts into five main categories.

📘 Types of Accounts in Accounting

There are two main approaches:

1. Traditional Classification (Three Accounts)

1. Personal Account
2. Real Account
3. Nominal Account

2. Modern Classification (Five Accounts)

1. Assets
2. Liabilities
3. Capital / Equity
4. Income / Revenue
5. Expenses / Losses

The modern system is more widely used today.

🌟 Debit and Credit Rules (Modern Approach)

1️⃣ Asset Accounts

Examples: Cash, Bank, Furniture, Building, Debtors

• Increase → Debit
• Decrease → Credit

👉 Example:
You buy furniture for cash ₹10,000

• Furniture (Asset) increases → Debit
• Cash (Asset) decreases → Credit

Journal Entry:
Furniture A/c …… Dr 10,000
  To Cash A/c ………… 10,000

2️⃣ Liability Accounts

Examples: Creditors, Loans, Outstanding Expenses

• Increase → Credit
• Decrease → Debit

👉 Example:
You take a loan of ₹50,000 from bank

• Loan (Liability) increases → Credit
• Cash (Asset) increases → Debit

Journal Entry:
Cash A/c ……… Dr 50,000
  To Bank Loan A/c ……… 50,000

3️⃣ Capital / Equity Account

Examples: Owner’s Capital, Drawings

• Capital Increase → Credit
• Capital Decrease → Debit

👉 Example:
Owner invests ₹1,00,000 into business

• Capital increases → Credit
• Cash increases → Debit

Journal Entry:
Cash A/c …… Dr 1,00,000
  To Capital A/c ……… 1,00,000

4️⃣ Income / Revenue Accounts

Examples: Sales, Commission Received, Rent Received

• Increase → Credit
• Decrease → Debit

👉 Example:
You make cash sales of ₹20,000

• Cash (Asset) increases → Debit
• Sales (Income) increases → Credit

Journal Entry:
Cash A/c …… Dr 20,000
  To Sales A/c ……… 20,000

5️⃣ Expense / Loss Accounts

Examples: Salary, Rent, Stationery, Electricity

• Increase → Debit
• Decrease → Credit

👉 Example:
You pay salary of ₹15,000

• Salary (Expense) increases → Debit
• Cash decreases → Credit

Journal Entry:
Salary A/c …… Dr 15,000
  To Cash A/c ……… 15,000

✨ Shortcut Summary Table

Type of Account	Increase	Decrease
Asset	Debit	Credit
Liability	Credit	Debit
Capital	Credit	Debit
Income	Credit	Debit
Expenses	Debit	Credit

⭐ Traditional Rules (Easy Memory Trick)

1. Personal Account

Debit the receiver
Credit the giver

👉 Example: Paid ₹10,000 to creditor Ram.
Ram (giver) → Credit
Cash → Credit? NO, Cash is receiver? Actually Cash goes out (real). Traditional overlap.

2. Real Account

Debit what comes in
Credit what goes out

👉 Furniture purchased: Furniture comes in → Debit; Cash goes out → Credit.

3. Nominal Account

Debit all expenses and losses
Credit all incomes and gains

👉 Salary paid: Salary is expense → Debit.

✔ Simple Combined Example

You receive ₹5,000 as rent from a tenant.

• Cash (Asset) increases → Debit
• Rent Received (Income) increases → Credit

Entry:
Cash A/c …… Dr 5,000
  To Rent Received A/c ……… 5,000