The paper "The Rules of Debit and Credit" is an outstanding example of an essay on accounting. The rules of debit and credit as applied to various accounts in financial accounting are specific. Each transaction in a particular account is recorded twice according to financial accounting rules. The different accounts in financial accounting are assets account, liabilities accounts, owner’ s equity account, revenues account, and expense account. In financial accounting, the debit and credit are positioned on the left and ride sides of the financial statement. In the case of assets accounts, an increase in the asset is recorded on the left-hand side whereas the decrease in asset comes on the right side.
For example, a purchase of machinery is recorded on the left and the sale of machinery is shown on the rights hand side of the financial statement. In the case of liabilities accounts, an increase in liability will be posted on the credit side and decrease is recorded on the debit side. if an organization has accounts payable then it will be recorded on the credit side while accounts receivables recorded on the debit side.
The owner’ s equity account is an owner’ s capital account where the increase and decrease in the owner’ s profitability are projected. Here a purchase of assets will be posted on the debit side whereas the sale of an asset comes on credit side. In the case of revenue account, an increase in an asset is debited while a decrease in the asset is credited. In expense account, the salary paid to employees will be credited and interest received will be debited. So every transaction is balanced out by recording them on the debit and credit side of an account.