In Accounts,there are only 2 things

  1. Profit and Loss- Containing Expenses and Incomes
  2. Balance Sheet-Containing Liabilities and Assets



Rules for Accounting

All Expenses- Debit

All Incomes- Credit

All Liabilities- Credit if Increase (Debit if Decrease)

All Assets- Debit if Increase (Credit if Decrease)


If we know these rules, our no entry will be wrong

Profit and Loss






Balance Sheet



Cr (Increase)



Cr (Decrease)




Example 1:-

Internet Bill received from Reliance of Rs 2000



Internet Expense Dr       2000

                To Reliance                         2000


(Internet Bill is an expense, hence we debit it

Reliance is a Creditor i.e. a liability, Since it increases, we Credit it


Example 1 Continued

Suppose Amount paid to Reliance by Cash 2000

View Answer

Entry 2

Machine purchased from AB Technologies 50000

Amount paid by cheque


Machinery A/c Dr                50000

                To AB Technologies         50000

(Machinery is our Asset,since it increases,we debit it

AB Technologies is our Sundry Creditor i.e. Liability,since it increases,we Credit it

  AB Technologies Dr        50000

                To Bank                                50000

  (AB Technologies is our creditor liability, since we have paid him, our liability decreases, hence we debit it

(Bank is our asset, since it also decreases, we Credit it)


Example 3

Sales made to Max and Co Rs 30000.

Amount received by NEFT (National Electronic Fund Transfer i.e. amount received directly in bank account)



Max Dr                 30000

                To Sales                30000

(Since Sales is an Income, we credit it

Since Max is our Debtor i.e. Asset and it increases, we Debit it)


Bank Dr                300000

                To Max                 3000000

(Bank is our asset, since it increases, we debit it

Max is out Sundry Debtor, since it decreases, we credit it)

  1. Accounts and Finance
  2. Step 1 Basic of Accounts -Debits and Credits

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 9 years. He also provides Accounts Tax GST Training in Delhi and Pune.