Chapter-3. Recording of transaction-I Accounts class 11 in english Medium CBSE Notes

Rules of Debit and Credit

All accounts are divided into five categories for the purposes of recording the transactions:

(a) Asset

(b) Liability

(c) Capital

(d) Expenses/Losses, and

(e) Revenues/Gains.

Two fundamental rules are followed to record the changes in these accounts:
(1) For recording changes in Assets/Expenses (Losses):
(i) “Increase in asset is debited, and decrease in asset is credited.”
(ii) “Increase in expenses/losses is debited, and decrease in expenses/
losses is credited.”
(2) For recording changes in Liabilities and Capital/Revenues (Gains):
(i) “Increase in liabilities is credited and decrease in liabilities is debited.”
(ii) “Increase in capital is credited and decrease in capital is debited.”
(iii) “Increase in revenue/gain is credited and decrease in revenue/gain is debited.”