Accountancy | Class 11 Accountancy Notes

3.3 Using Debit and Credit

In double-entry accounting, every transaction involves at least two accounts, with total debits equaling total credits. The terms debit (Dr.) and credit (Cr.) indicate the left and right sides of an account, respectively. Accounts are represented in a T-account format, with the left side for debits and the right side for credits. The rules of debit and credit depend on the type of account involved. There are five categories of accounts: Assets, Liabilities, Capital, Expenses/Losses, and Revenues/Gains. For assets and expenses, increases are debited and decreases credited. For liabilities, capital, and revenues, increases are credited and decreases debited. The chapter provides detailed examples applying these rules to various transactions, showing how to record them correctly using debit and credit entries. This understanding is crucial for maintaining the accounting equation and preparing accurate financial records.

📊 Diagram: Fig. 3.4: Showing T-account

🔗 Connection: Leads to detailed rules of debit and credit for different account types.