Credit and Debit

Credit and Debit are principles of the opposite nature that form the basis of accounting. These principles are the basis and most fundamental of accounting as plus and minus are to mathematics.It would however not be appropriate to apply these rules at all times, as it could not give a sensible meaning. In normal circumstances, we should consider debit as addition and credit as subtraction. It is important to realize that debit and credit are of opposing nature and to use them appropriately is the trick of accountingAn account that is affected by a transaction then it is either credited or debited by the particular amount depending on the nature or type of the accountThe three most important accounting rules based on debit and credit are the following
1) Real account: debit what comes in, credit what goes out
2) Nominal account: debit all expenses and loses, credit all incomes and revenues
3) Personal account: debit the receiver, credit the giver

• The following are a few examples throwing light to debit and credit of accounting
  Considering the following transaction: Bought furniture for credit from Mr. AThe two elements affected here are furniture a/c and Mr. A’s a/cFurniture here is real account, and according to real account, debit what comes in. hence, the furniture a/c is debited.

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