Accounting

Because, for every transaction on the left there must be one on the right. Increases in assets are debited to asset accounts. [ Increases in liabilities and owner's equity are credited to liability and owner's equity accounts. One of the more difficult points to understand is the application of these rules to the owner's equity components of revenues, expenses and withdrawals. Since revenues increase owner's equity and expenses and withdrawals decrease it. For every transaction there needs to be a reaction. So if you debit one account you need to credit the other o have a balance. Accountants will debit asset accounts to increase them while crediting liability accounts to increase them the same reason they debit expenses to increase them and also credit revenues to increase them. This is because of the double-entry system. In the equation assets = liability + stockholders' equity you have to do the opposite to assets than you would liabilities and stockholders' equity. So, because you debit assets you would do the opposite to the other side to balance the equation and therefore credit stockholders' equity. So if someone gave the company $10 in exchange for stock, the accountant would debit assets $10 and to balance the equation credit stockholders' equity. When you debit one account you must credit another so that the accounts equal each other out. When you debit an asset account you are increase to add to the assets, you then go to the right side of the t and credit the liabilities. When you credit the liabilities you are more to the liabilities. The way i think of it is when you buy something on loan you created an asset and a liability so each account must reflect the transaction. Accountants use debit and credit to increase and decrease accounts. Depending on the account such as expenses a debit would be mean to add expenses and a credit in this account would decrease expenses. The reverse with a revenue account to decrease the account you debit and increase...