Debit always means a. on the right side of the account b. increase c. decrease d.none

Debit always means:

  1. right side of an account.
  2. increase.
  3. decrease.
  4. none of these

The correct answer is option d which says, “none of these”. Debit is on the left side of an account. Debit does not always mean an increase or a decrease.

Is debit always on the right side of an account?

As you can see in the following T-account, debit is on the left side of the account. Credit is on the right side of the account.

Debit is always on the left side of the account
Debit is always on the Left Side

Does Debit always mean an increase?

Debit is an increase in limited circumstances i.e. when we have an expense account or asset account. When an expense account is debited, it is an increase.

Expense Account

Suppose, balance of our stationary account is zero. For example, if we purchase some stationary item, the following entry is passed;

  Dr Cr
Stationary Account $30
Cash $30
Example

As you can see, stationary account is debited and its increased from zero to $30.

Now, suppose we purchase more stationary items the next day, we’ll pass the following journal entry;

  Dr Cr
Stationary Account $20
Cash $20
Example

Once again, stationary account is debited and its increased from $30 to $50.

Let me show it in T-account form;

T account showing debit is always not an increase
T account

Asset Account

The same is the case with asset account. An asset account is increased if its debited.

Suppose we have no vehicles at the moment. On September 1, 2019, purchased a vehicle, the following entry will e passed;

  Dr Cr
Vehicle $30,000
Cash $30,000
Journal Entry

As you can see, vehicle account is debited and its increased from zero to $30,000

Now, suppose after some months, we make some major changes in the car (capital expenditure), we’ll pass the following journal entry;

  Dr Cr
Vehicle Account $2,500
Cash $2,500
Journal Entry

Once again, vehicle account is debited and its increased from $30,000 to $32,500.

Let me show it in T-account form;

Debit is always
T account

Now, we have evaluated our 2nd option and we can conclude that “Debit is an increase in case of Expenses and Assets only (Not always)”

Is debit always a decrease?

The answer is no. Debit is a decrease in two cases only

  • Liability
  • Income

A liability is decreased when its debited. For example, suppose we buy an asset on loan. We will pass the following entry;

  Dr Cr
Vehicle $20,000
Loan $20,000
Journal Entry

As you can see, Loan account is debited by 20,000 and its increased from zero to $20,000.

You can see from the above example that, when we are crediting our Liability account, we are increasing our asset account. This is always the case, when we are crediting a liability, we either have expense or an asset in our debit.

Conclusion

Debit does not always mean an increase or a decrease. Similarly, Debit is on the left of the account, so option A is also not correct. The only true answer is “None of these”.

Summary
Debit always means a. on the right side of the account b. increase c. decrease d.none
Article Name
Debit always means a. on the right side of the account b. increase c. decrease d.none
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The correct answer to the question. Debit does not always mean an increase or a decrease. Similarly, Debit is on the left of the account, so option A is also not correct. The only true answer is “None of these”.
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Sacred Accounting
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