DEBIT

AND
CREDIT
Fundamentals of ABM 1
 PRAYER
Lord, we offer to You our class today. We pray that through
Your Divine Guidance, we would learn how to listen
attentively to the inputs of our teacher. May we participate
actively in the discussions and activities, so we could learn
more while having fun. May we value each other’s
contributions as a building block towards harmony and
peace. All these we ask in Your powerful name. Amen.
CLASSROOM REMINDERS
At the end of
the lesson, you
are expected to:
 Analyze common business transactions using the
rules of debit and credit
 Solve simple problems and exercises in the
analyses of business transaction
 ”
The basis of the rules of debits and credits is
how the effects of the transaction on the
accounting elements are treated.
Changes in assets, liabilities, owner’s equity,
revenue, and expenses are shown either on the
left or on the right side of an account.
The left side of an account is called the debit side and the
right side is called the credit side. To show the effects of
debit and credit entries to an account, postings are made to
T- Accounts.

T-Account is a representation to separate debit from credit

in the form of “T”, whereas debit entry is put in the left
while credit entry is in the right side.

When analyzing and solving transactions using the T-

accounts, the accounting equation must always be
considered. The equation is as follows:
Assets = Liabilities + Owner’s Equity
The recorded increase and decrease in the T-
Account is determined by the account type.
 If there is an increase in assets, you will
record it as debits (on the left side of the
T-Account).
 If there is a decrease in assets, you will
record it as credits (on the right side).
Debit is the normal balance of the asset
accounts.
Increases in liabilities are recorded on credits and decreases on
debits.

The same rule applies with the owner’s equity accounts—

increases are recorded on credits and decreases are on debits.
If there is an increase in income, it will be recorded as credits and
if there is an adjustment (decrease), it will be recorded as debits.

Increases in expenses are recorded as debits and decreases are as

credits.
Normal Balances
For better understanding, the rules of
debit and credit will be applied to
Sarimanok Ads Design owned by
Maria Matulungin.
April 1: Matulungin deposited P350,000 to start her
new business.
April 2: Matulungin bought a computer amounting to
P50,000 by issuing a note payable to Ardiente
Computer Store.
April 3: Matulungin paid P15,000 to SB Spaces for
rent covering the months of April, May, and June.
April 4: Ralph Polo gave P18, 000 as an advanced
payment for services on the next three months.
April 5: Matulungin bought computer in the amount
of P145,000.00 on cash basis.
April 9: Matulungin purchased computer supplies in
the amount of P25,000 on account.
April 11: Matulungin collected P88,000 in cash for
services rendered.
April 16: Matulungin paid P18, 000 cash for utilities.
April 17: Matulungin billed the clients P35,000.00 for
services rendered during the month.
April 19: Matulungin partially paid April 9 purchase
of computer supplies at P17,000.
April 20: Matulungin collected P25,000 cash from
clients for billings dated April 17.
April 21: Matulungin withdrew P20,000 from the
business for personal use.
April 27: Matulungin received P8,000 for advertising
bill.
April 30: Matulungin paid P15,000 for the salary of
the assistant.
 After recording the transactions
in their respective T-accounts,
determine the account balance of
each account.