N 11TH CLASS ACCOUNTS BOOK I HAVE READ THAT DEBIT MEANS DECREASE IN OWNERS EQUITY AND CREDIT MEANS INCREASE IN OWNERS EQUITY..........THIS STATEMENT APPLIES ON EXPENSES AND INCOME AS WE DEBIT EXPENSES BECAUSE EXPENSES REDUCES PROPRIETORS EQUITY SIMILARLY INCOME IN BUSINESS INCREASES PROPRIETORS EQUITY SO WE CREDIT INCOME IN OUR BUSINESS. BUT I WANT TO KNOW HOW THIS STATEMENT APPLIES ON ASSETS AND LIABILITIES BEACUSE WE DEBIT INCREASES IN ASSETS IN OUR BUSINESS , SO ACCODINT TO THE ABOVE STATEMENT INCREAES IN ASSETS REDUCES OWNERS EQUITY...HOW DOES THIS POSSIBLE BECAUSE INCREASE IN ASSETES EITHER REDUCES OTHER ASSET OR INCREASE S A LIABILITY BUT THE OWNERS EQUITU REMAIN UNAFFECTED........SIMILARLY AS CREDIT MEANS INCREASES IN OWNERS EQUITY SO WHEN A BUSINESS TAKES A LOAN FROM BANK HOW DOES THIS LOAN AMOUNT AMOUNT INCREASES OWNERS EQUITY ..PLEASE EXPLAIN IT CLEARL
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Pls.........help
Anuj JI Please go the link below
/forum/details.asp?mod_id=174984&offset=1
which was also posted by me yestarday
i am not satisfied with urs answer
anuj now you have gained the knowledge of accounting principles so why so much focusing on that 11th standard book.
ashish bhai thats not the answer of my question...........i always prefer conceptual clarity
well dear agar aapko apna answer mile to mujhe bhi batana because mane kabhi debit aur credit ka ye meaning nahi padha kisi bhi book me.
When you record expenses and incomes the entry you pass out effect two accounts......one being a real a/c and the other being a nominal a/c which gives a change in either profit or loss.....
So in that case it solely it effects the owner's equity........as p/l would be their return for what they've done.....
But....in case of a transaction involving.....an asset or a liability......both the a/c 's involved are real a/c's.......and the ultimate light thrown on the owner's equity would be nill........
So there would be no matter considering the effect of debit or credit when you take a look of long term effecting transactions.........hope you're clear.......
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