In a T-account framework, which side records increases for assets, and which side records increases for liabilities and equity?

In a T-account framework, which side records increases for assets, and which side records increases for liabilities and equity?

• A. Left side (Debit) for increases to assets; Right side (Credit) for increases to liabilities and equity
• B. Right side (Credit) for increases to assets; Left side (Debit) for increases to liabilities and equity
• C. Increases to assets are recorded on the left; increases to liabilities/equity on the right
• D. Both sides record increases equally

Answer: (C)

In double-entry accounting, each transaction affects two sides: debits on the left and credits on the right. Assets have a normal debit balance, so increases to assets are recorded on the left (a debit). Liabilities and owner’s equity have normal credit balances, so increases to these accounts are recorded on the right (a credit). For example, buying supplies with cash increases an asset (the supplies account) so you debit Supplies, while cash decreases and is credited. If you borrow money, the liability increases and is credited. If you later pay down that liability, you would debit the liability (left) and credit cash (right).

In double-entry accounting, each transaction affects two sides: debits on the left and credits on the right. Assets have a normal debit balance, so increases to assets are recorded on the left (a debit). Liabilities and owner’s equity have normal credit balances, so increases to these accounts are recorded on the right (a credit). For example, buying supplies with cash increases an asset (the supplies account) so you debit Supplies, while cash decreases and is credited. If you borrow money, the liability increases and is credited. If you later pay down that liability, you would debit the liability (left) and credit cash (right).