a debit(DR) entry in the accounts can have all the effects excepts: A. increase assets B. increase revenues C. Decrease Liabilities D. Decrease Equity choose B. but why D , C and A correct? if both liability and equity decrease, shouldn’t the asset be dropped either? (A=L+E) same question for Credit(CR) in the account, if CR can increase revenue, how could be liabilities and equity increased, and asset decrease. so confused!anyone can help thanks!
it’s just asking what account a debit increases. not both sides of the transaction. so a debit increases an asset but decreases either revenue, liablilty or equity.
My 50ct, Revenues is in the income statement (what can appears in the BS is the result) Others are balance sheet related
Please excuse this question but FSA is a weakness for me. Why is it that a Debit is an increase for assets? Shouldn’t it be that a credit increases an asset just like on the L+E side of a T statement. Therefore a debit would be a decrease for liabilities and equity as well? Thanks for clarification.
nope. that would be too simple. Debiting an asset means increasing in asset. Crediting an expense, liability, equity etc means increasing it.
debit/credit is not tested. it is all in the optional material. however, yes it is confusing, as it is the exact opposite of how banks refer to the terms debit/credit.
This is useful. AED = LRC LHS = Debit Nature / RHS = Credit Nature Hence, Asset, Expense and Dividends are debit nature (Increase means debit) and vice versa.
Golden Rules - Accounting Personal Accounts - Debit the receiver, Credit the giver Real Accounts - Debit what comes in, Credit what goes out Nominal Accounts - Debit all expenses/losses, Credit all incomes/gains. Increase in Real Accounts = Assets(Dr), Liabilities(Cr) and equity(Cr) Increase in Nominal Accounts = Income (Cr) Decrease in Real Accounts = Assets(Cr), Liabilities(Dr) and equity (Dr) Decrease in Nominal Accounts = Income (Dr)
If debit/credit is optional CFAI material and won’t be tested, then why does Schweser include a discussion in the video CDs?
For Assets a Debit increases the acct For Liabilities/Equity a Credit increases the acct. Simple as that. it’s inverse.