Rules of Debit and Credit in Accounting – Class 11 Complete Guide with Examples

Rules of Debit and Credit in Accounting – Class 11 CBSE Guide

Two words appear on nearly every page of an accounting textbook: Debit and Credit. Yet many students remain confused about what they actually mean — especially because debit does not always mean increase, and credit does not always mean decrease.

The rules of debit and credit depend entirely on the type of account being affected. Understand the five types of accounts and two core rules, and these concepts will click permanently.

This blog provides a complete, example-driven explanation of debit and credit rules for CBSE Class 11 Accountancy, Chapter 3: Recording of Transactions-I.

What Do Debit and Credit Mean?

In accounting, every account has two sides:

• Left side → Debit (Dr.)

• Right side → Credit (Cr.)

Think of an account like the letter T — called a T-account:

        Account Title
  ________________________
  |                      |
  |  Dr. (Left Side)  |  Cr. (Right Side)  |
  |                      |

To debit an account means to enter an amount on its left side. To credit an account means to enter an amount on its right side.

Whether a debit increases or decreases an account — and whether a credit increases or decreases an account — depends on which of the five categories the account belongs to.

The Five Categories of Accounts

In double-entry accounting, all accounts fall into five categories:

The Two Fundamental Rules of Debit and Credit

Rule 1: For Assets and Expenses (Losses)

Assets and expenses behave the same way — they are debited when they increase and credited when they decrease.

Rule 2: For Liabilities, Capital, and Revenues (Gains)

Liabilities, capital, and revenues behave the opposite way — they are credited when they increase and debited when they decrease.

A Memory Aid

A helpful way to remember this:

• DEAD CLIC

• Debit: Expenses, Assets, Drawings → increase

• Credit: Liabilities, Income (Revenue), Capital → increase

Applying the Rules: Transaction-by-Transaction Analysis

Let us apply these rules to the transactions from Rohit’s business in the NCERT textbook:

Transaction 1: Rohit started business with cash ₹5,00,000.

• Cash increases (Asset ↑) → Debit Cash A/c

• Capital increases (Capital ↑) → Credit Capital A/c

Cash A/c (Dr.) ₹5,00,000 | Capital A/c (Cr.) ₹5,00,000

Transaction 2: Opened a bank account with ₹4,80,000.

• Bank increases (Asset ↑) → Debit Bank A/c

• Cash decreases (Asset ↓) → Credit Cash A/c

Bank A/c (Dr.) ₹4,80,000 | Cash A/c (Cr.) ₹4,80,000

Transaction 3: Bought furniture for ₹60,000 and issued a cheque.

• Furniture increases (Asset ↑) → Debit Furniture A/c

• Bank decreases (Asset ↓) → Credit Bank A/c

Furniture A/c (Dr.) ₹60,000 | Bank A/c (Cr.) ₹60,000

Transaction 4: Bought Plant and Machinery worth ₹1,25,000; advance of ₹10,000 in cash, balance to Ramjee Lal.

• Plant & Machinery increases (Asset ↑) → Debit Plant & Machinery A/c

• Cash decreases (Asset ↓) → Credit Cash A/c

• Ramjee Lal (creditor) increases (Liability ↑) → Credit Ramjee Lal A/c

Plant & Machinery A/c (Dr.) ₹1,25,000 | Cash A/c (Cr.) ₹10,000
                                        | Ramjee Lal A/c (Cr.) ₹1,15,000

Transaction 5: Goods purchased from Sumit Traders for ₹55,000 on credit.

• Purchases increases (Expense ↑) → Debit Purchases A/c

• Sumit Traders (creditor) increases (Liability ↑) → Credit Sumit Traders A/c

Purchases A/c (Dr.) ₹55,000 | Sumit Traders A/c (Cr.) ₹55,000

Transaction 6: Goods costing ₹25,000 sold for ₹35,000 on credit to Rajani Enterprises.

• Rajani Enterprises (debtor) increases (Asset ↑) → Debit Rajani Enterprises A/c

• Sales increase (Revenue ↑) → Credit Sales A/c

Rajani Enterprises A/c (Dr.) ₹35,000 | Sales A/c (Cr.) ₹35,000

Transaction 7: Paid monthly rent ₹2,500 in cash.

• Rent increases (Expense ↑) → Debit Rent A/c

• Cash decreases (Asset ↓) → Credit Cash A/c

Rent A/c (Dr.) ₹2,500 | Cash A/c (Cr.) ₹2,500

The Golden Summary: Debit and Credit Rules at a Glance

ASSETS:         Increase = Debit   |   Decrease = Credit
LIABILITIES:    Increase = Credit  |   Decrease = Debit
CAPITAL:        Increase = Credit  |   Decrease = Debit
EXPENSES:       Increase = Debit   |   Decrease = Credit
REVENUES:       Increase = Credit  |   Decrease = Debit

Does Debit Always Mean Increase? Does Credit Always Mean Decrease?

No — this is one of the most common misconceptions.

• For assets and expenses: Debit = Increase, Credit = Decrease

• For liabilities, capital, and revenues: Debit = Decrease, Credit = Increase

Debit and credit are simply directional labels (left and right). Their meaning — increase or decrease — depends entirely on the type of account.

Practice Debit-Credit Rules Until They Become Automatic

Debit and credit rules are applied hundreds of times across every exam paper and real business situation. The only way to master them is by practising transaction analysis regularly. ChampionsPrep offers a rich bank of practice questions on debit-credit rules, accounting equations, and journalising — solved instantly by our AI doubt engine.

👉 Start Practising Now on ChampionsPrep

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