Question

Rules of Debit and CreditThe following table summarizes the rules of debit and credit. Indicate whether the proper answer is a debit or a credit. Increase Decrease Normal BalanceBalance sheet accounts: Asset Debit Credit DebitLiability Credit Debit CreditStockholders' equity: Common Stock Credit Debit CreditRetained Earnings CreditDividends Debit Credit Income statement accounts: Revenue CreditExpense Credit Debit

Answer 1

Answer:

Retained Earnings Credit Debit Credit

Revenues Credit Debit Credit

Expenses Debit Credit Debit

Explanation:

As provided, we can clearly bifurcate the nature of each and every item separately.

Retained Earnings

When increase is credited,

When decrease is debited,

As for a normal balance it is part of stockholder's equity and thus, it has a credit balance.

Revenues are part of income statement, with revenues the net income increases.

Increase in revenue is credited,

Decrease in revenue is debited.

And generally, revenues has credit balance.

Expenses are the ones with which the net income reduces,

Increase in expense is debited,

Decrease in expense is credited.

And generally expenses have debit balance.