What entry (debit or credit) would you make to: (a) increase revenue (

1.	What entry (debit or credit) would you make to: (a) increase revenue (b) decrease in expense, (c) record drawings (d) record the fresh capital introduced by the owner.
Answer» • Increase in revenue Increase in revenue is credited as it increases the capital. Capital has credit balance and if capital increases, then it is credited. • Decrease in expense Decrease in expense is credited as all expenses have debit balance. If expense decreases, then it is credited. • Record drawings Capital has credit balance; if the capital increases, then it is credited. If capital decreases, then it is debited. Drawings are debited as they decrease the capital. • Record of fresh capital introduced by the owner – credit Capital has credit balance, if capital increases, then it is credited. The introduction of fresh capital increases the balance of capital, and so, it is credited.

What entry (debit or credit) would you make to: (a) increase revenue (b) decrease in expense, (c) record drawings (d) record the fresh capital introduced by the owner.

Answer»

• Increase in revenue Increase in revenue is credited as it increases the capital. Capital has credit balance and if capital increases, then it is credited.

• Decrease in expense Decrease in expense is credited as all expenses have debit balance. If expense decreases, then it is credited.

• Record drawings Capital has credit balance; if the capital increases, then it is credited. If capital decreases, then it is debited. Drawings are debited as they decrease the capital.

• Record of fresh capital introduced by the owner – credit Capital has credit balance, if capital increases, then it is credited. The introduction of fresh capital increases the balance of capital, and so, it is credited.

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