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Question
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
Solution
(a) increase revenue: For this case, Income/Gain should be credited as it increase the revenue of the business making the rise in the amount of the capital.
(b) Decrease in expense: The expenses are usually debited in the books of account.
But in this case the expenses are decreasing implying that reverse treatment should be given and hence the expenses have to be credited.
(c) Record drawings: Drawings refer to the withdrawal thereby reduces the amount of the capital.
Hence this should be debited in the books of accounts.
(d) Record the fresh capital introduced: Whenever the fresh capital is reduced in the business mu be credited as it increases the liability of the business by given the rise of the capital in the business.
