What is true about debits and credits?

Question

They always increase all accounts.

They always decrease all accounts.

They can be interchanged and substituted for each other; it does not matter which is used.

They are ways that you increase and decrease accounts.

Answer 1

The statement that is true about debits and credits is:

They are ways that you increase and decrease accounts.

In double-entry accounting:

• A debit increases asset and expense accounts and decreases liability, equity, and revenue accounts.
• A credit decreases asset and expense accounts and increases liability, equity, and revenue accounts.

Therefore, debits and credits are used to record transactions in a way that maintains the accounting equation (Assets = Liabilities + Equity), but they do not always simply increase or decrease all accounts in the same manner.