In double-entry bookkeeping, which side of an asset account normally increases with a debit?

In double-entry bookkeeping, which side of an asset account normally increases with a debit?

• A. Debit
• B. Credit
• C. Both
• D. Neither

Answer: (A)

In double-entry bookkeeping, assets carry a normal debit balance, so increases to an asset are recorded on the left side of the asset’s T-account. When you acquire an asset, you debit the asset to show the increase and credit something else to keep the books in balance. For example, buying equipment with cash increases the Equipment asset, so you debit Equipment and credit Cash. If you purchase on credit, you debit the asset (like Inventory) and credit the liability (Accounts Payable). Since debits expand asset balances and credits reduce them, the side that increases an asset is the debit side. The credit side would decrease assets, so it doesn’t fit the usual increase for an asset.

In double-entry bookkeeping, assets carry a normal debit balance, so increases to an asset are recorded on the left side of the asset’s T-account. When you acquire an asset, you debit the asset to show the increase and credit something else to keep the books in balance. For example, buying equipment with cash increases the Equipment asset, so you debit Equipment and credit Cash. If you purchase on credit, you debit the asset (like Inventory) and credit the liability (Accounts Payable). Since debits expand asset balances and credits reduce them, the side that increases an asset is the debit side. The credit side would decrease assets, so it doesn’t fit the usual increase for an asset.