Is Revenue a Credit balance or a Debit balance?

There IS another way to help you memorize this. It’s based on the equation: Assets = Liabilities + Equity. Assets are on the left and therefore are debits. Liabilities and Owner’s Equity are on the right and therefore are credits. Whichever side they are on is the side you INCREASE on. i.e. if you want to increase an asset (like cash) then you debit cause it’s on the debit side. If you charge something and want to increase liabilities, that’s a credit cause it’s on the credit side. Whenever you want to DECREASE a balance, just do the opposite.

Revenues increase equity and are therefore credit accounts, like equity is. Expenses decrease equity and therefore must be the other side, debits.

Summary:

Assets +debit, -credit

Liabilites -debit, + credit

Equity -debit, +credit

Revenue -debit, +credit

Expense +debit, – credit

Notice the two “outside” ones (assets & expenses) are the debits. The three inside ones are the credits.

Something important to keep in mind: do not think about the “affect” on the overall. All this is doing is increasing and decreasing balances. i.e. even though a liability seems like a “negative,” what you are actually doing is increasing or decreasing the amount of the liability. If you have a credit card and charge something, you’re ADDING to the amount you owe.

Revenue Debit Or Credit

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RE:

Is Revenue a Credit balance or a Debit balance?

normal balance

We don’t print the money so when we receive it for services rendered it is a debit from the monetary system. When we spend it for goods or services we put it back into the monetary system so its a credit. That’s the only way it makes sense to me.

The confusion comes when my bank account is credited when I receive or pay monies in. For accounting purposes I must show this as a debit. Hmm? It’s as though the whole accounting process is designed to regulate the money at source, which is not us, it’s the Banking system.

Still it’s nice to be in credit even if it’s a debit from their system credited to ours. Hope that helps.

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Assets = liabilties + equity. if you have $1000 cash and you owe $300 to a friend your equity is $700 Assets = liabilities + equity $1000 = $300 + $700 make sense?

There is no way to learn this besides memorizing:

The way I remember this is by memorizing cash. Whenever cash comes in, it’s a DR to cash, and when it goes out, it’s a CR to cash.

Therefore, revenue is cash in, so it’s a DR to cash and a CR to the income line. Therefore, income accounts have a normal credit balance.

This is the key to accounting and bookkeeping. You’ve got to learn it to do decently.