Revenues and Gains Are Usually Credited
In a T-account, their balances will be on the right side.
The exceptions to this rule are the accounts Sales Returns, Sales Allowances, and Sales Discounts—these accounts have debit balances because they are reductions to sales.
Why is revenue a credit balance?
In bookkeeping, why are revenues credits? In bookkeeping, revenues are credits because revenues cause owner’s equity or stockholders’ equity to increase. Recall that the accounting equation, Assets = Liabilities + Owner’s Equity, must always be in balance.
What is credit revenue?
Revenues cause owner’s equity to increase. Since the normal balance for owner’s equity is a credit balance, revenues must be recorded as a credit. (At a corporation, the credit balances in the revenue accounts will be closed and transferred to Retained Earnings, which is a stockholders’ equity account.)
Is capital a debit or credit?
Asset accounts normally have debit balances, while liabilities and capital normally have credit balances. Income has a normal credit balance since it increases capital . On the other hand, expenses and withdrawals decrease capital, hence they normally have debit balances.