While preparing a T-account in accounting, you must have wondered why debit is always written on the left side and credit on the right side. Well, if you have, you are one heck of a curious accountant!
In this article, I will simply explain why debit balance is written on the left side and credit balance on the right side.
Why Debit Is Written on the Left Side?
Well, there is no hard & fast mechanism behind why debit is written on the left and credit on the right side. However, it can be related to the fundamental accounting equation that is:
Assets = Liabilities + Owner’s Equity
The fundamental accounting equation states that the total assets of an entity will always be equal to the sum of liabilities and owner’s equity. In this equation, assets are written on the left side and liabilities and owner’s equity on the right.
Since additions of assets are debited which means they are written on the left side and additions in liabilities and owner’s equity result in credit entry, meaning that they are written on the right side of a T-account, we can relate it all to the fundamental accounting equation.
That being said, in bookkeeping, debit balances are written on the left side, and credit balances are written on the right side of a T-account because of the fundamental accounting equation.
Knowing when to debit and when to credit is itself a science in accounting and there are a lot of rules to learn & follow in order to master bookkeeping.
