According to the rules of debit and credit for balance sheet accounts ........

Principles of Accounting & Financial Management Accounting cycles

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According to the rules of debit and credit for balance sheet accounts?

Increase in assets, liabilities and owner equity recorded by debit

Decrease in asset and liability are recorded by credit

Increase in asset and owner’s equity are recorded by debit

Decrease in liability and owner’s equity are recorded by debit

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Explanation:

When an accountant is executing a transaction on the balance sheet of a company, debits and credits are used to record which accounts are increasing and which are decreasing. For example, if a company takes out a loan, that loan transaction would be recorded by both a debit and a credit, which would simultaneously increase its liabilities (the loan) and its assets (the cash on hand funded by the loan).

On the asset side of the balance sheet, a debit increases the balance of an account, while a credit decreases the balance of that account. When the company sells an item from its inventory account, the resulting decrease in inventory is a credit. In the example of the loan transaction above, the increase in cash would be recorded as a debit to the company's cash on hand, increasing it by the loan amount.