Debits and Credits:
Why Liabilities on Credit Side?

Q: Hi, can you please explain to me WHY it is a general rule that increased liabilities would be on the credit side of a double entry equation??? Can't get my head around it>>>


A: Jessie, go through each of these lessons, even if you've done so before, and go through them in the order here:

Basic Accounting Equation
Define Liability
Liability Example (Basic Transactions)
The Basic Accounting Equation: Another Viewpoint
Debits and Credits and
Liability Example (Debits and Credits)

Comments for Debits and Credits:
Why Liabilities on Credit Side?

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by: Anonymous

Thanks for sharing.

by: MrTee

Liabilities have Cr balances and increase on Cr side so that the accounting equation balances out: A=L+E.

by: wizard

A liability is any obligation that you have to a business, and so an increase in your liability increases your obligation. Therefore you record it on the credit side as on the credit side you record what you pay.

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