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    State Whether The Accounts For The Following Should Have A Debit Balance Or A Credit Balance Adding Your Reason In Each Case; Fuel And Power;bad Debts;plant And Machinery;discount;john Brown(creditor) Factory Building.

    Hi I'd really appreciate any help. I've been tying to figure this out for a while.

    asked 11 months ago

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    It's simple, following are the rules for debiting or crediting accounts (+ stands for increase and - stands for decrease)

    assets + debit
    - credit
    expense + debit
    - credit
    liability + credit
    - debit
    revenue + credit
    - debit
    capital + credit
    - debit

    First classify the accounts in your question, then see if they are increasing or decreasing and then debit or credit them accordingly as given here:

    Fuel&power expense (this is an expense because these are incurred as expenditures by a firm or household. As + or - is not mentioned we assume it to have + as it would not have been mentioned at all if it was not incurred)
    Therefore we will 'debit' it.

    Bad debts expense (These are the irrecoverable debts therefore these are considered as expense for a business. No + or - mentioned, but it is understood that bad debts are present.)
    Therefore we will 'debit' it.

    Plant& machinery asset (As these are useful for the business these are considered to be assets.)
    debit (no + or - mentioned but as they are there their existence means + so they will be 'debited')

    Discount: These are of 2 types
    Discount allowed: Discount given to customers therefore (expense) will be 'debited' (because of its existence)
    Discount received: Discount received from creditor therefore (revenue) will be 'credited' (because its mere existence here means + and revenue when + is credited as mentioned in the above classification).

    John Brown (creditor): Creditor is the person or firm to whom we have to pay in the future therefore ( a liability) will be 'credited' (existence shows + and + in liability is credited).

    Factory Building: Asset will be 'debited' (existence shows + and + in assets is 'debited').

    answered 9 months ago   

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