Debit and Credit:

Debits and credits are the opposing sides of an accounting journal entry. They are used to change the ending balances in the general ledger accounts.

Debit: 

An entry recording a sum owed, listed on the left-hand side or column of an account is debit. What ever that is owned is called debit.

Credit: 

Credit means receiving something of value now and promising to pay for it later, often with a finance charge added by the lender. In simple language credit means a loan.

Rules of Debit and Credit on the basis of Nature of Account:

1) Personal Account:

Accounts related to any person or organization like Ram, Luise, Nepal Bank Ltd A/c, Himalayan Co. Ltds. A/c, etc. are personal account.

The rules of debit and credit under personal account is;

Debit the receiver

Credit the giver

Example 1. : Cash paid to Hangsha Rs. 4500.

Here, Hari is a receiver and he is debited.

Solution:

Journal Entry
Date	Particular	L/F	Dr. Amount	Cr. Amount
	Hangsha A/c (Dr.)		4500
	To Cash A/c (Cr.) (being cash paid to Hari)			4500

2) Real Account:

Real accounts are related to assets or properties of the business. Machinery A/c, Bank and Cash A/c, Goods A/c, are some examples of real account.

Rules:

Debit What comes in

Credit What goes out

Example 2. : Goods purchased for cash Rs. 2000.

Here, Goods comes in so it is debited where as cash goes out so it is credited.

Solution:

Journal Entry
Date	Particular	L/F	Dr. Amount	Cr. Amount
	Goods A/c (Dr.)		2000
	To Cash A/c (Cr.) (Being goods purchased in cash)			2000

3) Nominal Account:

Those accounts which are related to losses, profits, expenses and incomes are called Nominal account. Wages A/c, Salary A/c, Discount A/c, Purchase A/c, Commission A/c, etc are some examples of nominal account.

Rules:

Debit all expenses and losses.

Credit all incomes and gains.

Example 3. : Salary paid Rs. 15000.

Here, Salary  and Cash are two aspect of the transaction. Salary is nominal account and it must be debited since it is an expense. 

Cash is a real account and should be credited because it has gone out from the business.

Solution:

Journal Entry
Date	Particular	L/F	Dr. Amount	Cr. Amount
	Salary A/c (Dr.)		15000
	To Cash A/c (Cr.) (Being salary paid.)			15000