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Rules of Recording in Ledger Accounts

Remember that $\text{debit}=\text{left}$ and $\text{credit}=\text{right}$. Now we are going to see what that really means.

The accounting equation shown in Lesson 1 can provide us with the understanding of debits and credits below.

Figure 2.3 indicates the natural balance of the account with the "+." Assets, expenses, and losses all have their natural balance on the left side, or debit side. Liabilities, owners' equity, revenue, and gains all have their natural balance on the right side, or credit side.