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Basic Question relating to DEAD CLIC

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Hi,

Very new to accounting. Just a question relating to DEAD CLIC and why it seems counterintuitive to me(I'm obviously just not understanding it correctly).

So if expenses reduce the amount of capital a company has, why are they debited and not credited? If a debit means a positive transaction for a business, then surely an expense cannot be a debit? Similarly, how is income a credit if income increases capital, why is it not debited?

Really appreciate any help with this question.

 

Thanks

 

John

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By Henk Heymans
May 6th 2018 06:46

Don’t look at it as positive or negative on the business. Think about credits as sources of funds (i.e. contributed capital, liabilities and income) and debits are how those funds are applied (i.e. assets and expenses).

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