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Debiting an asset account does increase that account, however debiting a liability account decreases the liability.

Remember the double entry accounting equation... Assets = Liabilities + Owners Equity (Stockholders Equity)

In double entry accounting as I've stated in many other answers, "for every action there must be an equal and opposite reaction". In other words for ever Debit there must be an equal credit.

Since Assets INCREASE with a debit, it stands to reason that Liabilities "MUST" decrease with a Debit. Since opposite sides of the equation can not have the same affect. You can not debit an asset and a liability in the same transaction for the exact amount. For example, say you purchase equipment on credit. Your Assets are going to increase, but so is liabilities, because you now "owe" a debt. Assets increase with a debit, you can't have a second debit for the "same" amount in the single transaction, for every debit there is an equal credit (always).

Therefore equipment purchase on credit for $500 will increase your asset of equipment (debit) $500 and increase your liability account payable (credit) $500.

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13y ago

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