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    maxgiz21's Avatar
    maxgiz21 Posts: 2, Reputation: 1
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    #1

    Apr 28, 2010, 11:42 PM
    Why does an income show in the credit side
    Why is it that an income shows in the credit side and not on the debit side of the accounts
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Apr 29, 2010, 01:13 AM

    Income increases equity. Equity is on the credit side, so in order to increase equity, you'd have to credit the income accounts as well. (Expenses are debits cause they decrease equity.)

    Equity is a credit because it's on the right side of the equation.

    Debits & credits are based on the side of the equation that type of account is on:
    Assets = Liabilities + Equity
    Assets on the left--> debit
    Liability & Equity on the right--> credit

    Debit and credit come from Latin words meaning left and right. The guy who created this was a monk, who spoke Latin. He wasn't trying to create fancy accounting words -- he was literally saying the left and right side of the accounts, nothing more.

    No magic, really.
    maxgiz21's Avatar
    maxgiz21 Posts: 2, Reputation: 1
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    #3

    Apr 29, 2010, 11:51 PM

    Thank you
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #4

    May 2, 2010, 05:28 PM

    You're welcome. :-)
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