Every business transaction affects two or more accounts. Under Double Entry System, equal debit and credit entries are made for every transaction. If more than two accounts affected by a transaction , the sum of debit entries must be equal to sum of the credit entries
It can be explained by simple equation :
Liabilities + Capital = Assets
Increases on the left hand side of a ledger are called credit balance
Increases on the right side side of a ledger are called debit balance
Similarly, Decreases on the left hand side are called debit balance and
Decreases on the right hand side are called credit balance
