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Is an expense a debit or credit?

We know that accounts have a "usual" nature, such as assets are usually debits, but they can also be credits in some instance. I know that assets increase on the debit side and decrease on the credit side.

When will an expense be debit and when will it be credit.

What is an expense usually? Is an expense a debit or a credit?
Posted in Business & Commerce, asked by lefe, 4 years ago. 4140 hits.

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Expense accounts are found on the debit side. When talking about the usual nature of accounts, assets and expenses are debits, and revenues, liabilities and equity are credits.

Revenues and expenses act differently to assets, liabilities and equity. As you mentioned, these 3 accounts can be found on the debit or credit side depending on the nature of the transaction. Example, when you purchase an asset, the asset account increases. This is therefore a debit. When the asset is sold, the asset account decreases. This is therefore a credit.

Revenue and expense accounts do not act in the same way as this. Revenues are always credits and expenses are always debits. The only time when you might find an expense being credited in a journal entry is if an adjusting journal is being passed. Adjusting journals are entries that rectify previous errors which have been posted to the accounts.

Have a look at the following example:

Rent paid of $370 was incorrectly posted to the insurance expense account. Correct the error.

The journal which was originally posted would have been:
Dr Insurance expense $370
Cr Cash at bank $370

This is incorrect therefore an adjusting entry must be passed as follows:
Dr Rent expense $370
Cr Insurance expense $370

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4 years ago
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