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Is Income debit or credit?
Income is credited.
Now, let me help you understand why and how is income credited & not debited.
Why and How is Income credited?
The account of expenses, losses, incomes, and gains are called Nominal accounts. So, to ascertain the treatment of income, we need to know both the Golden rules and Modern rules of accounting for nominal accounts.
1. Golden rules
First, we will interpret why income is credited correlating it with the golden rules of nominal account along with an example. Golden rules state;
Debit all Expenses and Losses & Credit all Incomes and Gains
This is the reason why income is always to be credited.
Professional fees charged by Deloitte Inc. for executing an audit of Pepsico Inc. 10,00,000.
The journal entry for this transaction in the books of Deloitte Inc. will be-
|Pepsico Inc. A/c||Debit||10,00,000||Personal A/c||Debit the receiver of service|
|To Professional fees A/c||Credit||10,00,000||Nominal A/c||Credit all incomes and gains|
The above journal entry shows that professional fees are the income for Deloitte Inc. Therefore, it has been credited.
2. Modern rules
Now, we will ascertain the reason why income is credited correlating it with the modern rules with the help of an example.
Modern rules of accounting state;
Credit the increase in Income
Mr Charles received rent 60,000 in cash from its tenant.
The journal entry for this transaction in the books of Mr Charles will be-
|Cash A/c||Debit||60,000||Debit the increase in asset|
|To Rent received A/c||Credit||60,000||Credit the increase in income|
The above entry shows an increase in the income of Mr Charles by receiving rent from its tenant.