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1 Answer

  1. 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 as 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.

    Example

    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/cDebit10,00,000Personal A/cDebit the receiver of service
     To Professional fees A/cCredit 10,00,000Nominal A/cCredit all incomes and gains

    The above journal entry shows that professional fees is 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 states-

    Credit the increase in Income

    Example

    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/cDebit60,000Debit the increase in asset
     To Rent received A/cCredit 60,000Credit the increase in income

    The above entry shows an increase in the income of Mr. Charles by receiving rent from its tenant.

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