The best phrase to remember in the accounting equation is to <u>debit</u> all assets, expenses, and losses, and to <u>credit</u> all liabilities, equity, gains, and incomes.
<h3>What is the accounting equation?</h3>
The accounting equation shows that assets are equal to liabilities and equity, given each business transaction.
The implication of the above definition is that when a transaction occurs, which may give rise to expenses, losses, gains, and incomes, the assets and liabilities and equity equation remains in balance.
For instance, when a company incurs an expense for cash, the assets (cash) side is reduced by the amount. Similarly, the equity side is also reduced by the same amount.
Thus, the best phrase to remember in the accounting equation is to <u>debit</u> all assets, expenses, and losses, and to <u>credit</u> all liabilities, equity, gains, and incomes.
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