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1. Absolutely, posing a question here before looking for a tutor can be a great way to clarify specific points of confusion. Let’s delve into your question about the relationship between expenses, equity, and the rules for debits and credits in Accounting.

   Understanding Debits and Credits for Expenses and Equity

   In Accounting, it’s crucial to grasp the fundamental principles of debits and credits. Let’s break down the relationship you’re asking about:

   1. Expanded Accounting Equation:
      The expanded accounting equation is usually presented as:
      [
      \text{Assets} = \text{Liabilities} + \text{Owner’s Equity} + \text{(Revenues – Expenses)}
      ]

   Here, revenues increase equity, while expenses decrease it. Therefore, expenses are positioned under the equity section as they ultimately affect the owner’s stake in the business.

   1. Normal Balance and Rules:
      Each type of account in accounting has a “normal balance,” which is the side (debit or credit) where increases to the account are recorded:

   2. Assets: Debit for increases, Credit for decreases

   3. Liabilities: Credit for increases, Debit for decreases
   4. Equity: Credit for increases, Debit for decreases
   5. Revenues: Credit for increases, Debit for decreases
   6. Expenses: Debit for increases, Credit for decreases

   Notice how expenses have a normal debit balance even though they fall under equity in the bigger picture. This is because expenses reduce equity.

   1. Why Expenses Are Debited:
      Expenses decrease net income, which in turn reduces retained earnings (a component of equity). To reflect this reduction, you record expenses as debits. This is consistent with the treatment of other components that reduce equity (like dividends in some accounting systems).

   2. Apparent Contradiction:

   3. The contradiction arises from treating expenses separately from equity when considering debits and credits, even though they are a part of the overall equity calculation.
   4. Think of it as a two-step process:
      1. Record expense as a debit, which reflects an increase in expense accounts.
      2. This, indirectly, reduces the equity because increased expenses eat into profit and subsequently reduce the equity via retained earnings.

   Example to Clarify:

   Suppose your company incurs $500 in utility expenses. The journal entry would look like:

   • Debit Utility Expenses $500

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