On the income statement, debits are used to increase account balances, whereas on the statement of financial position, credits are used to increase account balances.

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The statement is actually the opposite. On the income statement, credits are used to increase account balances (revenues and gains), while debits are used to decrease account balances (expenses and losses). On the statement of financial position (also known as the balance sheet), debits are used to increase asset, expense, and dividend account balances, while credits are used to increase liability, equity, and revenue account balances.

On the Income Statement, Debits Are Used to Increase Account