Question

If assets are valuable resources and asset accounts have debit balances, why do expense accounts also have debit balances?

Short answer

Expenses have debit balances because of their nature as they are a temporary resource for the business.

Step-by-step solution

Assets and Expenses

Assets are the owner’s resources for generating future income. They are permanent in nature.

Expenses are the temporary nature of payments for generating incomes.

Expenses having debit balance

Expenses are temporary nature payments but still work as a resource for the business. For example, money spent on rent provides a resource for a limited time period.

As in the balance sheet assets being recourse are shown on the debit side and have a longer lifetime. Expenses too are the resources but have temporary benefits and cannot be shown on the balance sheet.

That’s why they are shown in the P&L having a debit balance.