What is the proper way to record an increase in an asset account and an increase in an equity account?

To properly record an increase in an asset account and an increase in an equity account, the accounting equation must be followed, which states that assets must equal liabilities plus equity. When an asset increases, it is recorded as a debit because asset accounts increase with debits. On the other hand, equity accounts increase with credits.

Therefore, when you are increasing an asset, you would debit the asset account. At the same time, if you are recognizing an increase in equity—perhaps through retained earnings or additional investment—the equity account must be credited. This proper recording aligns with the double-entry accounting system, ensuring that the accounting equation remains balanced.

Thus, when you record an increase in an asset (debit) alongside an increase in equity (credit), the appropriate entry is a debit to the asset account and a credit to the equity account.