Forget "debit = bad, credit = good" — that's your bank talking, not your books. In double-entry bookkeeping, debits and credits are just the left and right side of every transaction. This cheat sheet is the whole trick.
| Account type | Normal balance | Debit means | Credit means | Examples |
|---|---|---|---|---|
| Assets | Debit | Increase | Decrease | Cash, A/R, inventory, equipment |
| Expenses | Debit | Increase | Decrease | Rent, wages, supplies, fees |
| Draws / Dividends | Debit | Increase | Decrease | Owner's draw, distributions |
| Liabilities | Credit | Decrease | Increase | Loans, A/P, credit cards, sales tax payable |
| Equity | Credit | Decrease | Increase | Owner's equity, retained earnings |
| Revenue / Income | Credit | Decrease | Increase | Sales, service income, interest earned |
The mnemonic: DEA / LER. Draws, Expenses, and Assets are debit-normal (debits increase them). Liabilities, Equity, and Revenue are credit-normal (credits increase them). Every transaction touches at least two accounts, and total debits always equal total credits — that's the "double" in double-entry.
Worked example: you pay $1,200 rent from checking. Rent expense is debit-normal and it's increasing → debit Rent expense $1,200. Cash is an asset and it's decreasing → credit Checking $1,200. Debits equal credits. Done.
Eight quick questions. Answer, read the why, move on.
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