🟢 Beginner 18 minbeginner path
Debits and Credits in Plain English
Every accounting transaction has two sides: one debit and one credit that must equal. Once this clicks, the rest of bookkeeping is easier than it looks.
Learning objectives
- State the accounting equation.
- Know which accounts are increased by debits vs credits.
- Record a simple journal entry.
Step-by-step
1. The equation
Assets = Liabilities + Equity. Every entry must keep this equation balanced.
2. DEALER trick
Debits increase: Dividends/Draws, Expenses, Assets. Credits increase: Liabilities, Equity, Revenue. (D-E-A / L-E-R.)
3. Every entry balances
Debits must equal credits in each transaction. If they don't, the books don't balance.
Key takeaways
- State the accounting equation.
- Know which accounts are increased by debits vs credits.
- Record a simple journal entry.
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