accounting debits and credits

📘 Debits and Credits in Accounting

Debits and credits are the fundamental building blocks of double-entry accounting, which ensures that every transaction keeps the accounting equation balanced:

Assets
=
Liabilities
+
Owner’s Equity
Assets=Liabilities+Owner’s Equity
🔄 Definition:

Debit (Dr): An entry on the left side of an account.

Credit (Cr): An entry on the right side of an account.

Every transaction affects at least two accounts, and the total debits must equal total credits.

🧭 Debit and Credit Rules by Account Type:
Account Type Increase With Decrease With
Assets Debit Credit
Liabilities Credit Debit
Equity (Capital) Credit Debit
Revenue / Income Credit Debit
Expenses / Losses Debit Credit
Drawings Debit Credit
📝 Example 1: Cash Sale

You sell goods for $1,000 in cash.

Account Debit Credit
Cash 1,000
Sales 1,000

Explanation:

Cash (an asset) increases → Debit

Sales (income) increases → Credit

📝 Example 2: Paying Rent $500
Account Debit Credit
Rent Expense 500
Cash 500

Explanation:

Rent (expense) increases → Debit

Cash (asset) decreases → Credit

📌 Mnemonic to Remember:

DEALER:

Dividends, Expenses, Assets → Debit increases

Liabilities, Equity, Revenue → Credit increases