Accounting Guide
Debits and credits are the left and right sides of accounting entries. They are not simply another way to say increase and decrease. Whether a debit or credit increases an account depends on the type of account you are recording.
Quick answer
A debit is the left side of an accounting entry.
A credit is the right side of an accounting entry.
Whether debit or credit increases an account depends on the account type. For example, cash increases with a debit, but revenue increases with a credit.
Memory tip
Assets and expenses usually increase with debits.
Liabilities, equity, and revenue usually increase with credits.
In a complete journal entry, total debits must equal total credits. That balance is what keeps the accounting equation organized.
Normal balances
The normal balance is the side where an account usually increases. Use this table when you are deciding which accounts increase with debit and which accounts increase with credit.
| Account Type | Normal Balance | Increases With | Decreases With |
|---|---|---|---|
| Asset | Debit | Debit | Credit |
| Expense | Debit | Debit | Credit |
| Dividends/Drawings | Debit | Debit | Credit |
| Liability | Credit | Credit | Debit |
| Equity | Credit | Credit | Debit |
| Revenue | Credit | Credit | Debit |
Examples
The easiest way to learn debit and credit rules is to connect each transaction to the account types involved.
The business buys equipment and pays cash immediately.
Debit line: Debit Equipment
Credit line: Credit Cash
Equipment is an asset, and assets increase with debits. Cash is also an asset, but it decreases when the business pays it out, so cash is credited.
The business performs a service and receives cash from the customer.
Debit line: Debit Cash
Credit line: Credit Service Revenue
Cash is an asset, so receiving cash increases it with a debit. Revenue normally increases with a credit.
The business pays rent for the month.
Debit line: Debit Rent Expense
Credit line: Credit Cash
Rent expense increases with a debit. Cash decreases because the business paid money out, so cash is credited.
The owner puts personal cash into the business.
Debit line: Debit Cash
Credit line: Credit Owner's Capital
Cash increases with a debit. Owner's capital is an equity account, and equity increases with a credit.
Watch out
Use the tool
If you are unsure whether to debit or credit an account, use the Debit/Credit Checker. Choose the account type, choose whether it increases or decreases, and the tool shows the correct side.
FAQ
A debit is the left side of an accounting entry. It increases some account types, such as assets and expenses, and decreases others, such as liabilities, equity, and revenue.
A credit is the right side of an accounting entry. It increases liabilities, equity, and revenue, and decreases assets, expenses, and drawings.
No. Debit does not always mean increase. Whether a debit increases or decreases an account depends on the account type.
Assets, expenses, and dividends or drawings usually increase with debits.
Liabilities, equity, and revenue usually increase with credits.
Debits and credits have to balance because double-entry accounting records each transaction on at least two sides. Total debits must equal total credits in a complete journal entry.
First identify the account type, then decide whether the account is increasing or decreasing. The normal balance rules tell you whether to debit or credit it.
Yes. A journal entry can have equal debits and credits but still use the wrong account, wrong amount, or wrong accounting treatment.