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Debits and Credits Rules


Excerpt

Quite simply there are 5 account types and each one can go up or down as follows.

D E A D C D   C L I C
This acronym stands for: 

  • Debit
Expenses, Assets and Drawings, and Credit Liabilities, Income and Capital
  • Expenses, Assets and Drawings; and, 
  • Credit Liabilities, Income and Capital.


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Account GroupAccount
Value
Increase		Account
Value
Decrease		Balance
Assets
- DR
  • A/R
  • Cash
- Cash
  • External Cash (for Internal Refunds and A/R Payments)
DRCRDR
Contra AssetCRDRCR
Liabilities
-
  • Deposits
-
  • Taxes Due
-
  • Prepaid Sales
CRDRCR
Contra LiabilitiesDRCRDR
Owner (Stockholders') EquityCRDRCR
Owner's Drawing or Dividends AccountDRCRDR
Revenue (Income)
-
  • Sales
  • Gains
CRDRCR

Contra Revenue

  • Sales Returns
  • Sales Allowances
  • Sales Discounts
DRCRDR
Expenses
-
  • Discounts
  • Losses
DRCRDR



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Info

You apply this DEAD CLIC rule if an account goes up in value. If an account goes down in value, you apply the opposite. In other words, if an expense increases in value, then you debit the account (because the DEAD CLIC rule says to Debit Expenses). If an expense decreases in value, then you credit the account.

Account GroupAccount
Value
IncreaseAccount
Value
DecreaseBalanceAssets
  • A/R
  • Cash
DRCRDRLiabilities
  • Deposits
  • Taxes Due
  • Prepaid Sales
CRDRCROwner EquityCRDRRevenue
  • Sales
CRDRCRExpenses
  • Discounts
DRCRDR


Note

Remember also that every financial transaction affects two accounts, one is a debit, the other a credit. This is why we call it double entry (not single entry) bookkeeping.  Refer to the T-account examples below, and on each Business Transaction page.

Source: "Debits and Credits Rule"; www.accountagility.co.nz; https://www.accountagility.co.nz/accounting/debits-and-credits/; accessed 2-11-2020

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UG:Setup & Admin Guides
UG:Setup & Admin Guides
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To see commonly used terms in VetView Hospital, please visit our Hospital Glossary of Terms
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titleDefinitions

Refer to the 'Inventory and Accounting Definitions' wiki page for the definition of inventory and accounting terms, and for details about fields and controls.


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