Debits and Credits Rules

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

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

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

Account Group	Account Value Increase	Account Value Decrease	Balance
Assets A/R Cash External Cash (for Internal Refunds and A/R Payments)	DR	CR	DR
Contra Asset	CR	DR	CR
Liabilities Deposits Taxes Due Prepaid Sales	CR	DR	CR
Contra Liabilities	DR	CR	DR
Owner (Stockholders') Equity	CR	DR	CR
Owner's Drawing or Dividends Account	DR	CR	DR
Revenue (Income) Sales Gains	CR	DR	CR
Contra Revenue Sales Returns Sales Allowances Sales Discounts	DR	CR	DR
Expenses Discounts Losses	DR	CR	DR

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.

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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