Debits and Credits Rules
- Rick Eggleston (Unlicensed)
- Jeff Duke
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
| DR | CR | DR |
| Contra Asset | CR | DR | CR |
Liabilities
| 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)
| CR | DR | CR |
Contra Revenue
| DR | CR | DR |
Expenses
| 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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