By Ben @ DebitisLeft

If debits and credits ever confused you — don’t worry. Every accountant struggled with this at some point. What nobody tells you is this:

Debits and credits aren’t “good” or “bad.” They’re just directions.

Think of them as left and right, not plus and minus.

Once you understand why accounts move the way they do, everything becomes easier.

Let’s break it down the simple way.

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1. The 5 Account Types (This Makes Everything Click)

Every line in accounting belongs to one of these:

1. Assets (cash, inventory, equipment, receivables)
2. Liabilities (credit cards, loans, payables)
3. Equity (owner’s capital, retained earnings)
4. Revenue (sales, fees earned)
5. Expenses (rent, utilities, supplies)

Each account type has a “normal balance” — the side where it usually increases.

Here’s the golden table:

Account Type	Increases With	Decreases With
Assets	Debit	Credit
Expenses	Debit	Credit
Dividends/Draws	Debit	Credit
Liabilities	Credit	Debit
Equity	Credit	Debit
Revenue	Credit	Debit

If you memorize this ONE table, debits and credits become easy forever.

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2. Debits = Left, Credits = Right (That’s All)

Every transaction affects at least two accounts.

One side is a debit, one is a credit.

Not plus/minus.
Not good/bad.
Not money coming in/out.

Just left and right.

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3. The Simple Rules You Can Always Trust

Rule #1 — Assets go up with debits

Example: You receive $500 cash → Debit Cash

Rule #2 — Expenses go up with debits

Example: You pay rent → Debit Rent Expense

Rule #3 — Revenue and liabilities go up with credits

Example: You earn $200 revenue → Credit Revenue

Rule #4 — Every debit must equal every credit

This is double-entry accounting.
It keeps the books balanced and stops errors.

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4. Real-Life Examples (So It Finally Makes Sense)

Let’s run through the most common transactions you’ll ever see.

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Example 1: Paying Rent

You pay $1,000 rent using your bank account.

• Rent Expense ↑ → Debit $1,000
• Cash ↓ → Credit $1,000

Journal Entry:

Debit Rent Expense $1,000
Credit Cash $1,000

Done.

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Example 2: Getting Your Paycheck

Your employer pays you $2,000.

For you (the employee), this is:

• Cash ↑ → Debit
• Revenue (salary/earnings) ↑ → Credit

Journal Entry:

Debit Cash $2,000
Credit Revenue $2,000

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Example 3: Buying a Laptop for Work

You buy a $900 laptop using your debit card.

• Equipment (asset) ↑ → Debit $900
• Cash ↓ → Credit $900

Journal Entry:

Debit Equipment $900
Credit Cash $900

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Example 4: You Use a Credit Card to Buy Office Supplies

You put $120 of supplies on a credit card.

• Supplies Expense ↑ → Debit $120
• Credit Card Payable (liability) ↑ → Credit $120

Journal Entry:

Debit Supplies Expense $120
Credit Credit Card Payable $120

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Example 5: You Receive Payment From a Customer

A client pays you $500.

• Cash ↑ → Debit $500
• Revenue ↑ → Credit $500

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5. Visual Cheat Sheet (Use This Forever)

Think of this chart any time you get confused:

        DEBIT (LEFT)              CREDIT (RIGHT)
-----------------------------------------------
Assets       ↑                       ↓
Expenses     ↑                       ↓
Draws        ↑                       ↓
Liabilities  ↓                       ↑
Equity       ↓                       ↑
Revenue      ↓                       ↑

If you understand that assets & expenses increase with debits, and liabilities & revenue increase with credits, you basically know accounting.

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6. Tiny Practice Quiz (Check Your Understanding)

Try these without looking:

1. You pay your phone bill. What do you debit?

Answer: Phone Expense (an expense increases → debit)

2. You take out a loan. What do you credit?

Answer: Loan Payable (liability increases → credit)

3. You receive $300 from a customer. What do you credit?

Answer: Revenue (revenue increases → credit)

4. You buy inventory for cash. What do you credit?

Answer: Cash (cash decreases → credit)

If you got these right — you fully understand debits & credits.

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7. Final Thoughts

Understanding debits and credits is the foundation of:

• Journal entries
• Trial balances
• Adjusting entries
• Financial statements
• Audits
• Bookkeeping
• CPA exam / EA exam basics

You’re officially ahead of most new accountants.

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