![]() If you know which are debit accounts and which are credit accounts, and you understand the math number line, you should be able to figure out which account to debit and which account to credit when entering transactions and journal entries. (We go into some logic in the last section for the analytics.) Liability accounts track debt and are negative accounts. We recommend memorizing this.įor example, Cash (checking account), an asset, is a positive account. Accounts that normally maintain a negative balance are called negative or credit accounts and they are Equity, Income, and Liabilities. Study the image below.Īccounts that normally maintain a positive balance are called positive or debit accounts and they are Assets and Expenses. ![]() Here is an important point for this tutorial: each account type primarily maintains either a positive or negative balance. Zero is in the middle, positive numbers increase moving to the right, and negative numbers increase moving to the left. The Math Number Lineĭo you remember the math number line from school? Look at the image below. However, total debits must equal total credits for the transaction. In many cases there is a single debit and credit, but debits and credits can also be split between multiple accounts. When a transaction is entered into the accounting system, the debit must equal the credit. Reading "debits go on the left and credits go on the right" can be confusing for folks who never kept books manually in a paper ledger, but it is the way of the double-entry bookkeeping system. ![]() You also see this in the Trial Balance report. You see this today in the accounting software dialog box when entering a journal entry. Debits (called DR) were written on the left and credits (called CR) were written on the right. When transactions were recorded in a paper ledger, there were two columns.
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