The principle of double entry, debit and credit rules, recording transactions in ledger accounts and balancing them.
The principle of double entry
Every transaction has two effects and is recorded twice — once as a debit and once as an equal credit. Total debits must always equal total credits.
The rules for which side to use:
| Account type | Debit (increase) | Credit (increase) |
|---|---|---|
| Asset | increase | decrease |
| Expense | increase | decrease |
| Drawings | increase | decrease |
| Capital | decrease | increase |
| Liability | decrease | increase |
| Income | decrease | increase |
A useful memory aid is DEAD: Debit Expenses, Assets, Drawings.
Viewing only
This content is free to read on superexams.com and cannot be printed or downloaded.
Read the full note, free
Create a free account to read this note in full. Every free account gets 2 complete revision notes, no card needed.