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.
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