Double entry bookeeping

contains examples and where they would be credited and debited to

Debit

Will increase an asset, a draw, or an expense.

Credit

Will increase a liability, equity, or revenue.

Accounting Equation

Assets = Liabilities + Equity.

Sale for Cash

Debit cash account; Credit revenue account.

Sale on Credit

Debit accounts receivable account; Credit revenue account.

Cash Payment for Accounts Receivable

Debit cash account; Credit accounts receivable account.

Purchase Supplies with Cash

Debit supplies expense account; Credit cash account.

Purchase Inventory for Cash

Debit inventory account; Credit cash account.

Loan Takeout

Debit cash account; Credit loans payable account.

Loan Repayment

Debit loans payable account; Credit cash account.

Rule of Debits and Credits

All accounts with a debit balance increase with debits and decrease with credits; accounts with a credit balance increase with credits and decrease with debits.

Why Debits and Credits Must Equal

To ensure accuracy in bookkeeping, as every transaction has two entries that must balance.