How To Use and Apply The Debit and Credit Rules

(1) Determine the types of accounts the transactions affect-asset, liability, revenue, expense or draw account.
(2) Determine if the transaction increases or decreases the account's balance. 
(3) Apply the debit and credit rules based on the type of account and whether the balance of the account will increase or decrease.  

Simple Debit / Credit Rule:

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• All Accounts that Normally Have a Debit Balance are Increased with a Debit by placing the amount in the Left Column of the account and Decreased with a Credit by placing the amount in the Right Column of the account.
• Assets
• Draws
• Expenses

• All Accounts that Normally have a Credit Balance are Increased with a Credit by placing the amount in the Right Column of the account and Decreased with a Debit by placing the amount in the Left Column of the account.
• Liabilities
• Owner's Equity ( Capital )
• RevenueAdditional Clarification:
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• Since Assets, Draw, and Expense Accounts normally have a Debit Balance, in order to Increase the Balance of an Asset, Draw, or Expense Account enter the amount in the Debit or Left Side Column and in order to Decrease the Balance enter the amount in the Credit or Right Side Column.
  
  
  Likewise, since Liabilities, Owner's Equity (Capital), and Revenue Accounts normally have a Credit Balance in order to Increase the Balance of a Liability, Owner's Equity, or Revenue Account the amount would be entered in the Credit or Right Side Column and the amount would be entered in the Debit or Left Side column to Decrease the Account's Balance.

   

  The Debit and Credit Rules Presented as A Table

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• Account Type	Normal Balance	Increase To Account Balance	Decrease To Account Balance	Account Example
  Property Accounts
  Asset	Debit	Debit - Left Column Of Account	Credit - Right Column Of Account	Cash, Accounts Receivable
  Property Rights Accounts
  Liability	Credit	Credit - Right Column Of Account	Debit - Left Column Of Account	Accounts Payable
  Owner's Equity	Credit	Credit - Right Column Of Account	Debit - Left Column Of Account	Owner's Capital
  Revenue	Credit	Credit - Right Column Of Account	Debit - Left Column Of Account	Sales
  Costs and Expenses	Debit	Debit - Left Column Of Account	Credit - Right Column Of Account	Rent, Utilities, Advertising
  Owner Draws	Debit	Debit - Left Column Of Account	Credit - Right Column Of Account	Owner Draws