Learn It
Forget what you may have heard about debits being "bad" and credits being "good." In bookkeeping, those words do not mean that at all. A debit is simply an entry on the left side of an account. A credit is an entry on the right side.
The trick is knowing which side makes an account increase. That depends on the type of account:
- Assets and Expenses increase with a debit and decrease with a credit.
- Liabilities, Equity, and Income increase with a credit and decrease with a debit.
The one rule that never breaks: total debits must always equal total credits in every entry. If they do not, the books are out of balance.
The Debit and Credit Rules
This table is the heart of bookkeeping. Memorize it — every entry you ever make depends on it.
| Account Type | Increases With | Decreases With |
|---|---|---|
| Assets | Debit | Credit |
| Expenses | Debit | Credit |
| Liabilities | Credit | Debit |
| Equity | Credit | Debit |
| Income | Credit | Debit |
A simple memory aid: DEAD — Debits Expand Assets and Draws (expenses). Everything else grows with a credit.
See It
Let's watch a small business record three transactions. For each one, we'll identify what happened, then build the journal entry.
1. Receive $800 cash from a customer
Cash (an asset) goes up. Assets increase with a debit. Service Revenue (income) goes up. Income increases with a credit.
| Account | Debit | Credit |
|---|---|---|
| Cash | 800 | — |
| Service Revenue | — | 800 |
| Totals | 800 | 800 |
2. Pay $300 cash for rent
Rent Expense increases. Expenses increase with a debit. Cash (an asset) goes down. Assets decrease with a credit.
| Account | Debit | Credit |
|---|---|---|
| Rent Expense | 300 | — |
| Cash | — | 300 |
| Totals | 300 | 300 |
3. Buy $500 equipment on account
Equipment (an asset) goes up. Assets increase with a debit. Accounts Payable (a liability) goes up. Liabilities increase with a credit.
| Account | Debit | Credit |
|---|---|---|
| Equipment | 500 | — |
| Accounts Payable | — | 500 |
| Totals | 500 | 500 |
Do It
Now build the entries yourself. Read the scenario, choose the right accounts, and type the debit and credit amounts. The entry must balance — debits equal credits.
Do It — Build the Journal Entry (1 of 3)
The business receives $800 cash from a customer for services performed today.
| Account | Debit | Credit |
|---|---|---|
| Totals |
Prove It
Answer each question, then read the explanation. There's no score — this is just to help the ideas stick.
Question 1
A business receives $500 cash from a customer for work done today. Which accounts are affected and how?
Question 2
A business pays $200 cash for rent. Which entry is correct?
Question 3
Why must debits always equal credits in every journal entry?
Ready for more than a short exercise?
Short exercises help you understand the skill. QBO Dojo practice clients let you apply bookkeeping skills across realistic business activity inside QuickBooks Online.
Explore QBO Dojo Practice ClientsKey Takeaways
- A debit is the left side of an account. A credit is the right side.
- Assets and expenses increase with a debit. Liabilities, equity, and income increase with a credit.
- Every journal entry must have equal total debits and total credits.
- When an account increases, the opposite side decreases — but the entry always balances.
- Debits and credits are not about good or bad. They are about which side an amount goes on.