Math & Science Support

Forget what you have learned about a bank statement or a credit card statement. In the accounting world, debit means left and credit means right, and the two sides must balance.

There is no good side or bad side.

The first idea is to remember your balance sheet accounts and look at the “equals” sign.

Assets = Liabilities + Owners Equity

Study tip: D E A L E R might be an acronym you can use to remember how the formula works. It stands for Dividends, Expenses, Assets, Liabilities, Equity, and Revenue.

The UP side is the natural side balance. The opposite side is used when the account goes DOWN.

Assets, expenses, and owner withdrawals go UP on the debit (left) side. Expenses and withdrawals are on the debit side because they make owners’ equity go DOWN.

Liabilities, owners’ equity, and revenues go UP on the credit (right) side. Revenues are on the credit side because they make owners’ equity go UP.

We use T-accounts to help see things more clearly.

Asset accounts: Cash, accounts receivable, prepaids, supplies on hand, and property, plant, equipment. There are many more!

Liability accounts: Accounts payable, notes payable, other payables, unearned revenue.

Owners’ equity (capital) account: Shown as “Their Name, capital”.

Withdrawals account: Shown as "Their Name, withdrawal".

Revenue accounts: (type of) revenue, (type of) fees earned

Expense accounts: Utilities expense, phone expense, supplies expense, wages expense, depreciation expense