Debits & Credits Cheat Sheet

Every transaction touches at least two accounts. Get this right and your books will always balance.

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The Golden Rule

Assets = Liabilities + Equity. This must be true after every single transaction. A journal entry's total debits must always equal its total credits — that's what keeps the equation balanced.

Normal Balances by Account Type

Account Type	Normal Balance	Debit Does	Credit Does
Assets	Debit	Increases	Decreases
Expenses	Debit	Increases	Decreases
Draws / Dividends	Debit	Increases	Decreases
Liabilities	Credit	Decreases	Increases
Equity	Credit	Decreases	Increases
Revenue	Credit	Decreases	Increases

Memory Trick

ADE = Assets, Draws, Expenses — these three have a normal Debit balance (a debit makes them go up). LER = Liabilities, Equity, Revenue — these three have a normal Credit balance (a credit makes them go up). If you remember ADE and LER, you can figure out the rest.

Worked Example

You pay $500 cash for office supplies. Office Supplies Expense goes up (an expense → debit), and Cash goes down (an asset going down → credit).

Account	Debit	Credit
Office Supplies Expense	$500	—
Cash	—	$500

Quick Sanity Check

After recording any entry, add up all the debit amounts and all the credit amounts. If they don't match, you have an error — find it before moving on. Debits are always listed first (left), credits second (indented, right).

Frequently Asked Questions

Why do debits and credits feel backwards for liabilities?

Because most people first learn "debit" from their bank statement, where a debit means money leaving your account. In accounting, debit and credit just mean "left" and "right" — their effect depends entirely on the account type.

What's the easiest way to remember which accounts increase with a debit?

Use the ADE / LER memory trick above: Assets, Draws, and Expenses increase with debits; Liabilities, Equity, and Revenue increase with credits.

Do debits and credits always have to be equal in a single entry?

Yes. Every journal entry must have total debits equal to total credits — that's the core rule of double-entry bookkeeping.

Is there a tool that builds the entry for me?

Yes — the free Journal Entry Generator lets you describe a transaction in plain English and get the correct debit/credit entry instantly.

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