A free sample from chapter 2 Accounting Fundamentals of our Landlord Accounting in QuickBooks guide. Section 2.05 Debits and Credits? We hope you’ll become a customer today, or sign up for the free e-course.
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“Debit” and “Credit” are two of the scariest words for many beginning bookkeepers. Debits occur on the left of a T-Account, and credits occur on the right. The frequent usage of Debit Cards and Credit Cards further confuses everyday language with accounting terminology. When you understand how to use Debits and Credits, they act as rules to guide you in figuring out almost any type of transaction.
A Debit is always on the left hand side of a “T account.” Asset and Expense accounts increase in value when debited, whereas Liability, Equity, and Revenue accounts decrease in value when debited. The letters Dr. are the abbreviation for Debit. The opposite of a debit is a Credit.
A Credit is always on the right hand side of a “T account.” Credit is abbreviated Cr. It is the opposite of a Debit.
Debits are on the left and Credits are on the right. Increasing the balance in a cash account is a debit (it occurs on the left side of the T-Account.) Increasing the balance of a liability account is a credit. Turn the page back and look at the previous transactions, observing how they follow this rule.
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