The Accounting Student

How to DEBIT and CREDIT

This is probably one of the earliest problems students face in accounts. So today I will try and ease your way through learning how to debit and credit as well as sharing with you all of my tips to remember what to do exactly.

First of I will like to clear something,

• The effects of DEBITs and CREDITS vary between the different ledgers
• Their main purpose is to either INCREASE or DECREASE values depending on the accounts in which they are used.

I will show you the first method I use to help me know where to debit and credit. It is another mnemonic called D.E.A.D.C.L.I.C.

This mnemonic applies for every transaction* which requires an increase in value.

I will illustrate it in a table below:

DEBIT anything which is..

E- Expense

A- Asset

D-Drawings

And

CREDIT anything which is …

L- Liability

I- Income

C –Capital

And obviously for a decrease you will do the reverse.

So that is the first method, let us go on to the next method I promised to teach you.

It is another mnemonic which I mentioned earlier probably in a previous post. This one is A.L.O.R.E.

Where the following keys are used;

CR-Credit

DR-Debit

A-Asset

L-Liability

O-Owners equity/capital

R-Revenue

E-Expenditure

So basically all you have to remember is that to increase the value of an asset or expenditure account or drawings you will always have to DEBIT. From here you can then deduce that to reduce its value you will have to CREDIT, and all other accounts follow the complete opposite, just as shown in the image above.

 

 

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