Fundamentals of Accounting

Summaries

Double-entry book keeping: Each transaction is recorded in at least 2 accounts (one credited and one debited)

Debit (DR) on left/ Credit (CR) on right

DEAL (Dividend, Expense, Asset, Losses) are Debit accounts – increase when debited

GIRLS (Gains, Income, Revenues, Liability and Stockholder’s equity) are Credit accounts – increase when credited

A debit (to owe) means someone owes the account the amount.

A credit (to entrust) means the account owes someone the amount.

(So your bank account usually has debit balance.

For liability account, the account owes someone, so, increase is credit)

Accounts are collectively referred as the ledger

A journal is where the entries (credits / debits) are written before into ledger

So now, you understand why credit card is called credit card and debit card is called debit card?