How Double-Entry Actually Works
Every transaction touches at least two accounts. Learn the rule and the rest is just practice.
Debits and credits aren't good or bad
Debit means 'left side of the ledger.' Credit means 'right side.' That's it. Whether a debit increases or decreases an account depends on the account type. Stop thinking of them as plus and minus.
The DEALER mnemonic
Debits increase: Dividends, Expenses, Assets. Credits increase: Liabilities, Equity, Revenue. Memorize DEALER and you can journal any entry without thinking.
Worked example
You buy a $1,200 laptop on a company credit card. Debit Equipment (asset) $1,200. Credit Credit Card Payable (liability) $1,200. Assets up, liabilities up, equation still balances.
Key takeaways
- Debit = left, Credit = right. Neither is inherently positive.
- DEALER tells you which side increases each account.
- Every entry must balance: total debits = total credits.