Debit and Credit Cheat Sheet

I know many of you get a little confused with the whole Debit and Credit terminology in accounting. It doesn’t mean the same thing as it does to a bank. It is also referred to as Double-Entry Accounting. It’s the process of journal entries having two-sided. Every entry requires a corresponding opposite entry to a different account. This system has been around since the early 1400s. Example: If you deposit cash to your bank account, what’s the other side? You need to Debit Cash (increases your asset) and Credit – What? Sales, A/R, etc.

I have created a quick cheat sheet to help you understand when a general ledger account needs to be “debited” or “credited.” It just means “left” or “right.”

Common Accounts used in everyday business.

Description	Account Type	Financial Statement
Cash	Asset	Balance Sheet
Accounts Receivable	Asset	Balance Sheet
Inventory	Asset	Balance Sheet
Fixed Assets	Asset	Balance Sheet
Accounts Payable	Liability	Balance Sheet
Taxes Payable	Liability	Balance Sheet
Short-Term or Long-Term Loans	Liability	Balance Sheet
Owner’s Draw	Equity	Balance Sheet
Owner’s Investment	Equity	Balance Sheet
Common Stock	Equity	Balance Sheet
Retaining Earnings	Equity	Balance Sheet
Revenue	Revenue	Profit and Loss (P&L)
Cost of Good Sold	Expense	Profit and Loss (P&L)
Advertising Expense	Expense	Profit and Loss (P&L)
Bank Fees	Expense	Profit and Loss (P&L)
Office Supplies	Expense	Profit and Loss (P&L)
Salaries	Expense	Profit and Loss (P&L)
Employer taxes	Expense	Profit and Loss (P&L)
Rent Expense	Expense	Profit and Loss (P&L)