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Debit and Credit Cheat Sheet

January 6, 2022 by nicolea.co2000@gmail.com Leave a Comment

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)

 

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