Debits and Credits Used To Record Transactions
 NEXT-->

NOTE: Simply place your mouse cursor over the Type Of Account Debited and Credited.
There is no need to click the answer.

Type Of
Account Debited
and Credited
Effect On Accounting Equation

Assets = Liabilities + Owner's Equity

Note:
Debit Account Balances on the Left Side of the equation represent increases.
Credit Account Balances on the Left Side of the equation represent decreases.
Debit Account Balances on the Right Side of the equation represent decreases.
Credit Account Balances on the Right Side of the equation represent increases.

Transaction 1. Owner invests personal cash in business.
Debit an Asset and Credit an Asset Increases an Asset / Decreases an Asset
Debit an Asset and Credit Revenue Increases an Asset / Increases Revenue (Increases Equity)
Debit an Asset and Credit Liabilities Increases an Asset / Increases Liabilities
Debit an Asset and Credit Owner's Equity Increases an Asset / Increases Owner's Equity
Debit a Liability and Credit an Asset Decreases a Liability / Decreases an Asset
Debit Draw and Credit an Asset Increases a Draw (Reduces Equity) / Decreases an Asset
Debit an Expense and Credit a Liability Increases an Expense (Reduces Equity) / Increases a Liability
Debit an Expense and Credit an Asset Increases an Expense (Reduces Equity) / Decreases an Asset
Transaction 2. Owner invests equipment in business.
Debit an Asset and Credit an Asset Increases an Asset / Decreases an Asset
Debit an Asset and Credit Revenue Increases an Asset / Increases Revenue (Increases Equity)
Debit an Asset and Credit Liabilities Increases an Asset / Increases Liabilities
Debit an Asset and Credit Owner's Equity Increases an Asset / Increases Owner's Equity
Debit a Liability and Credit an Asset Decreases a Liability / Decreases an Asset
Debit Draw and Credit an Asset Increases a Draw (Reduces Equity) / Decreases an Asset
Debit an Expense and Credit a Liability Increases an Expense (Reduces Equity) / Increases a Liability
Debit an Expense and Credit an Asset Increases an Expense (Reduces Equity) / Decreases an Asset
Transaction 3. Business receives cash from bank loan.
Debit an Asset and Credit an Asset Increases an Asset / Decreases an Asset
Debit an Asset and Credit Revenue Increases an Asset / Increases Revenue (Increases Equity)
Debit an Asset and Credit Liabilities Increases an Asset / Increases Liabilities
Debit an Asset and Credit Owner's Equity Increases an Asset / Increases Owner's Equity
Debit a Liability and Credit an Asset Decreases a Liability / Decreases an Asset
Debit Draw and Credit an Asset Increases a Draw (Reduces Equity) / Decreases an Asset
Debit an Expense and Credit a Liability Increases an Expense (Reduces Equity) / Increases a Liability
Debit an Expense and Credit an Asset Increases an Expense (Reduces Equity) / Decreases an Asset
Transaction 4. Business writes a check to buy equipment using the cash provided from the bank loan.
Debit an Asset and Credit an Asset Increases an Asset / Decreases an Asset
Debit an Asset and Credit Revenue Increases an Asset / Increases Revenue (Increases Equity)
Debit an Asset and Credit Liabilities Increases an Asset / Increases Liabilities
Debit an Asset and Credit Owner's Equity Increases an Asset / Increases Owner's Equity
Debit a Liability and Credit an Asset Decreases a Liability / Decreases an Asset
Debit Draw and Credit an Asset Increases a Draw (Reduces Equity) / Decreases an Asset
Debit an Expense and Credit a Liability Increases an Expense (Reduces Equity) / Increases a Liability
Debit an Expense and Credit an Asset Increases an Expense (Reduces Equity) / Decreases an Asset
Transaction 5. Business buys a building using an owner financed 10 year loan.
Debit an Asset and Credit an Asset Increases an Asset / Decreases an Asset
Debit an Asset and Credit Revenue Increases an Asset / Increases Revenue (Increases Equity)
Debit an Asset and Credit Liabilities Increases an Asset / Increases Liabilities
Debit an Asset and Credit Owner's Equity Increases an Asset / Increases Owner's Equity
Debit a Liability and Credit an Asset Decreases a Liability / Decreases an Asset
Debit Draw and Credit an Asset Increases a Draw (Reduces Equity) / Decreases an Asset
Debit an Expense and Credit a Liability Increases an Expense (Reduces Equity) / Increases a Liability
Debit an Expense and Credit an Asset Increases an Expense (Reduces Equity) / Decreases an Asset

 NEXT-->