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Debit or Credit?
Debit doesn't have anything to do with a debit card, it only means left in Latin! Credit means Right!
When writing journal entries I use 2 simple questions to alleviate any confusion.
Debit (the left side): What did I get?
Credit (the right side): How did I get it?
Here are a few examples of this in action:
1. I sold you my MP3 player for $50
Debit (the left side): What did I get?
$50 cash
Credit (the right side): How did I get it?
I sold my MP3 player
Journal entry:
Cash $50
MP3 player $50
2. Purchased Accounting textbook for $160 on account
Debit (the left side): What did I get?
an accounting textbook
Credit (the right side): How did I get it?
I payed $160 on an accounts payable (on account means you don't pay with cash) Journal entry:
Accounting textbook $160
Accounts Payable $160
3. Paid $700 Rent
Debit (the left side): What did I get?
A bill for Rent expense
Credit (the right side): How did I get it?
$700 cash Journal entry:
Rent Expense $700
Cash $700
4. Sold math book for $75 on account
Debit (the left side): What did I get?
$75 accounts receivable (on account means you don't get cash yet)
Credit (the right side): How did I get it?
I sold my math book
Journal entry:
Accounts receivable $75
Math Book $75
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