--- title: "Debits and Credits Cheat Sheet for Owners | MCC Solutions" description: "A plain cheat sheet for debits and credits: which accounts increase with each, common transaction patterns, and a memory trick that works." url: "https://mcc-solutionsnj.com/bookkeeping/guides/debits-and-credits-cheat-sheet" --- Bookkeeping guide · Updated October 12, 2026 # Debits and Credits Cheat Sheet for Owners Debits and credits confuse people because the words sound like everyday banking. In bookkeeping they simply mean left side and right side of an entry. Once you know which accounts grow on which side, the rest falls into place. By [Matthew Coleman](/about), MCC Solutions **Quick answer.** In bookkeeping a debit is simply an entry on the left and a credit an entry on the right. Whether that raises or lowers an account depends on the account type, which is why a credit is not always good. Want this handled for you? Monthly bookkeeping, cleanup and year-end close for small businesses. Start with a free health check of your books. [Free health check](/bookkeeping/health-check)[Get a quote](/bookkeeping/#interest) **Related:** [Owner contribution or loan](/bookkeeping/guides/owner-equity-and-capital-contributions) · [Closing entries and retained earnings](/bookkeeping/guides/closing-entries-and-retained-earnings) · [Void vs delete a transaction](/bookkeeping/guides/voiding-vs-deleting-transactions) **Free tools:** [Mileage deduction calculator](/bookkeeping/mileage-deduction-calculator) · [Current ratio calculator](/bookkeeping/current-ratio-calculator) [![Intuit ProAdvisor Gold tier badge](/img/credentials/intuit-proadvisor-gold.png)](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77)Gold tier in Intuit's ProAdvisor program. [See my Intuit listing](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77) Keeping your own books? Tallyfinch does invoices, bank import and reports on your computer. [See Tallyfinch](/bookkeeping/mcc-books-downloadable-bookkeeping-software) ## Forget what your bank says When your bank credits your account, your balance goes up. That makes people assume a credit is always good. In bookkeeping it is not. A debit is just an entry on the left, and a credit is an entry on the right. Whether that raises or lowers an account depends on the account type. The bank describes things from its own point of view. Your deposit is a liability for the bank, so a credit increases it. Your books are from your point of view, where cash is an asset and a deposit is a debit. ## The five account types and their normal side Think of five buckets. Assets and expenses normally carry debit balances, so a debit increases them. Liabilities, equity and income normally carry credit balances, so a credit increases them. The opposite entry decreases each one. A common memory aid is the word DEAD CLIC. Debits increase Expenses, Assets and Dividends or draws. Credits increase Liabilities, Income and Capital. It is a little silly, but it sticks, and it covers nearly every case a small business will meet. ## Common transactions as debit and credit pairs Paying rent from the bank: debit rent expense, credit the bank account. Receiving payment from a customer for an invoice: debit the bank, credit accounts receivable. Buying equipment with cash: debit equipment, credit the bank. Taking out a loan: debit the bank because cash rose, credit the loan liability. Making a loan payment: debit the loan liability for the principal portion, debit interest expense for the interest, and credit the bank for the total. Owner puts personal money in: debit the bank, credit owner contributions. Notice that in each pair one side is the thing that received value and the other is the source. If you can say what received and what gave, the debit is the receiver. ## What a negative balance can tell you When an account ends up on the wrong side, it is a clue. An asset account with a credit balance, like a bank account showing negative, suggests an overdraft or a missing deposit. An expense account with a credit balance suggests a refund was posted larger than the original charge. Learning the normal side of each account lets you scan a trial balance and spot oddities within minutes. Income showing a debit balance, or a loan showing a debit balance, deserve a closer look. ## Tips for using this day to day Do not try to memorize every case. Pick the five account types, remember where each grows, and work out the rest. If you are still unsure when posting a manual entry, write it on paper first and check that total debits equal total credits. If a transaction feels strange, such as a customer overpayment or a returned check, ask your bookkeeper rather than guessing. A wrong pair of sides can sit unnoticed for months and distort your reports. ## A quick self-test Try three on your own. You pay a utility bill from the bank. You sell a product for cash. You receive a vendor bill you will pay next week. The answers: debit utilities and credit the bank; debit the bank and credit sales; debit the expense and credit accounts payable. If you got them, you understand the system well enough to read most reports. ## Common questions **Does debit always mean money out?** No. A debit increases assets and expenses and decreases liabilities, equity and income. Whether cash moves out depends on which accounts are involved. **Why does software hide debits and credits?** Most screens use words like deposit, bill and payment. The program creates the correct debit and credit pair in the background. You only see them in manual journal entries and some reports. **Which side is a sale on?** Income is a credit. If the sale is on account, the other side is a debit to accounts receivable. If it is paid immediately, the debit goes to cash or the bank. This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation. Let us handle it [### Monthly bookkeeping Categorizing, reconciling and monthly reports, with cleanup, payroll and NJ filings available. Bookkeeping →](/bookkeeping/) [### QuickBooks Online Monthly bookkeeping, cleanup and reconciliation in QuickBooks Online for New Jersey small businesses. Your account stays in your name. QuickBooks →](/bookkeeping/software/quickbooks-online)[### Zoho Books Bookkeeping and reconciliation in Zoho Books for New Jersey businesses, especially those already using other Zoho apps. Zoho Books →](/bookkeeping/software/zoho-books) More guides - [How to Read a Small Business Balance Sheet](/bookkeeping/guides/how-to-read-a-balance-sheet) - [Statement of Cash Flows: A Plain-English Guide](/bookkeeping/guides/statement-of-cash-flows-for-small-business) - [What Is a General Ledger and Why It Matters](/bookkeeping/guides/what-is-a-general-ledger) - [How to Write a Journal Entry Step by Step](/bookkeeping/guides/how-to-write-a-journal-entry) Free tool - [Bookkeeping health check](/bookkeeping/health-check) [All guides](/bookkeeping/guides) Reach small business owners, freelancers and bookkeepers who read this guide: [advertise here](/advertise#bookkeeping). Do it yourself ### Accounting Student Study Workbook Type the entries, see the statements update and check your work against the answer key. 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