The most difficult concept in accounting, Debit and Credits, is really very simple once you know a couple of rules. Debits and Credits merely keep your accounts in balance. Those items on the left (Debit) side must equal those items on the right side (Credits). They do not mean addition or subtraction.

The easiest way to view account entries is to use a T-account. A T-account is merely a big T, with Debit accounts on the left, and Credit accounts on the right. For each transaction use a T-account, this will help keep the items separate and easy to balance.

A Debit is information entered on the left side of the T-account. These items are referred to as charges. A Credit is information entered on the right side of the T-account. These items are referred to as credits.

Items increase or decrease, depending on what side of the T-account they are on. Below is a chart that lists the account type and how a Debit or Credit affects it.

                       

A simple way to remember this is that the accounts are listed in the order of Balance Sheet and Income Statement accounts. The top and bottom accounts (Assets and Expenses) increase with a Debit and decrease with a Credit, all others are the reverse.