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Hi Candy,


I took a basic bookkeeping course and I'm still struggling to understand debits & credits. All the instructor said was that debits and credits are the reverse of what you do when balancing your checkbook. I'm hoping an experienced bookkeeper can explain it to me in simpler terms. Please explain to me in layman's terms what debits and credits are in double entry bookkeeping?


Thanks in advance,



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Hello Candy,



I would be happy to help!



Debits and Credits are one of the most challenging areas of the bookkeeping process to learn.


The advice given to you that debits and credits are the reverse of your checking account is correct in terms of:


When you deposit into your bank account - it is a debit on your side because it is an asset and when assets are increased then are debited.


However, it is shown as a credit on your bank statement because the bank views this on their side as revenue (afterall they are in the business of providing you with banking services that includes deposits - right?) therefore revenue accounts are credited when they are increased.


You need to understand that all transactions have two components and each of them are classified according to the chart of accounts - which is the bookkeeping classification system.


So, assets, expenses and cost of sales are all DEBITED when increased


Liabilities, equity and revenue are CREDITED when increased


If you reverse them: assets, expenses and cost of sales are CREDITED they decrease


Likewise, if liabilities, equity and revenue are DEBITED they decrease


It takes time to understand these relationships!


If it would help you at all - I can forward to you a COMPLIMENTARY Summary of this process if you forward your email address to me.


I hope this is helpful!









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There are accounting conventions governing how to record debits and credits for expense accounts from the income statement. ....

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