Debits and Credits
  • 14 Dec 2023
  • 1 Minute to read

Debits and Credits


Article Summary

This article explains how debits and credits work when making journal entries and in general how transactions affect the debit and credit columns.

Debit and Credit Columns

When making a Journal Entry Procare will automatically place each line item in the appropriate column (debit or credit) based on the GAAP rules listed in the Cart Below. You’ll just want to think about whether the items you enter cause the account to increase (entered as a positive number) or decrease (entered as a negative number).

Example: Transfer Funds
When transferring money from one account to another, the account from which the funds are being deducted (savings) is entered as a negative, since the account is decreasing, while the account to which the money is being deposited (checking) is entered as a positive, since the account is increasing.

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Account Types: Debits and Credits

Whether an item is posted in the debit or credit column depends on the type of account (asset, liability, etc.) and whether the account is increasing or decreasing.

DebitCredit
(+) Increase in Asset(-) Decrease in Asset
(+) Increase in Expense(-) Decrease in Expense
(-) Decrease in Liability(+) Increase in Liability
(-) Decrease in Equity(+) Increase in Equity
(-) Decrease in Revenue(+) Increase in Revenue

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