Accounting Tips: 5 Tips for Using Credits and Debits

By QuickBooks Canada Team

0 min read

Utilized in bookkeeping and accounting, credits and debits are key parts of the double entry system, which refers to a method of recording transactions that affects two accounts or more. Here are five tips for recording credits and debits:

  1. For every credit entry, a separate account must receive a debit entry of an equal amount.
  2. Use a T-account to illustrate the credit and debit effect on account balances.
  3. Expense accounts are usually debited. For example, a firm debits rent expense when it pays rent. It debits advertising expense if it runs an advertisement in the newspaper.
  4. Revenue accounts are nearly always credited. When a retailer sells a shirt, it credits sales. If a bank realizes interest on a loan, loan interest revenues gets credited.
  5. Assets and liabilities have both credit and debit entries. However, assets normally have debit balances, while liabilities usually have credit balances.
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Related Articles

Is an Accounting Franchise Right for You?

Buying an accounting franchise is one of the options available if you’re…

Read more

Tips for Accountants to Consider When Managing Their Accounting Practice Finances

If you’re an accountant with your own practice, you also have to…

Read more

Niche Markets for Accounting Professionals

Finding a niche market for your accounting firm to focus on can…

Read more