Lessons · Accounting · which side makes an account bigger

Which side makes it bigger

A debit increases assets and expenses. A credit increases liabilities, equity and revenue. To make any account smaller, use the other side.

Hone is a place to practise a career, one idea a day. This is one of its lessons, written out in full and free to read without an account.

What it is for

You are entering a rent payment of 1,200 and the software wants a side for each account. This one rule answers every entry you will ever make, so it is worth the ten minutes it takes to make it yours.

How to think about it

Name the two accounts. Name the type of each. Decide whether each goes up or down. Then: up on the side where the type lives, down on the other side.

Worked example

Assets and expenses: debit up, credit down

They live on the left, so the left makes them grow.

Liabilities, equity and revenue: credit up, debit down

They live on the right.

Pay rent 1,200 in cash: rent is an expense going up → Dr Rent expense 1,200

Expense up, so debit.

Cash is an asset going down → Cr Cash 1,200

Asset down, so credit. Debits 1,200, credits 1,200.

Your turn

A customer pays 900 cash for a sale. Cash goes up. Write the cash line.

 Cash 900

The trap

Debiting revenue because money came in. The cash is what gets the debit; the sale is revenue going up, and revenue goes up on the credit side.

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