DEALER - Debits and Credits
DEALER
The DEALER mnemonic helps you remember which accounts increase with a debit. Dividends, Expenses, and Assets are all increased by debits. The remaining accounts (Liabilities, Equity, Revenue) are increased by credits.
The DEALER mnemonic helps you remember which accounts increase with a debit. Dividends, Expenses, and Assets are all increased by debits. The remaining accounts (Liabilities, Equity, Revenue) are increased by credits.
Breakdown
Dividends
Increased by DEBIT - distributions to shareholders reduce equity
Expenses
Increased by DEBIT - costs of running the business
Assets
Increased by DEBIT - resources owned by the company
Liabilities
Increased by CREDIT - obligations owed to others
Equity
Increased by CREDIT - owners' residual interest
Revenue
Increased by CREDIT - income from operations
Example
When you receive cash from a customer: Cash (Asset) increases with a DEBIT, Revenue increases with a CREDIT. Both are in DEALER - just remember D, E, A get debits while L, E, R get credits.
When to Use This
- ✓When recording any journal entry
- ✓When unsure whether to debit or credit an account
- ✓When checking if your journal entry balances properly
- ✓During exams when you need a quick reference
FAQs
Common questions about this mnemonic
The first E stands for Expenses (debit increases), while the second E stands for Equity (credit increases). Expenses decrease equity, so they have opposite normal balances.
Debits are always on the left side of a journal entry and T-account. Credits are always on the right. Think "Debit = Left" like "Drive on the Left" in some countries.
Contra accounts have the opposite normal balance of their related account. Accumulated Depreciation is a contra-asset, so it increases with credits (not debits). Sales Discounts is contra-revenue, so it increases with debits. Think of contra accounts as exceptions — they reduce their parent account by living on the opposite side.
Yes, every standard journal entry follows DEALER rules. Whether you're recording revenue, paying expenses, buying assets, or issuing stock, the same debit/credit logic applies. The power of DEALER is its universality — once you internalize it, you can work through any transaction.