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.
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.