If you have been reading the The Debt Books blog for awhile, you might remember our Credits vs. Debits series if not, check out Round 1, Round 2, and Round 3. If you’re new here, we’d like to take a quick moment to revisit the topic.
Trying to figure out if an account goes into the Debit or Credit account can get a little confusing, so our Bean Counter has put together quick reference guide to help you keep your credits and debits straight.
It helps to think about Debits and Credits as the numbers on a calculator tape. Debits are black (+) and Credits are red (-)
- Balance sheet accounts are DEBIT accounts – Debits raise the balance
- Liabilities and Owner’s Equity are CREDIT accounts – Credits raise the balance
- Sales accounts are CREDIT accounts – Credits raise the balance
- Cost of Goods Sold accounts are DEBIT accounts – Debits raise the balance
- Operating Expense accounts are DEBIT accounts – Debits raise the balance
|Cost of Goods Sold
Knowing which accounts correspond with Debit or Credit accounts will make putting together financial statements quicker and easier.
Do you have a question for us? Submit it here and we’ll have our team work on it right away.