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In this video, I'll attempt to explain Debits & Credits in less than two minutes. You'll also learn my number one Accounting Hack... DEALER.

Debits and Credits are words that we use to reflect the double-sided nature of financial transactions. If you're new to Accounting, these words can seem a little counterintuitive.

But listen here...

They aren't good, they aren't bad... they're actually quite simple, and they have everything to do with "Double-Entry Accounting". Double-Entry Accounting is a bookkeeping system that says every accounting entry must have an opposite corresponding entry in a different account.

In Double-Entry Accounting, we have two main groups of accounts:

▪ Normal Debit Accounts
▪ Normal Credit Accounts

Normal Debit Accounts represent destinations that Economic Benefit flows to. They increase when debited & decrease when credited. Normal Credit Accounts work the other way around. They represent the sources that Economic Benefit flows from. Normal Credit Accounts decrease when debited and increase when credited.

A simple acronym to help you remember the Normal Debit & Credit Accounts is DEALER. DEA represents the Normal Debit Accounts: Dividends, Expenses & Assets. LER represents the Normal Credit Accounts: Liabilities, Equity and Revenue.

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⏱️TIMESTAMPS
00:00 - Intro
00:32 - What is Double-Entry Accounting?
01:10 - Origin of "Debit" and "Credit"
01:30 - Debits & Credits explained using Economic Benefit
02:50 - DEALER
03:15 - Debit & Credit Example

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