Accounting basics
Debit or Credit Cheat Sheet: 26 Common Accounts
This debit or credit cheat sheet answers the common questions first: cash is a debit, sales are a credit, purchases are a debit, capital is a credit, and expenses are a debit. As a rule, assets, expenses and owner drawings carry a normal debit balance, while liabilities, capital and revenue carry a normal credit balance.
The table below lists 26 accounts a small business meets every month, with the normal balance, what increases it and a one-line example. It is an educational reference based on standard double-entry rules; for a specific case or anything tax-related, a qualified accountant decides.
Zawid Accounts · Content updated:
The rule behind every debit or credit answer
Everything follows from the accounting equation: Assets = Liabilities + Equity. Assets sit on the left side, so they increase with a debit, which is the left side of an entry. Liabilities and equity sit on the right side, so they increase with a credit.
Revenue increases equity, so it is a credit. Expenses and drawings reduce equity, so they are debits. An expanded form to remember: Assets + Expenses + Drawings = Liabilities + Equity + Revenue. The left side increases with a debit; the right side with a credit.
Every entry has equal debits and credits. If a customer pays 500 in cash, you debit cash 500 and credit accounts receivable 500, and the equation still balances.
| Account (type) | Normal balance | Increases with | Example |
|---|---|---|---|
| Cash (asset) | Debit | Debit: cash received | Cash sale of 500: debit cash 500. |
| Bank (asset) | Debit | Debit: deposits and incoming transfers | Depositing 500: debit bank, credit cash. |
| Accounts receivable, debtors (asset) | Debit | Debit: sales on credit | Credit sale of 500: debit receivable, credit sales. |
| Inventory (asset) | Debit | Debit: stock bought or received | Perpetual system, buying stock for 400: debit inventory. |
| Equipment (asset) | Debit | Debit: equipment bought | Buying a display fridge for 2,000: debit equipment. |
| Prepaid expenses (asset) | Debit | Debit: paying before you use it | Paying 1,200 rent six months ahead: debit prepaid rent. |
| Accumulated depreciation (contra-asset) | Credit | Credit: depreciation recorded | Yearly depreciation of 200: credit accumulated depreciation. |
| Accounts payable, creditors (liability) | Credit | Credit: buying on credit | Buying stock on credit for 400: credit payable. |
| Loans payable (liability) | Credit | Credit: borrowing | Borrowing 5,000: debit bank, credit loan. |
| Accrued expenses (liability) | Credit | Credit: expense used but not yet paid | Unpaid electricity of 150 at month end: credit accrued expenses. |
| Customer advances, unearned revenue (liability) | Credit | Credit: money received before delivery | Deposit of 300 before delivery: debit cash, credit customer advances. |
| VAT payable (liability) | Credit | Credit: tax collected and not yet paid over | Shown as an amount you owe; tax rules are outside this page. |
| Capital, owner's equity (equity) | Credit | Credit: owner invests | Owner puts in 10,000: debit cash, credit capital. |
| Owner drawings (contra-equity) | Debit | Debit: owner takes money out | Owner takes 300 for personal use: debit drawings, credit cash. |
| Sales revenue (revenue) | Credit | Credit: goods or services sold | Cash sale of 500: credit sales. |
| Sales returns (contra-revenue) | Debit | Debit: customer returns goods | Customer returns goods worth 50: debit sales returns. |
| Discount allowed (contra-revenue or expense) | Debit | Debit: discount you give a customer | Customer pays 480 to settle 500: debit discount allowed 20. |
| Interest income (revenue) | Credit | Credit: interest earned | Bank adds interest of 10: debit bank, credit interest income. |
| Purchases (periodic system) | Debit | Debit: stock bought | Buying stock for 400 cash: debit purchases, credit cash. |
| Purchase returns (contra-purchases) | Credit | Credit: goods returned to a supplier | Returning goods worth 40: credit purchase returns. |
| Purchase discounts, discount received (contra-purchases) | Credit | Credit: discount from a supplier | Paying 390 to settle 400: credit discount received 10. |
| Cost of goods sold (expense) | Debit | Debit: stock sold | Goods costing 300 sold: debit cost of goods sold. |
| Rent expense | Debit | Debit: rent for the period | Monthly rent of 1,000: debit rent expense. |
| Salaries and wages (expense) | Debit | Debit: pay for the period | Paying salaries of 2,000: debit salaries, credit cash. |
| Utilities expense | Debit | Debit: electricity, water or internet used | Electricity bill of 150: debit utilities. |
| Depreciation expense | Debit | Debit: depreciation for the period | Yearly depreciation of 200: debit depreciation expense. |
Quick answers: is sales, cash, purchases or capital a debit or credit?
The questions people search for most, with the reason:
- Sales revenue: credit. A cash sale of 500 debits cash and credits sales.
- Cash and bank: debit. They are assets; money in is a debit, money out is a credit.
- Purchases: debit. Under a periodic inventory system, buying stock debits purchases; under a perpetual system, it debits inventory. Both are debits.
- Capital: credit. It is the owner's claim on the business, so it sits on the right side.
- Expenses such as rent, salaries and utilities: debit. They reduce profit, and profit belongs to equity.
Contra accounts that flip the usual side
Some accounts exist to reduce another account, so they carry the opposite balance. Sales returns and discount allowed reduce sales, so they are debits. Purchase returns and purchase discounts reduce purchases, so they are credits.
Owner drawings reduce the owner's equity, so they are a debit. Accumulated depreciation reduces the book value of equipment, so it is a credit, while the period's depreciation expense is a debit. Discount allowed is shown either as a reduction of sales or as an expense; it is a debit either way.
Timing accounts: prepaid, accrued and customer advances
Prepaid expenses are an asset with a debit balance: you paid 1,200 of rent for the coming months, so you hold the right to use the space. Accrued expenses are a liability with a credit balance: this month's electricity of 150 has been used but not yet paid.
Customer advances are a credit liability too. If a customer pays a 300 deposit before delivery, you owe them the goods or the money, and it becomes revenue only on delivery. VAT payable is also a credit liability; this page does not cover how tax is calculated or filed.
Where Zawid Accounts fits, honestly
Zawid Accounts is an Android app for recording debts, repayments, payments, income and expenses in separate customer and supplier accounts. It does not create double-entry journals, a trial balance or a chart of accounts, so it will not post the debits and credits in this table for you.
What it keeps is the running balance of each person you deal with. A customer's balance shows what they owe you, which corresponds to accounts receivable; a supplier's balance shows what you owe, which corresponds to accounts payable. Each balance stays in its own currency, with no exchange-rate conversion.
When your accountant prepares the books, you can export a PDF account statement for any account and period and share it as clean, dated records.
Who this cheat sheet suits, and its limits
It suits shop owners, students and freelancers who need a fast answer while recording or reviewing entries. Treat it as a starting point: account names and treatments vary between businesses and standards. When the amount matters or tax is involved, ask a qualified accountant.
Frequently asked questions
Is sales a debit or credit?
Sales revenue is a credit because it increases equity. Sales returns, which reduce sales, are a debit.
Is cash a debit or credit?
Cash is an asset with a normal debit balance. Cash received is a debit, and cash paid out is a credit.
Are purchases a debit or credit?
Purchases are a debit, whether recorded in a purchases account or directly in inventory. Purchase returns and purchase discounts are credits.
Is capital a debit or credit?
Owner's capital is a credit. Owner drawings, the money the owner takes out, are a debit because they reduce equity.
Why is a customer deposit a credit and not income?
Until you deliver, you owe the customer the goods or the money, so it is a liability with a credit balance. It becomes revenue when the sale is completed.
Does Zawid Accounts record journal entries?
No. Zawid records debts, payments, income and expenses per account and shows balances and PDF statements, but it does not do double-entry bookkeeping. Many people use it for daily records and give the statements to an accountant.