Debits and credits are not hard. They are just not intuitive.

Read the transaction as two effects, never one

The instinct that causes most errors is reading a transaction as a single event — "we paid cash". Every transaction changes at least two accounts, and the discipline is naming both before writing anything.

Assets = Liabilities + Stockholders' Equity. The equation has to hold after every entry. If your entry leaves it unbalanced, you found one effect and stopped. If it balances but the accounts are wrong, the equation cannot tell you — which is the real reason to reason about direction rather than checking the total.

Paying an account payable is the classic. Cash falls and the liability falls. Assets and liabilities both shrink, equity is untouched, and nothing about the transaction is an expense — the expense was recorded when the obligation arose.

Normal balances, which settle most questions on their own

Account type	Normal balance	Increases with
Asset	Debit	Debit
Liability	Credit	Credit
Common stock	Credit	Credit
Retained earnings	Credit	Credit
Revenue	Credit	Credit
Expense	Debit	Debit
Dividends	Debit	Debit
Contra-asset (e.g. accumulated depreciation)	Credit	Credit

Revenue and expense are the pair worth internalising: revenue increases with a credit because it increases equity, expense increases with a debit because it reduces equity. Once that clicks, "an increase to an expense is shown with a ___" stops being memorisation.

Where the marks actually go

• Purchases on account recorded as cash purchases. "On account" means no cash moved — the credit is to Accounts Payable.
• Borrowing treated as revenue. Cash from a loan increases an asset and a liability. Equity does not move, and it is not income.
• Owner or shareholder contributions treated as revenue. Equity rises, but through common stock, not the income statement.
• Dividends treated as an expense. They reduce retained earnings directly and never appear on the income statement.
• Prepaid items expensed immediately. Prepaid rent is an asset until the period it covers has passed; that is what the adjusting entry is for.
• Supplies purchased vs supplies used. The purchase is an asset; only consumption becomes an expense.
• Accrual timing. Revenue is recognised when earned and expenses when incurred, not when cash moves. A large share of intro exam questions is that sentence in disguise.

A method that survives the exam

1. Name the two accounts in the transaction, in words, before touching debits and credits.
2. Classify each — asset, liability, equity, revenue or expense.
3. Decide direction — did each go up or down?
4. Apply the normal balance to turn direction into debit or credit.
5. Check the equation still holds, then verify the entry itself — a balanced entry with the wrong accounts is the error the trial balance is structurally unable to catch.

Being straight with you

This is a coursework tool for financial accounting problems. It is not accounting, tax or financial advice, it is not authoritative on GAAP or IFRS, and nothing it produces should be used for real books, a real filing or a real decision. Where your textbook, your instructor or the standards disagree with it, they are right.

Related: the math checker explains the step-level check, and statistics & probability covers the other quantitative course most business programmes require.