A beginner’s intro to debits and credits

Balanced accounting is like a math equation, one side must equal the other, the debits have to equal the credits. All of your financial accounts (assets, liabilities, equity, income and expense) have a normal balance as either a debit or a credit. When you increase one account, another account has to be increased to keep everything in balance.

As a simple example let’s say you sold a print of one of your art pieces for $30 cash. Cash is an asset account (it’s what you own) and Sales is an income account. Asset accounts normally have a debit balance and Income accounts normally have a credit balance. To record this transaction you would debit (increase) cash and credit (increase) sales each for $30. The equal increase to both accounts keeps everything in balance. Sounds simple, right? It is, as long as you have a good chart of accounts, that you know what type of account you are increasing or decreasing and that you always keep everything equal.