Debits and Credits for Beginners

hey there students welcome to the next video here introduce you to debits and credits now first remember this accounting equation assets must equal liabilities plus equity you're gonna see this over and over and over again it's a very important equation in this class you have to know it now in the next practice videos I'm gonna show you how to classify things under each pretty much how each transaction affects this equation that right there will be on your test and guaranteed so in accounting we say that a account is increasing or decreasing and the count goes up account goes down so for example let's say you buy something with cash anything what's gonna happen is the cash account when you buy it will go down right because you bought it with cash so you used cash to buy whatever it was cash is going down now we say an account is increasing or decreasing in accounting we use the words debit or credit those are the words we use now debits and credits will affect different accounts differently so let's let's go take a look so let's talk about dentists so which accounts will increase with add/edit which accounts go up with a debit so here's a little acronym d e a d no but with this acronym mean so this acronym what it means is this you're gonna go to debit expenses assets dividends so that means this when these accounts go up they're increasing you debit them so if an expense goes up you debit it if an asset goes up you debit it if a dividend goes up you debit it every time so if you go ahead and buy some supplies you bought an asset was that asset going up yeah you just bought it so that means you would debit supplies so this is a very important acronym we're gonna go over some more transactions in a section or in a second but you need to know this acronym you have to know it always debit expenses assets and dividends if you're increasing those account let me show you what I mean here so let's say you buy some supplies supplies is going up so supplies is an asset is it increasing yes so and then you buy it with cash cash is going down right so you've bought supplies with cash so supplies goes up cash would go down so you would debit supplies because your supplies are going up but with cash it's going down cash is an asset so you do the opposite you'd have to credit it so once again if an account is going up it's either an asset dividend or expense you debit it if it goes down you do the opposite and you do what we call credit let's keep practicing here you'll get the hang of it so let's say you have an advertising expense you buy some advertising well that expense will go up and it's an expense right so you would have to debit it that's if it's going up cash you bought it with cash right the cash is going down so you do the opposite you credit it let's see what else so now we're gonna say which accounts will increase with a credit so remember you increase accounts only assets dividends expenses with a debit so which accounts will increase with a credit there's only a few it's really everything else so you're gonna credit here's a little acronym it's less intuitive than dead but you credit liabilities revenues and equity so if any of these accounts increase you credit them remember you debit assets dividends and expenses if they go up but you will credit liabilities equity and revenue if they go up again this will take some time you're gonna have to practice this stuff but again that's why these videos are here you can rewind them as many times as you need so let's talk about that say you have some debt take on a liability well you take it on right you borrow money so it'll go up debt is a liability so liabilities if they go up you credit them and in the same regard right you borrowed money so they means you got more cash you got more cash that means cash is going up right and what is cash again it's an asset so if assets increase you got a debit then you kind of see the overall theme here credits have to equal debits they have to in every transaction they must be equal to each other now again I'm just introducing you to this through some graphics and that kind of thing we're gonna practice this a lot using transactions and multiple-choice questions and short answer so let's keep going here so let's say you issue stock nurse stock is part of stockholders equity so do you issue it that means it's going up just good that means if it's going up its equity increasing credit that means you got some cash for it hopefully they gave you cash for that stock so cash is now going up as well cash is an asset it's increasing you done it so AR what's AR well you've heard of this I just abbreviated accounts receivable it's a current asset it's going up so you debit it now you earned revenue probably you made a sale right so you earn revenue because you made the sale they haven't given you the cash yet revenue remember it's going up so you have to credit it credit liabilities equity revenue if it's going up debit assets expenses dividends it's going up so I say if it's going up increasing so that means that if the opposite takes place you would have to be the opposite of whatever it was so if assets go down it's the opposite of a debit which is a credit you'll get the hang of it trust me so which accounts again which increase with a debit let's go back over it d-ii a MD you'll debit it's increasing assets expenses and dividends that's the rule debit expenses assets dividends if they're increasing and then which accounts increase with a credit Ciel are in E credit liabilities revenues expenses are sorry equity if it's increasing you credit those if it's increasing now oddly enough revenues is actually considered a subcategory of equity we're gonna practice that more when we do the test questions and you'll see what I'm talking about but just remember these acronyms they're gonna be very helpful for you on the tests to understand what do you debit what do you credit and again this is a type of video where you need to take note cards and practice practice practice do your homework take notes in class and watch these videos it'll put everything together for you or it all makes sense in your mind that's the idea so thank you for listening today I know that's a lot of stuff please rewind pause fast-forward whatever you need to do to understand it that's why I made these videos thanks for listening and I'll see you the next one

Channel: Accounting University

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Keywords: basic accounting for beginners, accounting for beginners, accounting tutorial, accounting basics tutorial, basic accounting, accounting for dummies, accounting basics for beginners, accounting tutorials for beginners, accounting, accounting basics, accounting 101, accounting basics debits and credit, accounting 101 debits and credits, debits and credits accounting, accounting debits and credits explained, accounting basics lesson 1, accounting 101 basics, accounting equation

Id: s-tGJAEC-Ls

Length: 6min 54sec (414 seconds)

Published: Fri Apr 24 2020