Debit or Credit Journals?
 Previous Top Next
In double-entry book-keeping every transaction has a debit and credit posting. When posting nominal journals, you will need to know which account(s) require the debit entry and which require the credit entry. 

Firstly you should check whether the nominal account being posted to is a debit or a credit account.  Assets, sales discount given, cost of sales, overheads and other expenses are debits.  Depreciation of assets, liabilities, sales, other income and purchase discount taken are credits.

Having decided this, you can determine whether the journal posting to this account is a debit or a credit, depending on the effect you want the transaction to have.  To increase the balance of a debit nominal account, you should post a debit journal entry.  To decrease the balance of a debit nominal account, you should post a credit journal entry.  To increase the balance of a credit nominal account, you should post a credit journal entry.  To decrease the balance of a credit nominal account, you should post a debit journal entry.    

This is simplified in the following table:

  
Account Type
Debit +
Credit -
ASSETS (DR)
Increase
Decrease
LIABILITIES (CR)
Decrease
Increase
EQUITY (CR)
Decrease
Increase
SALES/INCOME (CR)
Decrease
Increase
PURCHASES/COST OF SALES (DR)
Increase
Decrease
OVERHEADS/EXPENSES (DR)
Increase
Decrease

Once you have figured whether the first posting is a credit or debit, you can easily figure if the other side of the double-entry posting is a credit or debit. Put simply, it will be the opposite of the first entry.  As a rule, an increase in a debit item must be accompanied by either an increase in a credit item or a decrease in another debit item. An increase in a credit item must be accompanied by either an increase in a debit item or a decrease in another credit item.   Reversely, a decrease in a debit item must be accompanied by either an increase in another debit item or a decrease in a credit item.  A decrease in a credit item must be accompanied by either a decrease in a debit item or an increase in another credit item.  You can use the table above to check whether this second posting should be a debit or credit entry.