Accounting Reference

The DEALER Framework

Master double-entry bookkeeping with this simple mnemonic. Every account type falls into one of two categories: Debit-normal or Credit-normal.

Debit-Normal

These accounts increase with debits

D
E
A

Dividends • Expenses • Assets

Credit-Normal

These accounts increase with credits

L
E
R

Liabilities • Equity • Revenue

The Golden Rule

In every transaction: Debits = Credits. Money flows from the credited account to the debited account.

Account Types Explained

+Debit-Normal Accounts (DEA)

D
Debit +

Dividends

Distributions of profits to owners. Increase with debits.

• Owner withdrawals
• Shareholder distributions
E
Debit +

Expenses

Costs incurred in the course of business operations. Increase with debits.

• Legal fees
• Office supplies
• Utilities
A
Debit +

Assets

Resources owned that provide future economic benefit. Increase with debits.

• Estate checking
• Real estate
• Investments

+Credit-Normal Accounts (LER)

L
Credit +

Liabilities

Obligations owed to others. Increase with credits.

• Mortgages
• Credit cards
• Loans payable
E
Credit +

Equity

The owner's stake in the business. Increase with credits.

• Opening balance
• Net worth
• Retained earnings
R
Credit +

Revenue

Income earned from operations. Increase with credits.

• Interest income
• Dividend income
• Rental income

How Transactions Work

Source Account
Credited
Money flows FROM here
→
Destination Account
Debited
Money flows TO here

Example: Paying $500 for legal fees from Estate Checking

CR Estate Checking (Asset ↓)   $500
DR Legal Fees (Expense ↑)    $500