5 questions foundA system where every transaction is recorded with equal debits and credits in at least two accounts, keeping the books in balance.Every entry: total Debits = total CreditsReal-world example It underpins every accounting system, from ledgers to modern ERP software.Debits increase assets and expenses; credits increase liabilities, equity and income. The opposite entries decrease them.Assets & Expenses: Dr increases
Liabilities, Equity, Income: Cr increasesReal-world example Knowing this lets you journalise any transaction correctly.Debit Cash (asset up) and credit Capital (equity up).Dr Cash 5,000
Cr Capital 5,000Real-world example Recording the initial injection of funds when a business starts.Record: the business pays $800 rent by cash.
Intermediate Debit Rent Expense (expense up) and credit Cash (asset down).Dr Rent Expense 800
Cr Cash 800Real-world example Every operating cost paid reduces cash and records an expense.Because each transaction posts equal debit and credit amounts, the sum of all debit balances must equal the sum of all credit balances.Sum(Dr) = Sum(Cr) across every accountReal-world example An out-of-balance trial balance signals a posting error to investigate.