Don't know your debits from your credits? Here's a quick primer on how basic bookkeeping works and an easy way to understand debits and credits.
First, know that debits are not "deductions" and credits are not "increases". Debit and credit are the names of the columns on bookkeeping ledgers (debit is the column on the left and credit is the column on the right).
In double entry accounting (bookkeeping) the sum of each column must equal the other. In other words, the sum of all of the debits must equal the sum of all of the credits. By making sure that the sum of each column equals the other, the bookkeeper can eliminate arithmetic errors.
To make an entry, the bookkeeper makes one or more entries on the debit side of the ledger (debits) and one or more entries on the credit side (credits). All entries are positive numbers and debits must equal credits.
Into which column do you place any particular entry? A simple way to remember is that the accounts that represent your money increase with debits and decrease with credits. All other accounts are the reverse - they increase with credits and decrease with debits.
What are the "money" accounts? Those that represent actual money (cash, accounts receivable, etc.); assets (inventory, equipment, etc.); and, expenses (basically money that you've spent with others). In other words, assets and expenses are debit up, credit down - otherwise it's debit down, credit up.
