Debit or Credit?

How to play Debit or Credit?

Each card describes one transaction and names one of the accounts it touches. Choose Debit or Credit. You see the answer and the reason straight away, then move to the next card. A run has twelve cards drawn at random from a larger set, so a second run will not be the same.

A correct answer scores 10 points. Consecutive correct answers add a streak bonus, so accuracy matters more than speed. Twelve out of twelve earns the Controller rank.

The rule behind every answer

Double-entry bookkeeping records each transaction twice: once as a debit and once as a credit, for the same amount. The two sides always balance. Which side an account goes on depends on what type of account it is.

• Assets and expenses increase with a debit and decrease with a credit. Cash, inventory, receivables, rent and salaries all work this way.
• Liabilities, equity and revenue increase with a credit and decrease with a debit. Loans, payables, share capital and sales all work this way.
• Contra accounts do the opposite of the account they sit against. Accumulated depreciation reduces an asset, so it grows with a credit. Sales returns reduce revenue, so they grow with a debit.

Where people usually go wrong

The common mistake is to read debit as bad and credit as good. Neither word means that. A debit to cash is money arriving. A credit to a loan account is new debt. Another trap is money received in advance: it feels like revenue, but until the work is done it is a liability called unearned revenue.

For worked examples and fuller explanations, see the accounting guides, or use the free accounting calculators to check your own figures.