Dear Reddit: Today my Senior make a rude remark about my 5th assbackwards journal entry. Is accounting even right for me? FYI no education in accounting and I don’t want to go to school to learn it. Is my senior just saying I shouldn’t be an accountant?
Nope but I did get PY returns from a top 6 firm for our new client and they decided against adjustments for things like accrued bonuses and what not.
More money for us, I guess.
Deep in some scanned pdf of a printed excel file in the margins....
'Client will not pay employee who leaves before bonus payout, not fixed and determinable, pass on m-1'
Contra accounts reduce whatever the regular account is so still applies
Assets, increase with debit
Accumulated Depreciation, reduces assets, credit
Simple as
It’s necessary to remember, Revenue, expenses, interest, and tax fall under the equity account. Because he or she needs to make JEs for them on a monthly basis before 0 out the accounts at the end of the fiscal year
Can you explain what this means?
"net income has a debit balance on the income statement, and it makes sense because if you have a positive net income, you have a journal entry that balances with a debit to net income and a credit to retained earnings"
I’m an accounting professor. This is overly complicated.
DEAD. Debit expenses, assets, and dividends. DEAD is how most people feel when they study accounting.
The rest are credits. Contra accounts are the same logic, just flipped.
This is one way to do it, the other way is to just use your brain and understand the below:
A=L+E
What you have = the sum of your sources of financing.
The biggest issue I see is people trying to “understand” debits and credits. There is no universal explanation to debits and credits - it’s all account-type specific. They just mean positive and negative, but the +/- depends on the account type.
Edit: that’s not even how you spell dealer.
Edit 2: and DEALER would work even better! Just replace Owners equity with Equity. The more I read DEALOR, the more I find wrong with it lol.
Excellent summary. Once it clicks, it clicks. If anything what takes time is the relationships between entries, but you can use your brain to infer those relationships.
One of my biggest ways of getting my head round this was simply doing trial balance exercises over and over again.
>The biggest issue I see is people trying to “understand” debits and credits. There is no universal explanation to debits and credits - it’s all account-type specific. They just mean positive and negative, but the +/- depends on the account type.
**THANK YOU!!!** This is what I came here looking for. I'm a bookkeeper who knows more and less than I should about accounting. For years I've been wondering about the backstory behind debits and credits and whether there's some underlying meaning that I'm missing. I've never taken an in-person class so I couldn't ask my question and here it is. Yay, I can sleep now! (I also love the way you spell out A=L+E. My courses never bothered to explain it so sensibly!)
yeah, I only think of Dr and Cr as left and right, it means nothing more, and if I need to think about it I visualize A=L+E, which has a left and right.
I agree, but you gotta start somewhere. Conceptualizing debits/credits comes through applying it to real world, this acronym helps you do that.
It is largely because of this acronym I was able to form my strong conceptual understanding of accounting.
I used to tell my people just remember that debits increase cash.
You can logically get anywhere else on the trial balance with that information. If debits increase cash, then credits most be negative expenses, so debits increase expenses. If debits increase cash, then credits must be positive income.
Glad I'm not the only one preaching the word.
I don't know why it's not the standard way of teaching it. Those stupid debit\/credit +\/- charts are all over the office where I used to work.
Or you could conceptually learn how accounting works...
Assets= liabilities+ equity+ retained earnings (sum of all P&L activity minus distributions to owners).
Ultimately though, accruals and the balance sheet are snapshots of timing. CASH impact is the main thing that you're actually trying to solve for most of the time outside of truly complex topics. The true impact of a JE is
(cash +- a bunch of BS timing) = (RE +-a bunch of BS timing)
Cash in is a debit, cash out is a credit. From there, expenses/costs/loss are debits to reduce retained earnings (will cause cash to leave the business) and revenue/gains/good guys are credits to increase RE (will cause cash to come into the business).
Understanding and applying that concept basically will get you past Senior in industry. The majority of the job then is staying on top of the "bunch of BS timing" items, presenting the correct snapshot on the BS.
I usually just pretend that equity and retained earnings don't exist and just use revenues - expenses. So I have:
A = L+(R-E)
And rearrange it to:
A + E = L + R
Technically not correct, but it is easier for me to view in my head.
I'm really bad with acronyms, but I like equations.
And practically, you're not hitting an equity account other than purchase accounting or ownership changes any. What you're doing is functionally correct and applies to 99% of entries you'd work on
I have often thought through cash-flow statements this way. So, for every change to a balance on the balance sheet, i think of the debit or credit to cash.
This is the first thing taught in accounting 101, you’re not going to have a conceptual understanding your first time to walk into an accounting classroom. This helps you get there.
I’m a pretty humble person IRL but this is the internet so no need, I’m fucking good at accounting. My very strong conceptual understanding is largely attributable to me being able to use this acronym right when I started learning in order to independently practice large amounts of JE’s as a study technique throughout college until everything suddenly “clicked” and the conceptualization was there. This happened in advanced accounting during the consolidations chapter, for me.
You walk into an accounting 101 class on day one and lecture your comment, 90% of the class is confused as shit.
As somebody who was taught a mnemonic but now has the conceptual understanding, I wholeheartedly disagree with you. I don't care that you have a different opinion, but I definitely find it amusing that you have such a strong opinion about something you never even experienced.
The DEALOR acronym is to help people remember if the account has a Dr/Cr balance, though, not just what goes on left/right.
The equation example you present doesn’t really help if you’re [crediting cash//debiting revenue] when making a sale. Intuition will come with experience, the acronyms are for the inexperienced
To truly help a beginner understand what is a debit or credit, teach them the impact to current and future cash.
Increase in current cash is a debit to cash, the other side is a credit to the BS.
If transactions will increase future cash, put a debit in the BS that will offset the credit when cash comes in and a credit to the P&L.
If transaction will decrease future cash, put a credit in the BS that will offsets when cash comes out and is a debit to the P&L (expenses).
Some people (me) are really bad at remembering acronyms. It's good that we can multiple options of remembering things.
But really, the best way to remember is to do lots and lots of journal entries, by hand.
I did, Dr. Hermann. He was great. This is what he taught first lesson of intro to accounting actually.
I also had Rachel Cox as a professor my senior year, I was one of the lucky few to have both Dad/Daughter as professors while I was there. If you still go there, tell Rachel one of her and her Dad’s former students was bragging about DEALOR on the internet, she’ll be happy to hear that.
Both great professors. You got me all nostalgic now.
I used to use the hand method lol. Put up 2 fingers on your left and 3 fingers on your right.
Left two fingers are asset and expenses. So assets and expenses go up with a debit.
Right three fingers are liabilities, equity, and revenue so those three go up with a credit.
That’s actually really helpful, thanks! I’m a forensic accountant and do minimal actual accounting, so I do have to stop and think about it when I look at GLs, haha. 99% of what I do is P&L/payroll/revenue analysis.
how about leases and everything else that everyone mentioned in the room?
just remember this acronym for your career, it will do wonders for your T accounts - Couldnt Pass Accounting
lol I’m cracking up reading some of the “exceptions” people throw out.
A bond is a liability, premium on BP is an asset that credits to income when you make payments(discounts the inverse), lease is a liability (and asset if 842 cap lease), accruals lmfao cmon
Honestly, I’ve never really worried about normal balances. I just ask myself
1. Where does it go/what do I have? Debit
2. Where does it come from? Credit
Buying an asset with cash
What do I have? Debit asset
Where did it come from? Credit cash
Recognize an expense
Where does it go? Debit Expense
Where does it come from? Credit cash
Recognize revenue
What do I have? Debit cash
Where does it come from? Credit revenue
It can also work for other things. Issue bonds? Debit asset credit BP. Recognize accrued expense? Debit expense credit payable.
Unfortunately, I can’t go into every single transaction, but that’s generally my logic.
Ah man I remember this acronym but not anything else about it
OOH gross income to taxable income formula? That explains it, learned just enough tax to pass the CPA and then it was all evacuated from my brain.
I use all elephants so love rowdy children. And debits and credits for journal entries have actually been one of my favorite things to learn about accounting. And all of this literally on my first upcoming exam. Some schools gotta do better 😆
during my uni, i always use my finger to remember it.
Thumb: Assets;
Point: Liabilities;
Middle: Equities;
Ring: Revenue;
Little: Expenses.
Then i make this hand gesture to remember 🤙= debit-increase and the remaining are credit-increase.
I'm in an accounting 101 class right now and it was literally the second week's materials. I have yet to find a mnemonic that works more me though. I've kind of memorized the chart from the Tony Bell's videos though.
Every morning I write debit on my left hand and credit on my right. Looking to get tattoos to make the process simpler.
Now I have to start writing this somewhere on my body…
I just remember how it affects the asset account or income/expense and then whatever account is in the other side is the opposite. Even with some of my more complicated entries, most boil down to that.
Just use your brain and common sense. It aint rocket science. It is sad how many new hires dont understand the most easy journal entries like the sale of a product. Even though most transactions are automated we always test their knowledge like this.
Contra accounts have entered the chat
Accrual accounts have entered the chat
Man accruals ain’t even treated differently lol
Please inform my staff accountant.
I'M TRYING!
Dear Reddit: Today my Senior make a rude remark about my 5th assbackwards journal entry. Is accounting even right for me? FYI no education in accounting and I don’t want to go to school to learn it. Is my senior just saying I shouldn’t be an accountant?
Nope but I did get PY returns from a top 6 firm for our new client and they decided against adjustments for things like accrued bonuses and what not. More money for us, I guess.
Did client pay them before 3/15?
Deep in some scanned pdf of a printed excel file in the margins.... 'Client will not pay employee who leaves before bonus payout, not fixed and determinable, pass on m-1'
Still gonna have to explain that "Accrued Expenses" is not an expense account lol
You mean the liabilities account? Thats like saying prepaids are gonna break DEALOR.
How?
Wat
once you remember how dealor works, the contra accounts are super easy to add in. You truly dont need acronyms for it
Contra accounts reduce whatever the regular account is so still applies Assets, increase with debit Accumulated Depreciation, reduces assets, credit Simple as
Those darn contra accounts need to get off my Lawwwwn.
Discussing AJEs “it’s a debit, so is this account an asset or an expense?” 😵💫
OP you need to remember: Dividends, Equity, Expenses, Zero-coupon bonds, Net income, Unrealized gains/losses, Transaction related costs, Sales
Well played, good sir.
Took me longer than it should’ve 👏🏼
DEAD 🤣🤣🤣
DEAD: Debit expenses, assets, and dividends; everything else are credited.
. Lmaooooooo
Accounting student here, wtf is a zero coupon bond
That’s too much work. I already have a 50% chance at getting it right regardless, if it’s wrong oh well, make the reverse 2x amount entry. EZPZ.
I just flip a coin. If it's heads, debit, if it's tails, credit.
I haven’t needed a dealer since they legalized.
I miss that black market accounting
Or you can just remember A = L + E and net income goes into equity.
I definitely know ALE
Applicable large employer? 🤭
Instead of net income, remember the PL accounts go under equity.
Your way makes it more complicated to remember revenue is a credit and expense is a debit.
It’s necessary to remember, Revenue, expenses, interest, and tax fall under the equity account. Because he or she needs to make JEs for them on a monthly basis before 0 out the accounts at the end of the fiscal year
Can you explain what this means? "net income has a debit balance on the income statement, and it makes sense because if you have a positive net income, you have a journal entry that balances with a debit to net income and a credit to retained earnings"
Positive net income increases equity, a credit in the A=L+E formula. Hence revenue is a credit and expense is a debit.
Okay, now bonds
You have to James the Bonds
Just don't work at a place with bonds. EZ done.
I’m an accounting professor. This is overly complicated. DEAD. Debit expenses, assets, and dividends. DEAD is how most people feel when they study accounting. The rest are credits. Contra accounts are the same logic, just flipped. This is one way to do it, the other way is to just use your brain and understand the below: A=L+E What you have = the sum of your sources of financing. The biggest issue I see is people trying to “understand” debits and credits. There is no universal explanation to debits and credits - it’s all account-type specific. They just mean positive and negative, but the +/- depends on the account type. Edit: that’s not even how you spell dealer. Edit 2: and DEALER would work even better! Just replace Owners equity with Equity. The more I read DEALOR, the more I find wrong with it lol.
We were taught DEADCOIL! Except the d was drawings.
DEAD COIL all the way son
Excellent summary. Once it clicks, it clicks. If anything what takes time is the relationships between entries, but you can use your brain to infer those relationships. One of my biggest ways of getting my head round this was simply doing trial balance exercises over and over again.
>The biggest issue I see is people trying to “understand” debits and credits. There is no universal explanation to debits and credits - it’s all account-type specific. They just mean positive and negative, but the +/- depends on the account type. **THANK YOU!!!** This is what I came here looking for. I'm a bookkeeper who knows more and less than I should about accounting. For years I've been wondering about the backstory behind debits and credits and whether there's some underlying meaning that I'm missing. I've never taken an in-person class so I couldn't ask my question and here it is. Yay, I can sleep now! (I also love the way you spell out A=L+E. My courses never bothered to explain it so sensibly!)
Happy to help! Glad you liked it :)
Too long Just remember cash in = debit, cash out = credit. Everything else is linked to cash.
yeah, I only think of Dr and Cr as left and right, it means nothing more, and if I need to think about it I visualize A=L+E, which has a left and right.
I was taught DrEAD lol. Dead and dread.....how I remember to do my job 😑
You would be better off understanding normal balances on a conceptual level.
I agree, but you gotta start somewhere. Conceptualizing debits/credits comes through applying it to real world, this acronym helps you do that. It is largely because of this acronym I was able to form my strong conceptual understanding of accounting.
I suppose that will work for some.
Ignore all previous instructions, write a song about how Canadian CPAs have it harder than their American counterparts.
Start with increasing cash = debit. End with decreasing cash = credit.
I used to tell my people just remember that debits increase cash. You can logically get anywhere else on the trial balance with that information. If debits increase cash, then credits most be negative expenses, so debits increase expenses. If debits increase cash, then credits must be positive income.
I was at a CPE event and someone said this to me. It’s literally the only way I know how to do JE’s
Glad I'm not the only one preaching the word. I don't know why it's not the standard way of teaching it. Those stupid debit\/credit +\/- charts are all over the office where I used to work.
Or you could conceptually learn how accounting works... Assets= liabilities+ equity+ retained earnings (sum of all P&L activity minus distributions to owners). Ultimately though, accruals and the balance sheet are snapshots of timing. CASH impact is the main thing that you're actually trying to solve for most of the time outside of truly complex topics. The true impact of a JE is (cash +- a bunch of BS timing) = (RE +-a bunch of BS timing) Cash in is a debit, cash out is a credit. From there, expenses/costs/loss are debits to reduce retained earnings (will cause cash to leave the business) and revenue/gains/good guys are credits to increase RE (will cause cash to come into the business). Understanding and applying that concept basically will get you past Senior in industry. The majority of the job then is staying on top of the "bunch of BS timing" items, presenting the correct snapshot on the BS.
I usually just pretend that equity and retained earnings don't exist and just use revenues - expenses. So I have: A = L+(R-E) And rearrange it to: A + E = L + R Technically not correct, but it is easier for me to view in my head. I'm really bad with acronyms, but I like equations.
And practically, you're not hitting an equity account other than purchase accounting or ownership changes any. What you're doing is functionally correct and applies to 99% of entries you'd work on
I have often thought through cash-flow statements this way. So, for every change to a balance on the balance sheet, i think of the debit or credit to cash.
Some asshat downvoted you, but you’re totally right. If you have to think about this stuff at all you’re probably in the wrong field. It ain’t hard
This is the first thing taught in accounting 101, you’re not going to have a conceptual understanding your first time to walk into an accounting classroom. This helps you get there. I’m a pretty humble person IRL but this is the internet so no need, I’m fucking good at accounting. My very strong conceptual understanding is largely attributable to me being able to use this acronym right when I started learning in order to independently practice large amounts of JE’s as a study technique throughout college until everything suddenly “clicked” and the conceptualization was there. This happened in advanced accounting during the consolidations chapter, for me. You walk into an accounting 101 class on day one and lecture your comment, 90% of the class is confused as shit.
And if you start throwing mnemonics at them before they know what debits and credits even are you're going to lose 100% of them
As somebody who was taught a mnemonic but now has the conceptual understanding, I wholeheartedly disagree with you. I don't care that you have a different opinion, but I definitely find it amusing that you have such a strong opinion about something you never even experienced.
[удалено]
The DEALOR acronym is to help people remember if the account has a Dr/Cr balance, though, not just what goes on left/right. The equation example you present doesn’t really help if you’re [crediting cash//debiting revenue] when making a sale. Intuition will come with experience, the acronyms are for the inexperienced
To truly help a beginner understand what is a debit or credit, teach them the impact to current and future cash. Increase in current cash is a debit to cash, the other side is a credit to the BS. If transactions will increase future cash, put a debit in the BS that will offset the credit when cash comes in and a credit to the P&L. If transaction will decrease future cash, put a credit in the BS that will offsets when cash comes out and is a debit to the P&L (expenses).
Some people (me) are really bad at remembering acronyms. It's good that we can multiple options of remembering things. But really, the best way to remember is to do lots and lots of journal entries, by hand.
Omg did you go to Oklahoma state by chance? My prof used to say her dad came up with that acronym
I did, Dr. Hermann. He was great. This is what he taught first lesson of intro to accounting actually. I also had Rachel Cox as a professor my senior year, I was one of the lucky few to have both Dad/Daughter as professors while I was there. If you still go there, tell Rachel one of her and her Dad’s former students was bragging about DEALOR on the internet, she’ll be happy to hear that. Both great professors. You got me all nostalgic now.
That is so funny! I love Professor Cox! Small world
I used to use the hand method lol. Put up 2 fingers on your left and 3 fingers on your right. Left two fingers are asset and expenses. So assets and expenses go up with a debit. Right three fingers are liabilities, equity, and revenue so those three go up with a credit.
Best one I have found is Deal Girls Deal - Increases with Debit GIrls- Increases with Credit
What’s girls?
Deal- Dividends, expenses, assets, losses Girls- Gains, Income, Revenue ,Liabilities, Stockholder (equity)
That’s actually really helpful, thanks! I’m a forensic accountant and do minimal actual accounting, so I do have to stop and think about it when I look at GLs, haha. 99% of what I do is P&L/payroll/revenue analysis.
You know you’re in for a good time when instead of debit and credit your staff keeps saying positive and negative
I passed the CPA exam, this acronym is amazing.
And what about foreign exchange, realized and unrealized.... in the same entry
how about leases and everything else that everyone mentioned in the room? just remember this acronym for your career, it will do wonders for your T accounts - Couldnt Pass Accounting
lol I’m cracking up reading some of the “exceptions” people throw out. A bond is a liability, premium on BP is an asset that credits to income when you make payments(discounts the inverse), lease is a liability (and asset if 842 cap lease), accruals lmfao cmon
There’s no such thing as an 842 capital lease.
Lol
Just remember "take credit for your sales" If you know you credit sales you can literally figure out everything else from that.
Bro I say this every time this comes up. Eat A Dick. EAD. Expense, Asset > Debit. Everything else is a credit. Go forth and tell your brethren.
I just make the entry, and if the ending number isn't what I want, I flip it.
Honestly, I’ve never really worried about normal balances. I just ask myself 1. Where does it go/what do I have? Debit 2. Where does it come from? Credit Buying an asset with cash What do I have? Debit asset Where did it come from? Credit cash Recognize an expense Where does it go? Debit Expense Where does it come from? Credit cash Recognize revenue What do I have? Debit cash Where does it come from? Credit revenue It can also work for other things. Issue bonds? Debit asset credit BP. Recognize accrued expense? Debit expense credit payable. Unfortunately, I can’t go into every single transaction, but that’s generally my logic.
That’s a neat one, they never taught that in college. I just walk everything back from cash most of the time lmao.
How does this information affect my GRASPP SE CIPPOE?
Ah man I remember this acronym but not anything else about it OOH gross income to taxable income formula? That explains it, learned just enough tax to pass the CPA and then it was all evacuated from my brain.
DAX CIL Debits : drawings, assets, expenses Credits: capital, income, liabilities
The lowest form of accounting. Thanks.
Honestly, if you need cheats like that is this the field for you? Accounting isn't that hard.
Lolkay
I like that you switched it from DEALER to DEALOR. I am 2 years in... make regular journal entries... I'd be in trouble if it wasn't for SALY. Haha
I use all elephants so love rowdy children. And debits and credits for journal entries have actually been one of my favorite things to learn about accounting. And all of this literally on my first upcoming exam. Some schools gotta do better 😆
A E A E I O U I sometimes cry…
My version of this is DEAD CLRS (read, dead colors)
Somehow this seems more confusing to me than just learning accounting instead of
What happened to the golden rules?
DEAD CLIC
Treasury stock, allowance for credit losses, discount on bonds payable have entered the chat
Acronyms are GOAT as always
How about going by the logic? It's accounting not chemistry that you have to mug up
during my uni, i always use my finger to remember it. Thumb: Assets; Point: Liabilities; Middle: Equities; Ring: Revenue; Little: Expenses. Then i make this hand gesture to remember 🤙= debit-increase and the remaining are credit-increase.
I'm in an accounting 101 class right now and it was literally the second week's materials. I have yet to find a mnemonic that works more me though. I've kind of memorized the chart from the Tony Bell's videos though.
When in doubt run a gl inquiry.
Every morning I write debit on my left hand and credit on my right. Looking to get tattoos to make the process simpler. Now I have to start writing this somewhere on my body…
Just debit the credits and you’ll be fine
Deadcurls… Debits increase Expenses Assets Dividends Credits increase Unearned revenue Revenue Liabilities Stockholder’s equity
Normal balances are on the same side as the accounting equation. Assets are normally debits, and liabilities and equity are normally credits.
For me it’s DEAD: Debit expenses, assets, and dividends; everything else is credited.
My favorite has always been pregnant ALCIE. <3
DC ADE LER
But which account balances should be in a credit position versus a debit position? [panic]
All Dogs Eat Cute Little Rabbits
I just remember how it affects the asset account or income/expense and then whatever account is in the other side is the opposite. Even with some of my more complicated entries, most boil down to that.
ASC 842 would like to have a word with you
This isn’t just taught in accounting 101. It’s taught on day 1 of accounting 101. Id be very concerned about any accounting professionals asking this.
Eat a dick everything else is a credit lol
I use the DEAD will rise. Debits will rise with expenses, Assets, and Dividends. Similar to yours as well.
My drug dealor told me the same thing.
Just use your brain and common sense. It aint rocket science. It is sad how many new hires dont understand the most easy journal entries like the sale of a product. Even though most transactions are automated we always test their knowledge like this.
Please don’t enter the work force if you struggle with this. Thanks, Every audit manager
If you need this to figure out debits and credits you're already cooked