How do I know when to debit or credit something in Accounting?

With these T ledgers for instance.





It says, write down inventories down by 10,000





So I have to debit INVENTORY WRITE DOWN EXPENSE and credit INVENTORIES. But why do I credit inventories and why do I debit the other one?





How do I know in general what to debit or credit when they give me stuff like that?|||Here's how we were taught to remember debits and credits (write it on a note card and keep it with you during class):





_________ Debit Credit


Assets + -


Liabilities - +


Capital - +


Withdrawals + -


Revenue - +


Expenses + -





+ means you are increasing the account, while - means you are decreasing that account (I know you are not dumb but I wanted to let you know anyway. For example a debit to an asset would increase the assets account while a credit would decrease it. For the question you had for inventory and expense it would look like this:


Expense 10,000 (debit) you are increasing your expense





I had this formatted nicely but yahoo changes it when I submit it, sorry!


_____Inventory 10,000 (credit) you are decreasing your inventory|||INVENTORY WRITE DOWN EXPENSE is an Expense account which is being increased, so it is debited. INVENTORIES is an Asset account being reduced so it is credited.








In general, just remember that:


Assets and Expenses are increased with debits, reduced with credits.


Liabilities, Equity, and Income accounts are increased with credits, reduced with debits.


(unless they are contra accounts, which you probably don't have to worry about for now)





It may help to remember the basic accounting equation:


Assets - Liabilities = Equity


Debits are always on the left, Credits are always on the right side.