The Modern (American) Approach to Debit and Credit

An alternative, equally valid way to decide debit and credit is to classify every account under one of the five elements of the Accounting Equation, and apply a single consistent rule to each:

This approach connects directly back to the Accounting Equation (Assets = Liabilities + Capital) covered in the previous chapter: assets sit on the same side as debit balances, while liabilities and capital sit on the same side as credit balances, and revenue increases capital (so it is credited) while expenses reduce capital (so they are debited). …