Chapter 2 — The Recording Process

Nature of Accounts

Learning Outcome Covered: 2.1c

Match accounts to their normal balances!

◀️Debit
🃏Match
▶️Credit

🎯 Objective

All six cards are face up. Match each account to its normal balance (Debit or Credit). More than one account can match the same balance card!

🎮 How to Play

  1. Tap an account card to select it (tap it again to change your mind)
  2. Tap the balance card it belongs to - "Normal Debit" or "Normal Credit"
  3. Match all pairs to complete the round!
  4. ⚠️ Every wrong match lowers your score, so think before you tap!
⭐ How stars work: more stars = a better result. 3 stars = no mistakes at all.

📚 Normal Balances - Where Accounts "Live"

📊 The DEALER Rule

Side Letter Means
DEBIT D Dividends (corporations) & Drawings (proprietorships)
E Expenses
A Assets
CREDIT L Liabilities
E Equity (Capital, Common Stock, Retained Earnings)
R Revenue

💡 Remember

  • DEA = Debit home (Dividends/Drawings, Expenses, Assets)
  • LER = Credit home (Liabilities, Equity, Revenue)

✨ Quick Examples

  • Cash = Asset = Debit
  • Accounts Payable = Liability = Credit
  • Rent Expense = Expense = Debit
  • Service Revenue = Revenue = Credit

🔍 Two Questions That Decide It

  • Ask "Do I own it?" If yes, it is an Asset, so its home is Debit. Land, Buildings, Equipment and Prepaid Rent all pass this test.
  • Ask "Do I owe it?" If yes, it is a Liability, so its home is Credit. Notes Payable, Salaries Payable and Utilities Payable all pass this test.
  • ⚠️ One trap: Unearned Revenue has the word "Revenue" in its name, but the customer has paid and we still owe the work. It is a Liability, so its home is Credit.
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DEALER
D E A | L E R
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