I still remember my first accounting class. It was the fall of 2019, right before everything went online due to COVID. Like most first-term students, I was used to thinking of debits as decreases and credits as increases. That is how banks usually present it on your accounts, after all. But it turns out that debits and credits are a bit more complicated than that. Some account categories increase with debits and decrease with credits, while others are the reverse. It's enough to leave a first-term student pulling their hair out in frustration.

The DEALER Acronym

In my initial push to understand and get a grasp on the rules of debits and credits, I discovered the DEALER acronym:

Dividends, Expenses, Assets, Liabilities, Equity, Revenue

The first three account types are normal debit accounts. These are increased by debits and decreased by credits.

• D- Dividends (or Draws)
• E- Expenses
• A- Assets

The next three account types are normal credit accounts. These are increased by credits and decreased by debits.

• L- Liabilities
• E- Equity
• R- Revenue

But this still left me with the question, "Why does it work that way?" With some accounting issues, "because XYZ authority says so" is a perfectly valid explanation. GAAP and taxes, for instance. But not here. This is mostly a math issue.

The Accounting Equation

Eventually I came across the accounting equation. Like most students, I first learned it as:

Assets = Liabilities + Equity

This is a good start, but the equation can be fleshed out a bit more. Since revenues increase equity while expenses and dividends decrease equity, we can expand the equation to show those relationships explicitly:

Assets = Liabilities + Equity + Revenue - Expenses - Dividends

With a basic understanding of what those accounts are, this seems pretty logical, right? But we are going to rearrange this equation so that there are no subtraction symbols. To do this, we will add Expenses and Dividends to both sides, cancelling out the negative on the right and moving them to the left.

Dividends + Expenses + Assets = Liabilities + Equity + Revenue

And there we have the DEALER acronym again. Accounts to the left of the equals sign are normal debit accounts and accounts to the right are normal credit accounts. The accounting equation is just that--an equation. As such, it must always be kept equal. An increase to one account must always be balanced by either an increase to an account on the opposite side of the equation or a decrease to another account on the same side. This is the basis for double-entry bookkeeping. This is how T-accounts work.

Final Thoughts

Mnemonics like DEALER are useful—they help you remember the rules. But understanding where those rules come from makes them much harder to forget. Once I saw how the accounting equation and double-entry bookkeeping fit together, debits and credits stopped feeling like six unrelated rules to memorize and started feeling like one logical system. With that understanding, I was able to turn around after each class and tutor one of my classmates on the day's material rather than struggling to just remember how debits and credits work. Even now, nearly seven years later, I can't forget the rules of debits and credits.

This was immensely helpful when I was completing my bank reconciliation project for my accounting portfolio. Understanding the fundamentals let me recognize when something didn't look right. I was able to question ChatGPT's reasoning about the solution and the steps to get there.  I'm not saying that the AI wasn't useful (it was great for generating the scenario and providing feedback to improve the writing), but I do not expect it to get everything right on its own. Remember that AI, especially those like ChatGPT which are prone to hallucinations, are a tool, not a replacement for knowing the material.

Recommended Reading

Journal of Accountancy - How Will Accountants Learn New Skills when AI Does the Work? 

Bonus Question: Why Do Banks Do It "Backwards"?

So why on earth do banks present your cash accounts (assets) as increasing with credits and decreasing with debits? Is there any internal logic to this? Yes. Yes, there is.

From your perspective, the account is an asset because it represents money you own. But banks consider users' cash accounts liabilities. They are just holding onto the money for you and are obligated to give it back. That's why, from the bank's perspective, the account increases with credits and decreases with debits. So no, banks don't do debits and credits "backwards." They just have a different perspective of the account.

That's all I have for you today. Never stop learning, friends.

Disclaimer: This explanation focuses on the normal balances of the major account categories and ignores some of the more advanced aspects of accounting, such as contra-accounts. Remember that any information on this blog is for educational purposes only and should not be construed as any type of legal advice.

Hello, everyone.

I have once again neglected this blog for far too long. When you see what I've been up to, I think you'll understand. First up, business:

Accounting Stuff

Life keeps happening, and I have not yet managed to get into the accounting industry. However, I have renewed my learning efforts. This week I completed the accounts payable aging project for my accounting portfolio, and there will be many more projects to come.

I am also using ChatGPT to develop a strategy for making connections in the accounting industry in my local area. This week I plan to start reaching out to CPA and tax firms to ask them what sorts of projects they would most like to see in an entry-level candidate's portfolio/skill set.

I have some ideas for videos as well, so stay tuned for those.

Here are a few podcasts I've been listening to lately to track the pulse of the industry:

• Accounting Best Practices with Steve Bragg
  
• My first accounting capstone class (2021) at Chemeketa Community College Featured Steve's book Accounting Best Practices 7th Edition. I remembered how useful that book was, especially in discussions of internal controls, and that got me excited about the podcast.
• I have been listening to the oldest episodes first since it seems to increase in complexity until it begins to focus on more contemporary issues, and I want a review of some basics.
• In the early episodes, Steve has some guests or co-hosts who have truly terrible accounting puns, and I love it.

• Journal of Accountancy Podcast produced by the AICPA and CIMA
• For this one, I have been listening to the newest episodes first and working backwards since it has good coverage of contemporary issues that I don't want to miss.
• My favorite recent episode is The Power of Active Listening in Addressing the CPA Skills Gap, which touches on The Profession Ready Initiative.
• A quick look into The Profession Ready Initiative led me to an article on JoA titled "How will accountants learn new skills when AI does the work?" That article was thought-provoking, and I will write a blog post or make a video about that in the near future.
• AI: Accounting Intelligence with Isaac Heller
• As the title suggests, this one focuses on artificial intelligence in accounting, which I think is a natural use for AI.
• Some of the early episodes seem a bit cheerleadery, like "get with the program. Accounting is changing," which isn't terribly useful to me as someone who already accepts that this is part of the profession. I may try listening to it in reverse order to see if I like that better. 

Books and More Books

Just before Lent (February) this year, I realized that I had twenty-six books on my "Currently Reading" list. Twenty-six! So I decided I was not allowed to add any new books to that list until Easter. That was my fast. In that time I finished a bunch of books that I had started, and since Easter I have finished many more. So far this year I have finished 40 books including:

• Most of Andrzej Sapkowski's Witcher series (I started it last year). With the show's steady downward trend after season one and Henry Cavill leaving after season three, I decided that if I wanted to enjoy the story, I needed to just go to the source material.
• The Margaret of Ashbury trilogy by Judith Merkle Riley. Highly recommend this one for anyone who likes early medieval historical and fantasy books. These have been my favorite fiction read so far this year.
• Six books of poems or on the art of writing poetry.
• Two books on keeping chickens that convinced me not to do that right now.
• A cheesy mystery novel written for French learners.
• Ten books on religion and mythology.
• Five books on gardening.

My Garden

Since moving to my current place in April of 2025, building a kitchen garden has been one of my big projects.

My philosophy is that food gardening should save me more money than it costs me, so I have been working with salvaged materials like pallets, scrap lumber, old gates, pre-owned chicken wire, old tires, upcycled kitty litter buckets, stones I dug out of the ground (very laborious, but abundant), and soil I sifted myself. I have started as many plants as I can from seed since that is much less expensive. In total, I think I have bought all of six or seven plants, and they were all perennial herbs that I could not get starts for from friends or family. I have also been given quite a few plants, from berry bushes to herb starts. My mother, who was a home economics major and is pretty inventive herself, had better be proud of me.

In addition to fruits, vegetables, and herbs, I have also planted quite a few flowers, all from seed. Most of the flowers are edible or medicinal, but some just deter pests and attract beneficial insects. The garden is a whole system, and I have learned it functions better if I work with nature rather than against it.

While this project needs a few more beds filled to be truly complete, it has moved from being primarily a construction project to an established system that produces a significant amount of food. I anticipate canning many batches of pasta sauce and salsa in the coming months as the tomatoes begin to ripen.

That's all I have for today. Thanks for stopping by. Never stop learning, friends.