Debit accounts are:
To increase a debit account a debit is required; to decrease it a credit is required.
Credit accounts are:
Owners equity/Retained earnings/Surplus of funds
To increase a credit account a credit required; to decrease it a debit is required.
Exceptions to this rule are contra accounts.
A sale is made for $5 cash. Cost of good sold was $3. Two things are happening:
Cash is received and revenue is increasing.
Inventory is decreased and inventory expense is increased.
The following entries required:
Dr. Cash $5
Cr. Revenue $5
Cash is debit account and debiting it will show increase of $5.
Revenue is credit account, crediting this account will increase revenue by $5.
Dr. Inventory Expense $3
Cr. Inventory $3
Inventory expense is a debit account. Debiting it will increase our expense incurred by $3.
Inventory is an asset account. Crediting it will decrease this account by $3 to reflect lesser amount of inventory on hand.