The simplest way to memorize it is to remember the accounting formula and one simple rule.

- Assets minus Liabilities = Equity (net worth)

- Your bank account or cash balance increases on the debit side

From this you can figure out that if you borrowed money, the debt increases on the credit side and the cash influx debits your bank account. The same goes for an income.

But signed amounts (instead of debit/credit) formula is a way easier.

Sum of entries of assets/liabilities accounts = Equity. Moreover assets and liabilities become one type.

And single entry bookkeeping is even "easier". Doesn't mean it's a good idea.

Single entry is not easier. Every time it makes things horribly complex really fast. I don't understand your point.

That is why I sincerely hope this way takes over the debit/credit approach

Surely it credits my bank account. Credits make things go up, no?

Clearly not. But this is why I let an accountant do it.

The bank will tell you there's a credit because to them, it's a credit. Your bank account is a loan from you to them - they owe you that money. When your account goes up, their debt to you goes up... thus it's a credit to them, and a debit to you.

Thanks. That's actually really helpful. Of course every transaction is a credit or debit depending on your point of view.

That's probably not the way I would have designed it. I'd probably have designed it from the point of view of the account, so that we'd all agree on what addition and subtraction mean. But that's my programmery point of view. I imagine that they're more concerned with the flows -- not just the numbers, but especially the actual materials being bought and sold.

It kind of works that way, it’s just confusing that the bank tells you their point of view.

Your bank account is really two accounts: an asset on your books, and a liability on the bank’s books.

When you talk about accounting for physical inventory, that’s a whole new can of worms.

The most popular way I see is this:

- you keep track of goods by their cost to you (not their value once sold)

- every time you buy item xyz, you increase an asset account (perhaps called “stock” and the transaction labeled “xyz”). You also keep track of the number of xyz. Say you buy 10 for $10 each, then another 10 for $20 each. Now you have 20 and your xyz is valued at $300. Average cost: $15

- every time you sell or lose some xyz, you adjust the number of xyz, and reduce the asset account by the average value of those items at the time of the transaction, or $15 in this example. The other account would be cost_of_goods_sold or stock_shrinkage.

Many other approaches also work.

The goal of double entry accounting is to enable an audit of the ledger and catching errors by the bookkeeper.

Think about how you're going to do that with your concept. You will likely end up with something extremely close to what double entry accounting is after a few iterations

This is a bit late, but I don't see any other answers that provide what I think is the key insight.

The accounting equation is: Assets = Equity + Liabilities.

For a transaction to be valid it needs to keep that equation in balance. Let's say we have two asset accounts A1, A2 and two Liability accounts L1, L2.

A1 + A2 = Equity + L1 + L2

And any of these sorts of transactions would keep it balanced:

(A1 + X) + (A2 - X) = Equity + L1 + L2 [0]

(A1 + X) + A2 = Equity + (L1 + X) + L2 [1]

(A1 - X) + A2 = Equity + (L1 - X) + L2 [2]

A1 + A2 = Equity + (L1 + X) + (L2 - X) [3]

Now, here is the key insight: "Debit" and "Credit" are defined so that a valid transaction consists of the pairing of a debit and credit regardless of whether the halves of the transaction are on the same side of the equation or not. It does this by having them change sign when moved to the other side.

More concretely, debit is positive for assets, credit is positive for liabilities. And then the four transaction examples above are:

[0]: debit X to A1; credit X to A2

[1]: debit X to A1; credit X to L1

[2]: credit X to A1; debit X to L1

[3]: credit X to L1; debit X to L2

You can debit and credit to any arbitrary accounts, and so long as the convention is followed and debits and credits are equal, the accounting equation will remain balanced.

Another way of looking like this is with parity. A transaction consists of an even parity part "debit" and an odd parity part "credit". Moving to the other side of the equation is an odd parity operation and so a credit on the RHS has double odd parity, which means it adds to those accounts (and debit, with odd parity, subtracts).

most accounting software chooses one convention and sticks with it on all account types, to the chagrin of accountants