 Very few areas of an introductory accounting class give students trouble like the rules of debits and credits. Personally I blame the banks and the invention of debit cards. You'll see why shortly. Much of life is about following rules. Don't go on red, don't steal, do pay taxes, always flush and wash your hands. Well, from my experience on college campuses that last one might be more of a suggestion. Anyway, accounting is no different. We have rules that tell us how to account for transactions, and those rules are known as the rules of debits and credits. The debit rules are as follows. Assets, dividends, and expenses are all increased by debits. I remember this with the acronym ADE. Debits increase aid. The normal balance is the balance we would expect to see in an account. The normal balance is always what increases the account. So the normal balance for assets, dividends, and expenses are debit balances. The credit rules are as follows. Common stock and retained earnings, liabilities, and revenues are increased by credits. I remember this with the acronym CLEAR. Credits increase clear. The normal balance of common stock and retained earnings, liabilities, and revenues are credit balances. When we follow the rules of debits and credits, the accounting equation always remains in balance. Please take some time and write down the rules of debits and credits in your notes or on flashcards because we will be referencing these rules for much of what we learned in financial accounting. The sooner you have these memorized, the easier accounting will become. Let's conclude this short video with a visual recap of the rules of debits and credits. Increase with debits and have normal debit balances. Dividends increase with debits and have normal debit balances. Expenses increase with debits and have normal debit balances. Common stock and retained earnings increase with credits and have normal credit balances. Liabilities increase with credits and have normal credit balances. Revenues increase with credits and have normal credit balances