The five account types
Sort these accounts into their families and name each one's normal balance: Cash, Accounts Payable, Service Revenue, Rent Expense, Owner's Capital, Supplies, Unearned Revenue, Accounts Receivable.
Remember this
- mnemonic
DEALER: Debits grow Draws, Expenses, Assets · credits grow Liabilities, Equity, Revenues. Say it until it's boring — then it's yours.
- watchout
Unearned Revenue is a LIABILITY, not revenue — cash received for work not yet done means the business OWES the work. The name fools someone on every exam.
- tip
Why expenses are debit-normal: they REDUCE equity, and reductions live on the opposite side of the thing they reduce. Revenues grow equity, so they share equity's credit side.