A good tool to have in your toolbox for learning or recapping your double-entry skills is the mnemonic DEADCLIC. DEADCLIC should be split into DEAD and CLIC, and I will deal with them in turn. DEAD is an acronym for Debit, Expense, Asset and Drawings. These are split into this group as if you want to increase any of expenses, assets and/or drawings you would enter a debit. For example, if you receive a bill for rent you would enter a debit to rent, and that would increase the rent account in the ledgers.

CLIC is an acronym for Credit, Liabilities, Income and Capital. Much like we have seen before, if you want to increase any of liabilities, income and capital you enter a credit. For example, if we receive an invoice from one of our suppliers, we need to reflect the fact that we now owe them money, so we enter a credit to liabilities, to increase our liabilities.

Let’s go back to our example of a rent bill. We need to reflect that we have incurred the expense of the rent, but we also owe our landlord money. The full double entry will be a debit to the rent account to increase the expense, and credit our trade payables to reflect the increased amount we owe.

No assumptions

You can’t assume that every time we need to increase something covered under DEAD we must also increase something under CLIC. Sometimes we will need to DECREASE something. Remember we said that to increase expenses, assets and liabilities we enter a debit, to decrease it we enter, you guessed it, a credit. Then on the flip side to decrease liabilities, income and capital we enter a debit. We might need to decrease something that is covered under DEAD and decrease something that is covered under CLIC.

An example of this would be when we pay our suppliers for a bill that we owe. The double entry for this would be debit trade payables to reduce the liability that we owe, and the credit cash, to show that asset that we had in having money in our bank account has been reduced.

However, no matter which aspects of DEADCLIC you need to adjust, you can be sure that you will always need an equal debit and credit. Please remember though, as I mentioned, this is something that if you haven’t seen before, or in quite some time, it may well take time to get up to speed with.