Member-only story
Basics of Accounting
2 min readJul 10, 2019
A guide to learning accounting basics easily.
In business and management field accounting plays a vital part. In this article we will learn few accounting basics that are helpful for us when preparing Income statements and Balance sheets.
1. DC ADE LER
What is meant by DC ADE LER?
DC ADE LER is a shortened formula that represents the tabulating format for Income statements, Balance sheets and T accounts etc. Refer the following image to understand the format.
As shown in the diagram, looking at the highlighted letter in each word, gives the formula DC ADE LER.
2. Examples for each category
- A →Assets : Cash, Account Receivable, Inventory, Equipment, Buildings
- D →Draw : Distribution, Dividend
- E →Expenses : Rent, Utilities
- L →Liability : Accounts Payable
- E →Equity (owners’) : Retained Earnings
- R →Revenue : Sales, Services
3. Debit = Credit
Debit always equals to Credit. This balances out the table’s Left hand side to right hand side.
