Principles of Financial Accounting: Chapter 2 Notes

Chapter 2 – Class Notes

DEALOR Remember to use the mnemonic.
Increase Decrease
D = Dividends Debit Credit
E = Expenses Debit Credit
A = Assets Debit Credit
L = Liabilities Credit Debit
O = Stockholders’ Equity (Owners’ Equity) Credit Debit
R = Revenues (Sales) Credit Debit


5 Types of General Ledger Accounts
Assets Have debit balances.
Liabilities Have credit balances.
Equity Have credit balances.
Revenues Have credit balances.
Expenses Have credit balances.


Revenues, Expenses and Dividends are closed-out (zeroed-out) to
Retained Earnings at the end of each month.
Dividends are a contra-equity account. They are not a ‘type’ of account.