In the world of financial accounting, one bookkeeping transaction has two effects. We call these two effects “debits and credits.” This is the first thing all accounting students need to understand about them. Let us consider a few analogies to better understand this fundamental idea.

Accounting term	Debit	Credit
Analogy: coin	Heads	Tails
Analogy: Newton’s Third Law	Action	Reaction
Analogy: Yin-Yang (Chinese philosophy)	Yin	Yang

In just the same way that we cannot separate a coin’s head from its tail, or the action from the reaction of Newton’s Third Law, or yin from yang in ancient Chinese philosophy, we cannot separate a debit from a credit. Debits and credits represent two aspects of each financial transaction.

I want to use Newton’s Third Law to draw out the parallel a little bit. Newton’s Third Law can be paraphrased as:

For every action, there is an equal and opposite reaction.

Let’s say you purchased a car for $10,000 cash. You now have $10,000 less in cash, and you have obtained a car. We could say that the reduction of cash is the action, and the acquisition of the car is the reaction. Or vise-versa. I’m not sure the order matters because the fundamental principle remains: debits and credits are linked in an absolutely equal manner. Thus, they cannot ever accurately be used apart from each other in an unequal way.

This linkage was described in the year 1494 A.D. by Fr. Luca Pacioli, a Catholic priest who is one of Leonardo da Vinci’s teachers. In Fr. Pacioli’s Summa, he had a chapter devoted to double-entry bookkeeping. Accounting historians believe that this chapter was the very first time such ideas were published, which is why he is often referred to as the founder of modern accounting. In this chapter, he wrote:

“The very day a debit is born, it has a twin credit. So it is quite natural for them to always go together in your books.”

As accountants and accounting students, how do we use this information?

Debits and credits must equal each other in every journal entry. If they do not equal, the error must be corrected. We don’t often use the word “always” in accounting, but this is one such time:

Journal entries must always be in balance.

The debits must equal the credits. There are no exceptions to this rule. This is because the accounting equation (A = L + E) must be in balance, and a balanced journal entry = a balanced accounting equation.