O-Level Accounting: T-Accounts & Double Entry Explained

Q: What is the Double Entry rule?

Every single financial transaction affects exactly TWO accounts in the business. For every transaction, there MUST be one physical Debit entry, and one equal compensating Credit entry.

Q: What does DEAD CLIC stand for in Accounting?

It is the cheat code for knowing which side to use. Debit (DEAD) increases Expenses, Assets, and Drawings. Credit (CLIC) increases Liabilities, Income, and Capital.

Q: How do you balance off a T-account?

Add up both sides. Find the side with the biggest total. Write that massive total at the bottom of BOTH sides. Find the difference between the small side and the total, and write that missing number as 'Balance c/d' on the small side. Finally, bring it down as 'Balance b/d' on the massive side for the new month.

Q: What happens if a T-Account has a Credit Balance?

A credit balance means the business either owes someone money (Liability), or it is a form of revenue (Income). A typical bank account in credit means it is completely overdrawn!

A giant T-account showing Debits on the left and Credits on the right.

How do I record a transaction when I buy a motor van with cash?

Apply the DEAD CLIC rule. You gained a Motor Van, which is an Asset. To increase an Asset, you must Debit it. (Debit Motor Van). You paid using Cash, which is also an Asset. But since you lost cash, the asset is decreasing. To decrease an asset, you do the opposite: Credit it. (Credit Cash).

1. The Philosophy of Double Entry
2. The Absolute Rules of Debit and Credit
3. Balancing Off at Month End (c/d and b/d)
4. Frequently Asked Questions

If you do not memorize the laws of double entry, you cannot pass O-Level Accounting. Every single question requires you to intuitively know whether an entry is a Debit or a Credit. This guide from our Ultimate O-Level Accounting Guide provides the only mnemonic you will ever need to survive the exam.

1. The Philosophy of Double Entry

A physical store cannot gain something without giving something else away in return. If you receive a computer, you must give away cash. Every action has an equal and opposite reaction.

Therefore, whenever you are given a transaction in an exam, you must immediately identify the TWO accounts involved.

Transaction: Owner puts $5,000 cash into the business.
Account 1: Cash Account (Bank).
Account 2: Capital Account.

2. The Absolute Rules of Debit and Credit

Stop guessing. Use the DEAD CLIC acronym to know exactly which side of the T-Account to write on to make the value INCREASE.

DEAD (Left Side = Debit to Increase)

Expenses (e.g., Rent, Wages, Electricity)
Assets (e.g., Cash, Buildings, Trade Receivables)
Drawings (Money the owner takes out)

CLIC (Right Side = Credit to Increase)

Liabilities (e.g., Bank Loans, Trade Payables)
Income (e.g., Sales Revenue, Rent Received)
Capital (Money the owner puts in)

Reverse the rule to decrease! If you want to DECREASE a Liability (like paying off a loan), you must do the opposite of CLIC: You DEBIT it.

3. Balancing Off at Month End (c/d and b/d)

At the end of the month, you must close the accounts and find out how much money is actually left. Examiners award massive marks for formatting this correctly.

The 4-Step Balancing Algorithm:

1. Add up the total of the Debit side column. Add up the total of the Credit side column.

2. Find the LARGEST total. Draw parallel lines at the bottom of the account, and write that massive total at the bottom of BOTH sides.

3. Go to the smaller side. You are missing a number. Calculate the difference between the small total and the massive total. Write that missing numbers as 'Balance c/d' (Carried Down) above the total line. Now the math is perfect.

4. Go to the massive side. BELOW the total lines, write 'Balance b/d' (Brought Down) for the start of the next month, and bring that exact same figure down.

📋 From the Desk of Prof. Arthur Pendelton

Never Balance the Expenses! You only do the c/d and b/d trick on Assets and Liabilities in the SOFP. You NEVER bring down a balance for Sales (Income) or Rent (Expenses). At the end of the year, Income and Expenses are 'closed off' by transferring their totals straight into the Income Statement. They start the new year completely empty!

Frequently Asked Questions

What is the Double Entry rule?▼

Every transaction results in one Debit and one equal Credit across two different accounts.

What does DEAD CLIC stand for in Accounting?▼

Debit increases Expenses/Assets/Drawings. Credit increases Liabilities/Income/Capital.

How do you balance off a T-account?▼

Find the difference between the two sides, enter it as Balance c/d on the smaller side, and bring it down as Balance b/d on the larger side.

What happens if a T-Account has a Credit Balance?▼

The balance brought down is on the right side. This means the account is either a Liability (business owes debt) or an Income.

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Double Entry: Mastering the Ledger T-Accounts