Is it necessary to talk about accounting terms as debit / credits?

Having a hard time knowing if item goes up or down based on credit or debit because it differs whether it is asset, liability, or equity. What is the purpose of knowing debit and credits in accounting?

For example, for a $10 undeclared dividend, isn't it just a $10 drop in cash and $10 drop in retained earnings? Why say cash is credited by 10 and retained earnings is debited by 10?

If it is essential, any tricks to remembering if debit / credit increases or decreases a line item?

Comments (3)

2y 
ZIRP, what's your opinion? Comment below:

Just need to remember DEAD CLIC. Have a google and you'll see this makes it a LOT easier to remember.

Basics are, if you want to increase any assets, or expenses, debit if you want to increase liabilities, equity or income, credit.

To decrease any of the above, just do the reverse operation e.g. decrease in assets is a credit.

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2y 

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