A debit is an entry on the left side of a double-entry bookkeeping system that increases asset or expense accounts, and decreases liability, revenue, or equity accounts. It is crucial for ensuring that the accounting equation remains balanced.
5 Must Know Facts For Your Next Test
Debits increase asset and expense accounts.
Debits decrease liability, revenue, and equity accounts.
In a double-entry system, every debit must have a corresponding credit.
Debits are recorded on the left side of a T-account.
The total amount of debits must always equal the total amount of credits in a transaction.
Review Questions
What types of accounts are increased by debits?
Where do you record debits in a T-account?
How do debits affect liability and equity accounts?
Related terms
Credit: An entry on the right side of an account that increases liabilities, revenues, or equity and decreases assets or expenses.
Double-Entry Bookkeeping: An accounting system where every transaction affects at least two accounts, with debits equaling credits.
T-Account: A visual representation of an account that uses a 'T' shape to track debits on the left and credits on the right.