key term - Debit

Definition

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

1. Debits increase asset and expense accounts.
2. Debits decrease liability, revenue, and equity accounts.
3. In a double-entry system, every debit must have a corresponding credit.
4. Debits are recorded on the left side of a T-account.
5. The total amount of debits must always equal the total amount of credits in a transaction.

Review Questions

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.