Debit

Definition

A debit is an entry recorded on the left side of a ledger account that increases asset or expense accounts and decreases liability, revenue, or equity accounts. It represents money flowing into an account in double-entry bookkeeping.

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 double-entry accounting, every debit must have a corresponding credit.
4. Debits are recorded on the left side of the T-account.
5. In accrual accounting, debits can reflect expenses incurred but not yet paid.

Review Questions

• Which side of a ledger account does a debit entry appear on?
• How does a debit affect asset accounts?
• What must accompany every debit in double-entry bookkeeping?

Related terms

Credit: An entry recorded on the right side of a ledger account that decreases assets and expenses while increasing liabilities, revenues, and equity.

Double-Entry Bookkeeping: An accounting system where every transaction affects at least two accounts with equal debits and credits.

Accrual Accounting: An accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged.