Accounts - Define debit and credit, Definitions of Debits and Credits

Define debit and credit

Debit


-An entry in the financial books of a firm that increases an asset or an expense or an entry that decreases a liability, owner's equity (capital) or income.

-Also, an entry entered on the left side (column) of a journal or general ledger account.

Credit

-An entry in the financial books of a firm that increases a liability, owner's equity (capital) or revenue, or an entry that decreases an asset or an expense.

-Also, an entry entered on the right side (column) of a journal or general ledger account.


Simple Debit / Credit Rule:

- All Accounts that Normally Have a Debit Balance are Increased with a Debit by placing the amount in the Left Column of the account and Decreased with a Credit by placing the amount in the Right Column of the account.

    - Assets
    - Draws
    - Expenses

- All Accounts that Normally have a Credit Balance are Increased with a Credit by placing the amount in the Right Column of the account and Decreased with a Debit by placing the amount in the Left Column of the account.

    - Liabilities
    - Owner's Equity ( Capital )
    - Revenue

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