What are Debits and Credits in Accounting?
Table of Contents:
Debits and Credits: The Essentials for Bookkeepers
Every financial transaction has two sides, that's the core of double-entry bookkeeping.
A debit (Dr) is an entry on the left side of an account. A credit (Cr) is an entry on the right side. Neither is"good" or"bad," they simply show where value moves.
For every transaction, total debits must equal total credits. This balance is what keeps your books accurate.
The Golden Rule
| Account Type | Debit Increases | Credit Increases |
|---|---|---|
| Assets | | |
| Expenses | | |
| Liabilities | | |
| Equity | | |
| Income | |
Debits and Credits Example
Example 1
You buy office supplies for $200 cash.
| Account | Debit | Credit |
|---|---|---|
| Office Supplies (Asset) | $200 | |
| Cash (Asset) | $200 |
One asset goes up (supplies), another goes down (cash).
Books stay balanced.
Example 2
You receive $1,000 from a customer for services rendered.
| Account | Debit | Credit |
|---|---|---|
| Cash (Asset) | $1,000 | |
| Service Revenue (Income) | $1,000 |
Cash increases (debit), revenue increases (credit).
Tips For Beginners
1. Don't think "debit = bad."
In everyday language, debit feels negative, but in accounting, it's neutral. It depends entirely on the account type.
2. Always check the balance.
If debits do not equal credits, there's an error somewhere. This built-in check is the biggest advantage of double-entry accounting.
3. Practice with real transactions.
Theory only sticks once you apply it, so start recording your own daily transactions, even small ones.
