Definition of a Debit Account
Accounting transactions are always recorded using debits and credits. The debits and credits allow bookkeepers to keep the books balanced out and they must always equal each other. Debits refer to the left side of the equation and credits refer to the right. Accounts with debit balances are either asset accounts or expense accounts.
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Cash
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Cash is an account with a normal debit balance. This does not mean it always has a debit balance; however it always should. Cash is an account that represents how much cash a business has. The debit balance of a cash account is the exact amount of cash the business has in its account. If cash has a credit balance, it means the account is overdrawn and a deposit of money needs to be made. When cash is received, a debit is posted. When cash is paid out, a credit is posted.
Accounts Receivable
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Accounts receivable is an account similar to cash. Accounts receivable is an account that refers to the amount of cash owed to the business by debtors. This account also should have a debit balance at all times. The debit balance in this account varies from day to day or as often as cash is put on account or cash is received from debtors. The only way this account could contain a credit balance, is if someone over pays a bill to the company.
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Other Assets
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Other assets that are tangible such as supplies, vehicles, land and buildings also have normal debit balances. These debit accounts represent the amount each of these assets is worth. These types of assets always have a debit balance. If the asset becomes worthless, the balance in its respective account becomes zero. These accounts should never have a credit balance.
Expense Accounts
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Expenses are each individually tracked in accounts with debit balances. Expenses rarely ever contain a credit balance or even an entry. Expense accounts are simply accounts tracking an expense. Every expense has its own account and this is how a business tracks the amount of money spent in each category. Whenever an expense is incurred, a debit post is made to the respective expense account.
Other Debits
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Other types of accounts, such as liabilities and equity accounts, all have normal credit balances. Liabilities have debit entries to them when a liability is paid, but the liability account itself never has a debit balance. Equity accounts also have debits posted to them, but the equity accounts always contain a normal credit balance.
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References
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