What Does the Accounting Term Debit Mean?

The accounting industry uses two primary terms to describe the amounts in journal entries: debit and credit. These terms result from the double-entry accounting system used by companies today.

Definition

According to The Concise Oxford Dictionary, the term "debit" comes from the Latin term "debitum," which means "that which is owing."

Effects

In accounting entries, debit amounts increase asset accounts and decrease liabilities, owner's equity or net worth accounts.

Features

Debits are listed in the left side of general ledger accounts. Additionally, debit amounts are listed first in journal entries, followed by the offsetting credit amounts.

Misconceptions

The appropriate abbreviation for debit is "Dr", which stands for "debtor." A common but incorrect abbreviation is "Db."

Expert Insight

Generally Accepted Accounting Principles (GAAP) provides the guidelines for properly using debits in accounting. GAAP is the sole authority for accounting principles in the U.S.

References

• Investorwords: Debit Definition
• Money Instructor: Debits and Credits
• Net MBA: The General Ledger