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Debit Vs. Credit in a Journal Entry

If you are keeping books or are an accountant, chances are you have posted journal entries. These can be debits or credits. Journal entries record how transactions take place and their affect on certain accounts. Accounts can be increased or decreased with journal entries.

  1. History

    • You can find information about debits and credits going back as far as 500 years. These entries describe our double-entry accounting system.

    Significance

    • Whenever you have a double-entry system, transactions are recorded with debits and credits. If the account or transaction has a debit, a record will be made on the left-hand side of the entry. Credits are made on the right-hand side of the ledger or journal entry.

    Function

    • A debit entry or a credit entry can increase an account. The type of account will depend on whether it is increased by a debit or credit.

    Considerations

    • As a rule of thumb, expenses, losses, assets, and dividends accounts are more likely to be increased with a debit entry. A credit entry usually increases accounts that are labeled gains, revenues, income, liabilities, and stockholders' equity (also known as owner's equity).

    Features

    • Some journal entries can involve a debit and two credit entries. The debits should always equal the credits.

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