Define Debit in Accounting

Debits are used to increase and decrease accounts when recording accounting transactions.

A debit is an accounting function that is used to either increase or decrease an account when recording a transaction. Businesses conduct a large number of transactions and keep track of many accounts to record those transactions. The debit is one part of the systematic process of bookkeeping and financial reporting.

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Debit vs. Credits
- Debits and credits are part of double-entry accounting. Every transaction is recorded with at least one debit and one credit that increase or decrease the affected accounts. Total debits equal total credits for each transaction. Debits represent uses of funds, while credits represent sources of funds. Debits are the opposite of credits. If a debit increases an account, a credit will decrease the same account.
Effect of Debits on the Balance Sheet
- The balance sheet contains three sections: assets, liabilities and shareholder's equity. Assets are listed on the left side of the balance sheet, while liabilities and shareholder's equity are listed on the right side. Assets must equal the sum of liabilities plus shareholder's equity, resulting in a balance between the left and right sides. Debits increase the left side of the balance sheet and decrease the right side of the balance sheet.
Accounts Increased with a Debit
- Accounts that are increased with a debit and decreased with a credit are assets, expenses or dividends. Debits increase asset accounts because assets increase the left side of the balance sheet. Debits increase expense and dividend accounts because those accounts decrease the right side of the balance sheet. Expenses decrease retained earnings, which is part of shareholder's equity, by decreasing net income on the income statement.
Accounts Decreased with a Debit
- Accounts that are decreased with a debit and increased with a credit are liabilities, revenues and equity. Debits decrease liabilities and equity because those accounts increase the right side of the balance sheet. Debits decrease revenue accounts because those accounts increase retained earnings, which is part of shareholder's equity on the right side of the balance sheet.

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Define Debit in Accounting

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