What Accounts Do We Debit in Accounting?
Financial reporting depends on the numbers recorded in the accounting records. Every transaction requires an accountant to enter the transaction in the accounting system. Accountants record financial transactions using a system of debits and credits and each transaction must contain an equal amount of debits and credits. Some accounts maintain a normal debit balance and experience debit entries.
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Assets
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Companies use assets to finance or facilitate the operation of business activities. Assets refer to any item of value owned by the company. These include financial assets, such as cash, physical assets like production equipment or intangible assets like patents. Asset accounts maintain a normal debit balance. Any transaction that increases an asset account should debit that account. Acquisition of new assets, recognition of customer payments and receipt of inventory shipments increases the value of these asset accounts. These asset accounts should be debited to record these transactions.
Expenses
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Companies incur expenses in the operation of the business. Expenses refer to any cost incurred to pay for an item or service. These include utilities expense, salaries expense, rent expense or repairs and maintenance expense. Expense accounts maintain a normal debit balance. Any transaction that increases an expense account should debit that account. The expiration of insurance coverage, the payment of a biweekly payroll or the recognition of another period of depreciation increases the balance in these expense accounts. These expense accounts should be debited to record these transactions.
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Owner's Drawing
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Companies use an owner's drawing account to record any funds removed from the business for the owner's personal use. The owner may withdraw funds in cash or may remove other assets from the business. The owner's drawing account maintains a normal debit balance. Any transaction that increases the owner's drawing account should debit that account.
Other Accounts
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Most other accounts maintain a normal credit balance. These accounts include revenues, liabilities and equity accounts. Credit entries increase the balance in these accounts. Debit entries will decrease the balance in these accounts. Examples of transactions that will decrease these balances include paying off creditor balances, retiring outstanding stock or reversing a sale. Each of these transactions should be recognized by debiting the account.
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