What does Debit and Credit mean in accounting?
In accounting, debit and credit are two sides of a transaction that are used to record increases or decreases in a company's financial accounts.
Debit: A debit entry increases the balance of assets and expenses accounts, and decreases the balance of liabilities, revenues, and equity accounts. Debits are recorded on the left side of an account.
Credit: A credit entry decreases the balance of assets and expenses accounts, and increases the balance of liabilities, revenues, and equity accounts. Credits are recorded on the right side of an account.
In double-entry accounting, every transaction must have both a debit and a credit entry, and the total debits must equal the total credits to ensure that the accounting equation stays balanced.