Debit and Credit

When is a debit and credit used?

Debit and Credit are terms used in They refer to entries made in accounts to reflect the transactions of a business. The terms are often abbreviated to Dr (Debit) and CR (Credit).

Do not try to read anything more into the terms other than debit means on the left hand side and credit means on the right hand side of the accounting equation.

What is a Debit?

  • Debit entries show something which comes into the business
  • Debits go on the left, and they either increase or decrease accounts depending on the type of account. This is shown in our Debit and Credit Chart for easy reference.
  • For every Debit there must be a Credit

What is a Credit?

  • Credit entries show something which went out of the business
  • Credits go on the right, and they either increase or decrease accounts depending on the type of account. This is shown in our Debit and Credit Chart for easy reference.
  • For every Credit there must be a Debit

At the end of an accounting period the net difference between an accounts debits and credits is the account balance which can either be a debit or a credit balance.

Return to the Small Business Accounting Course

Debit and Credit March 12th, 2017Team

You May Also Like

Related pages

calculating the payback periodfob factory meansaccounting spreadsheet for small businessinventory impairment gaapbad debt expense formuladeferred revenues accountingcheque payment receipt formatpva calculatorhow do you calculate retained earningsaccounts receivable ledger definitiontrade discount accounting treatmentcash disbursement voucherpresent value of stock with dividend calculatorbills payable and bills receivabledebits and credits for dummiesretained earnings debit balancesupplier reconciliation templatehow to calculate stock value in excelbad debt recovery journal entryhow to calculate ending retained earningsadjusting entries affectaccrued expense journal entry exampleequation for dividendsliquidating partnerfree printable ledger balance sheetpmt accountingdoubtful accounts journal entrywhat does eom mean in accountingconsumable storesprove it bookkeeping testcalculating pv of annuitybills receivable accounting entriesaccounting sheets excelcost volume profit graph excel templateprepare balance sheet from trial balancefactoring of receivablesfifo calculationcurrent assets debtorsgeneral ledger vs subsidiary ledger7 steps of accounting cyclelower of cost or net realizable valuehow to calculate bond discountformula for total fixed costaccelerated depreciation method examplegearing ratio formula calculationhow to calculate variable overhead rateunpaid salaries adjusting entrytds journal entrycalculate ratios in exceltrade receivables turnover dayswhat is meant by payback periodallocation and apportionment of overheadsaccrued expense liabilityhow do you calculate contribution marginbasic accounting t accounts examplesfuture value of perpetuitydebit and credit accounts examplesis prepaid insurance a deferralposting journal entries to ledgerproject profitability index formulafixed manufacturing overhead formulastockholders equity formulacalculator future value of annuityprepayment double entryproveit practice testsbalance sheet sample excelpv function exceltransactional analysis quizallowance for doubtful debtshow to calculate lifobookkeeping definition accountingblank balance sheet excelcalculate manufacturing overhead raterevenue recognition percentage of completion methodjournal entries for dummies