Debit - What is a debit?
A debit is an expense, or an amount of money paid from an account, that results in the increase of an asset or a decrease in a liability or owner’s equity on the balance sheet
Accounting and invoicing software like Debitoor makes it easier than ever to stay on top of your debits and credits by generating a balance sheet instantly. Try it free for 7 days.
‘Debit’ is a formal bookkeeping and accounting term that comes from the Latin word debere, which means "to owe". The debit falls on the positive side of a balance sheet account, and on the negative side of a result item.
In bookkeeping, a debit is an entry on the left side of a double-entry bookkeeping system that represents the addition of an asset or expense or the reduction to a liability or revenue. The opposite of a debit is a credit.
An overview of debit in accounting
- To debit a debtor account implies a reduction of debt
- To debit an asset account implies that the assets increase
- To debit an income account implies that income decreases
- To debit an expense account implies that the cost increases
Accounts increased by debits A debit will increase the following types of accounts:
- Assets (Cash, Accounts receivable, Inventory, Land, Equipment, etc.)
- Expenses (Rent Expense, Wages Expense, Interest Expense, etc.)
- Losses (Loss on the sale of assets, Loss from a lawsuit, etc.)
- Sole proprietor's Drawing account
Accounts decreased by debits A debit will decrease the following types of accounts:
- Liabilities (Notes Payable, Accounts Payable, Interest Payable, etc.)
- Stockholders' Equity (Common Stock, Retained Earnings)
The debit balance refers to the balance that remains after one or a series of bookkeeping entries. This amount represents an asset or an expense of the entity.
Under double-entry bookkeeping, your debit accounts and your credit accounts should be equal, effectively balancing your financial accounts and helping ensure that your business finances don’t receive extra attention from the tax authorities in the form of an audit.
Debits and Debitoor
Clearly related to our namesake, Debitoor allows you to stay on top of your debits and credits. Because most accounting and invoicing software prevents the need for a double-entry bookkeeping system, your debits and credits are adjusted automatically according to your expenses and income.