What is the difference between a debit and a credit?

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by alan , in category: Taxation and Accounting , a year ago

What is the difference between a debit and a credit?

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1 answer

by khalil_ward , 10 months ago

@alan 

Debit and credit are two terms frequently used in the context of accounting and financial transactions. Here is the difference between the two:

  1. Debit: Debit refers to an entry made on the left side of an account. It is used to record an increase in assets, expenses, or dividends, and a decrease in liabilities, equity, or revenue. Debit can also be associated with the action of taking funds from a bank account. In simple terms, a debit increases an account balance when applied to the appropriate type of account.
  2. Credit: Credit refers to an entry made on the right side of an account. It is used to record an increase in liabilities, equity, or revenue, and a decrease in assets, expenses, or dividends. Credit can also be associated with the action of adding funds to a bank account. In basic terms, a credit decreases an account balance when applied to the appropriate type of account.


In summary, debits and credits are used in double-entry bookkeeping to reflect the flow of money or transactions within accounts. Debits increase certain accounts, while credits decrease other accounts.