Debits and credits

Debits and credits are used in double entry-bookkeeping to know what money is going in or going out to your business.[1]

An account is debited when the money is going in to your business.[2] This means that increase in assets and expenses are recorded as debits.

Meanwhile, an account is credited when the money is going out from your business.[2] This means that increase in liabilities, capital, and revenues are recorded as credits.[3]

If assets and expense decreases, they are recorded as credits.[3]

If liabilities, capital, and revenues decreases they are recorded as debits.[3]

The chart also explains the following below:

 Kind of account Debit Credit
Asset Increase Decrease
Liability Decrease Increase
Income/Revenue Decrease Increase
Expense Increase Decrease
Capital Decrease Increase
Accounts that are normally recorded as debits are in bold

References

  1. NetSuite.com. "Accounting 101: Debits and Credits". Oracle NetSuite. Retrieved 2023-01-14.
  2. 2.0 2.1 "Debits VS Credits: A Simple, Visual Guide | Bench Accounting". Bench. Retrieved 2023-01-14.
  3. 3.0 3.1 3.2 Ballada, Win Lu (1996). Accounting Made Easy. Manila Philippines: GIC Enterprises Co., Inc. p. 25.