Information AboutDebit |
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Debit is a formal '' means "debt". The opposite of a debit is a Credit . Debit is abbreviated ''Dr'', while credit is abbreviated ''Cr''. A debit changes the balance of an account. Asset and Expense accounts increase in value when debited, whereas Liability , Equity , and Revenue accounts decrease in value when debited. This distinction is somewhat counterintuitive, until the nature of those accounts is more closely scrutinized. For example, revenue is coded as a credit. After recording a day's sales, the company will have credited a certain amount in revenue, and since credits are negative numbers, the balance grows more and more negative. An adjustment to revenue would need to be a debit, because its purpose is to bring the revenue totals closer to zero. For instance, the journal entry for paying the telephone bill might look like this: The telephone company would record the exact same transaction (from their side) like this: Many people who have no formal education in accounting often assume that a debit decreases a balance because use of a bank's Debit Card decreases the balance in the customer's account. However, it is called a debit card because, from the bank's perspective the customer's account is a liability. By withdrawing money, the customer is decreasing the bank's liability. Since liability accounts normally have a credit balance, the withdrawal of cash from a banking account is reflected on the bank's Balance Sheet as a debit. |
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