In accounting, Debit means the left side of an account and Credit means the right side of an account. We increase and decrease accounts by debiting them or crediting them. Knowing whether to debit or credit an account depends on the Type of Account and that account’s Normal Balance. An account’s Normal Balance is based on the Accounting Equation and where that account is in the equation.
The account types are Asset, Liability, Equity, Dividends, Revenue, Expense. To increase an Asset, Dividend, or Expense account, we debit. To decrease those accounts, we credit. To increase an Equity (Capital), Revenue, or Liability account, we credit. To decrease those accounts, we debit.
For more information about the Accounting Equation, check out this video:
If you need to understand Normal Balances, check out this article:
If you need to know what to Debit and Credit and how accounting works, check out this step-by-step article:
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