Debit

A debit represents a decrease in the value of an asset or an increase in the value of a liability or expense in accounting. It signifies a charge against an account. Debits are recorded on the left side of a ledger. Common examples of debit transactions include paying cash, incurring expenses, or taking out a loan. The opposite of a debit is a credit, which increases assets or decreases liabilities/expenses. The impact of a debit depends on the type of account involved and the specific accounting system.

Debit meaning with examples

• The company recorded a debit to its 'Cash' account because it used cash to pay for supplies. This signifies a decrease in the company's cash assets. This reduces how much is on hand. The accounting entry shows the flow of funds.
• When a customer buys goods on credit, the seller may debit the 'Accounts Receivable' account, indicating an increase in the amount owed to the seller. This shows who owes what.
• A debit to the 'Rent Expense' account reflects the monthly cost of office space. This is added to the expenses side which will reduce net income. This is a loss for the company.
• If a business takes out a loan, it will debit the 'Cash' account (increasing cash) and credit the 'Loans Payable' account (increasing liabilities). Loans are debts.
• If equipment is purchased with cash, a debit is made to the 'Equipment' account (increasing assets) and a credit to the 'Cash' account (decreasing assets). This is an asset.