What is Debit ?
A debit is an entry made in accounting that records when a payment is made or owed. It is often recorded on the left-hand side of a ledger account. An account gets debited when the amount of an asset or liability is increased or decreased. Debits correspond to expenditures, asset additions, or decreases in revenue or obligations, respectively.
In the company’s finances, a debit increases an asset the business owns (such as cash) and increases day to day running costs or expenses. It reduces the liabilities owed (such as bills paid), reduces the business's income, and reduces the capital the business owes back to the owner. The following is how a debit influences different types of accounts:
- An income account is decreased by a debit, increased by credit
- An expense account is increased by debit
- A liability account is decreased by a debit
- An asset account is increased by a debit
- A capital account is decreased by a debit