Definition
A debit is an entry on the left side of an account. Debits increase asset and expense accounts and decrease liability, equity and revenue accounts. Every journal entry contains at least one debit, and the total of its debits must equal the total of its credits for the entry to balance.
How it works
Debit does not mean good or bad, and it does not mean money leaving. It is only a position: the left column of a ledger account. Whether a debit increases or decreases the balance depends on the type of account. Cash is an asset, so receiving cash is a debit; a loan is a liability, so repaying it is also a debit because it lowers what you owe.
Bank statements cause much of the confusion. When your bank says it has credited your account, it is looking at your deposit as its liability to you. In your own books, the same deposit is a debit to the bank (asset) account.
A quick way to remember the rule is the expanded equation: assets plus expenses sit on the debit side, liabilities plus equity plus revenue sit on the credit side. See credit for the mirror image, and use the journal entry balance checker to test an entry.
Formula
Assets + Expenses = Liabilities + Equity + Revenue
Debit side (left) ← → Credit side (right)
Example: paying rent
A business pays 1,200 of monthly rent from its bank account. Rent expense increases, so it is debited; the bank balance (an asset) decreases, so it is credited.
| Account | Debit | Credit |
|---|---|---|
| Rent expense | 1,200 | |
| Bank | 1,200 |