Debit / Credit
Financial Accounting glossary · The Accounting Cycle & Financial Statements
Definition
Left and right sides of a journal entry; debits increase assets and expenses, credits increase liabilities, equity, and revenues.
Debit / Credit in plain English
Every accounting entry has two sides that must balance, and debit just means the LEFT side while credit means the RIGHT side — that's all those words originally mean, not "good" or "bad." The trick is which side makes an account go up: debits increase what a company OWNS (assets) and what it SPENDS (expenses), while credits increase what it OWES (liabilities), what owners have put in (equity), and what it EARNS (revenue). Picture a see-saw that always has to stay level — every time you record something, you push down one side and lift the other by the same amount, so the books always balance. For example, getting $100 of cash means you debit Cash $100 (an asset going up) and credit something else $100 to keep it even.
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