What is a debit?
The left side of a journal entry, which increases assets and expenses. Debiting cash means cash went up.
Definition
A debit is the left side of a journal entry. It increases assets and expenses, and it decreases liabilities, equity, and revenue.
This is a direction, not a charge on a bank card. Debiting cash means cash went up, not that the shop was billed.
Where it shows up
Balance Sheet: Related to asset increases and liability or equity decreases.
P&L: Related to expense increases.
Cash flow: Related to cash only if the debit is to cash.
See also: Credit · Journal Entry · Double-Entry Bookkeeping
When you look at a Trial Balance, debit balances sit on asset and expense accounts. Credit balances sit on liabilities, equity, and income.
You do not see the word debit on the Balance Sheet. You see cash, receivables, and equipment, which grew because debit entries hit those accounts.
On the Income Statement, rent and supplies grow with debit entries. Sales grow with credits, so a debit to revenue would reduce sales, not raise them.
A debit to cash shows up later on the Statement of Cash Flows as cash in. A debit to rent does not move cash by itself.
You will see the debit column on an entry screen and on a general ledger printout. Left side is debit, and right side is credit.
How it works
Every entry has at least one debit and at least one credit. The debit amounts must equal the credit amounts.
What a debit does depends on the account type. Debit an asset or an expense, and that account rises.
Debit a liability, and the liability falls. Paying accounts payable is a debit to that payable.
Debit equity, and equity falls. Debit revenue, and revenue falls, which is why refunds often hit income that way.
Cash is an asset, so a collection debits cash. Accounts receivable is also an asset, so collecting the cafe invoice credits receivables to take that asset down.
The bank-card use of the word is different. A debit-card payment at the store is cash leaving, which is a credit to cash on the books.
The normal balance of an account is the side that increases it. Assets and expenses carry debit balances, while liabilities, equity, and revenue carry credit balances.
If you debit the wrong account, the entry can still balance and still be wrong. Debiting supplies instead of rent keeps the sides equal and misstates both expenses.
A debit by itself is not a complete posting. The left side has to be matched by a credit of the same amount.
The amount on the debit line is the amount of the change. Debiting cash $400 raises cash $400, not $200 and not $800.
Example
A florist collects $400 cash on a cafe invoice. Cash should go up, and receivables should go down.
Debit: Cash $400
Credit: Accounts receivable $400
The debit is the cash line. That is what raises cash on the Balance Sheet.
The credit is the other side. It is required so the entry stays in balance, but it is not the debit.
If the florist had bought $400 of ribbon on account, the debit would be to supplies, not to cash. Same left-side idea, different account.
A $400 rent check is a debit to rent and a credit to cash. The debit raises the expense on the Income Statement.
Common mix-ups
A debit is not always a decrease. Debiting cash increases cash, and debiting a loan decreases the loan.
A debit is not a bank-card charge. The card may say debit, and the books still credit cash when money leaves the account.
People also treat debit as the whole entry. The debit is only the left side, and the credit has to be there too.
Related terms
- Credit: The right side of an entry, which increases liabilities, equity, and revenue.
- Journal Entry: A dated record of debits and credits posted to the ledger.
- Double-Entry Bookkeeping: The method in which every transaction hits at least two accounts and stays in balance.
- Trial Balance: A listing of every ledger account balance, used to check that debits equal credits.
- General Ledger: The master record of every account and every posted transaction.
- Posting: Recording a journal entry into the general ledger accounts.
- Chart Of Accounts: The organized list of every account used to record transactions.
- Adjusting Journal Entry: An entry made at period end to record accruals, deferrals, and corrections.