Debit
In bookkeeping, an entry on the left side of an account that increases assets and decreases liabilities.
A debit is an entry recorded on the left side of a T-account in double-entry bookkeeping. Debits increase asset and expense accounts while decreasing liability, equity, and revenue accounts. Every financial transaction must have equal debits and credits to maintain the accounting equation balance.
Example
A coffee shop owner purchases an espresso machine for $3,000 cash—the bookkeeper debits equipment (asset up $3,000) and credits cash (asset down $3,000).
Why It Matters for Your Business
Every transaction in your books involves debits, and recording them incorrectly leads to inaccurate financial statements and potentially bad business decisions.
Related Terms
More Accounting Terms
Accounts Payable
Money owed by a business to its suppliers or creditors for goods or services received but not yet paid for.
Accounts Receivable
Money owed to a business by its customers for goods or services delivered but not yet paid for.
Accrual Accounting
An accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged.
Asset
Any resource owned by a business that has economic value and can provide future benefits.
Balance Sheet
A financial statement showing assets, liabilities, and equity at a specific point in time.
Related Financial Guides & Resources
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