What are debit and credit in accounting?

Debit and credit are fundamental concepts in double-entry accounting that represent the two opposite aspects of financial transactions.

A debit is an increase in an asset or expense account, or a liability or equity account.

A credit is a decrease in an asset or expense account, or a liability or equity account.

In other words, debit and credit entries are used to record increases or decreases in various accounts, ensuring that this fundamental accounting equation remains balanced:

In double-entry accounting, every transaction involves at least one debit entry and one credit entry of equal value, ensuring that the total debits and credits remain equal.

EXAMPLE
When a company makes a sale and receives cash, it increases their cash balance with a debit entry and increases their revenue with a credit entry. When they have an expense, they increase their expense account with a debit entry. If they pay the expense immediately, they decrease their cash with a credit entry. If not paid immediately, they increase their liabilities with a credit entry.

Frequently asked questions

How do you determine whether to debit or credit an account?

Generally, asset and expense accounts are debited for increases and credited for decreases.  The liability, equity, and revenue accounts are credited for increases and debited for decreases. 

Can a debit have a negative value or a credit have a positive value?

Yes, it is possible for a debit to have a negative value or a credit to have a positive value, depending on the context of the transaction.

For example, negative debits and positive credits are used when adjusting entries, reversing entries, or reflecting contra accounts.