When you spend money, the balance that you owe increases.įor example, if a company pays off a business loan, this would show up as a debit on its liabilities account but the same event would show up as a credit on the company's cash account. When you add money to it, the balance that you owe decreases. Meanwhile, your credit card, like the credit column of an account, is the reverse. Your debit card, like the debit column of an account, increases in value when you deposit money into it and decreases in value when you withdraw money from it. Accountants use debit and credit rather than “increase” or “decrease” because it reflects the change that is happening as a result of the transaction more precisely.Īn easy way to think about this is with your debit card and credit card. In this way, it is the opposite of credit, which would be any transaction that decreases a company's assets or increases its liabilities. Related: Learn About Being an Accountant What does debit mean?ĭebit is a term used by accountants to refer to any transaction that either increases the company's assets or decreases the company's liabilities. In this article, we'll talk about what debit means, what it's used for, which types of accounts use it and provide some examples to make the concept easier to understand. As useful as it is, understanding what debit means can be tricky since it functions in different ways depending on which account you are looking at. In bookkeeping, the use of debits, alongside credits, is a useful way of categorizing every transaction that affects a company's finances.
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