Finance Dictionary : Debit



Discover the significance of a Debit in double-entry bookkeeping, where it represents asset or expense increases. Understand its role in maintaining balanced financial records and generating financial statements.



In the context of double-entry bookkeeping, a debit is a foundational accounting entry made on the left-hand side of a journal or ledger. Debits are typically used to record increases in assets or expenses and are a critical component of the double-entry accounting system.


This system ensures that the accounting equation, where assets equal liabilities plus equity, remains balanced. To achieve this balance, for every debit entry made, there must be an equal and corresponding credit entry, often on the right-hand side. Debits and credits play a pivotal role in recording financial transactions accurately and are used to generate financial statements, assess the financial health of a business, and make informed financial decisions.


Debits are essential for tracking cash flow, expenses, and asset changes, making them a fundamental concept in accounting and financial management.


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