A debit does not mean an increase or decrease in an account. Many accounting students make this mistake. A debit is always an entry on the left side of an account. Depending on the account, a debit can increase or decrease the account. Accounts that have debit or left balances include assets, expenses, and some equity accounts. This means that a debit recorded in an asset account would increase the asset account. Conversely, liabilities and revenue accounts have credit or right balances. A debit recorded in a revenue account would decrease the revenue account.
In a nutshell:
- A debit is an accounting entry that creates a decrease in liabilities or an increase in assets.
- In double-entry bookkeeping, all debits must be offset with corresponding credits in their T-accounts.
- On a balance sheet, positive values for assets and expenses are debited, and negative balances are credited.