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What is the difference between a debit and a debit balance?

Author:
Harold Averkamp, CPA, MBA

Definition of Debit

A debit is an entry on the left side of a T-account.

A debit entry is used to record assets, expenses, losses, and owner’s draws in their appropriate general ledger accounts. A debit reduces the amounts in liability and owner’s (stockholders’) equity accounts.

Definition of Debit Balance

A debit balance is the normal balance in the general ledger accounts for assets, expenses, losses, and owner’s draws.

Example of Debit and Debit Balance

Let’s assume that a person starts a business as a sole proprietorship with an investment of $5,000. The entry to business accounts will include a debit to Cash for $5,000. On the next day, the business spends $1,000 to purchase office equipment. Part of this entry will include a credit to Cash for $1,000. After this transaction is recorded, the Cash account will have a debit balance of $4,000.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

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