A debit is an entry on the left side of an account. For example, the account Cash is debited when cash is received. The account Cash will be credited when cash is paid out. (A credit is an entry on the right side of an account.)

If a company's Cash account has $394,000 of debit amounts and $392,000 of credit amounts, the Cash account will have a debit balance of $2,000. Most asset accounts and expense accounts will have debit balances.

If the Cash account had $394,000 of debit amounts and $395,000 of credit amounts, the Cash account will have a credit balance of $1,000. This indicates that it has a negative amount of cash—that the amount of checks written is greater than the money it has received. If a bank deposit is not made prior to its checks clearing the bank, the company's bank account will overdraw.

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