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What is the meaning of debit?

Author:
Harold Averkamp, CPA, MBA

Definition of Debit

The term debit is similar to the term used in Italy more than 500 years ago when the double entry accounting system was documented. What you need to know today is that debit means left or left side. For example, every accounting entry will have a debit entered on the left side of a general ledger account. (There will also need to be a credit amount entered on the right side of another account.) The abbreviation for debit is dr. (which is also related to the term from 500 years ago).

Since the general ledger accounts have both a debit and credit side, or left and right side, the balance in a general ledger account will be either a debit balance or a credit balance.

Within the general ledger, these accounts are expected to have debit balances: assets, expenses, and the owner’s drawing account. The debit balances will be increased when additional debit amounts are entered, and will be decreased when credit amounts are entered.

Examples of Debit

To illustrate the term debit, let’s assume that a company has cash of $500. Therefore, the company’s general ledger asset account Cash should indicate a debit balance of $500. If the company receives an additional $200, a debit of $200 will be entered and will result in the Cash account having a debit balance of $700.

Sometimes the word charge is used in place of debit. For example, if a company spends $300 for advertising, a credit of $300 will be recorded in the Cash account, and an accountant might add “…and charge Advertising Expense for $300.” Another accountant might say “…and debit Advertising Expense for $300.”

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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.

Learn More About Harold

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