A debit is one of the two sides of every accounting entry, written on the left. What a debit does depends on the type of account it is applied to.
What it means
A debit increases asset and expense accounts and decreases liability, income and equity accounts. So buying equipment debits an asset, and paying wages debits an expense. The common belief that a debit always means "money out" is wrong - it depends on the account. Debits are abbreviated Dr.
Where it fits in
In a payroll journal, the salary cost is a debit to a wage expense account, while the matching credits reduce cash or raise the liabilities owed to SARS and employees. Every debit has an equal and opposite credit, keeping the entry balanced.
Key rules
- The left side of an accounting entry, abbreviated Dr.
- Increases assets and expenses.
- Decreases liabilities, income and equity.
- Always matched by an equal credit in the same entry.
