# Debit|Definition & Meaning

## Definition

A debit (in an account entry) represents a decrease in something’s worth. It is primarily a finance term. A very simple example is when you withdraw or spend money stored in a bank account. On the account statement, this transfer is considered a debit. It is the opposite of credit, which increases worth (e.g. if you transfer money into your account).

Figure 1 below shows an example of debit.

Figure 1 – Representation of debit

A debit is a balance sheet accounting item that results in a gain in assets or even a decrease in liabilities. In basic accounting, debits are countered by credits, which function inversely.

For example, if a company obtains a loan to buy equipment, it will debit capital assets plus credit a receivables account simultaneously, depending on the type of loan. Debit is commonly abbreviated as “dr,” which means “debtor.”

## The Main Takeaways from Debit

• A debit is indeed an accounting item that reduces obligations while increasing assets.
• All debits were made just on the left of the ledger in double-entry accounting and needed to be offset with equal credit on the right portion of the ledger.
• Positive amounts for assets and expenditures are debited on a balance sheet, whereas negative payments are credited.

## Difference Between Debit and Credit

Debits are an essential part of these dual accounting systems. Credits are the inverse of debits. Debits represent money taken out of a bank, whereas credits represent money deposited.

Because all credits are reported entirely on the row under the debits, all debts are put on the top lines, even the most basic diary entry.

When utilizing F l, a debit is on the left side of the chart, and even a credit is on the right. To assure the utilization of all general ledger and modified balance sheet items, debits, and credits.

The entire monetary value of all accounting systems should equal the total monetary value of all debit or credit transactions. To put it another way, money should always be balanced.

Figure 2 below shows the difference between debit and credit.

Figure 2 – Difference between debit and credit.

A hanging debit is a debit balance that does not have an offsetting credit card balance that allows it to be wiped off. It is used in financial accounting to indicate differences in a firm’s balance sheet and when a corporation buys goods or services to produce a negative.

So, the debt is \$300. ### Example 2 A college student paid for his meal using his debit card. The current balance of his account was \$650. After paying for the meal, his account balance is \$630. Find the debt amount. ### Solution We subtract the total amount from the remaining balance to calculate the debit. As shown below: \$650 – \$630 = \$20

This gives us a debit amount of \\$20.

All Images are made using GeoGebra.