Debit and Credit

The terms debit and credit are synonymous with left and right. Debit indicates left, and credit indicates right side of an account. Entering an amount on the left side of an account is called debiting the account; making an entry on the right side is crediting the account. It is commonly abbreviate debit as Dr. and credit as Cr.

Assets, drawings, and expenses are increased by debits and decreased by credits. Liabilities, owner’s capital, and revenues are increased by credits and decreased debits.

Having debits on the left and credits on the right is an accounting custom or rule and this rule applies to all accounts.

When the totals of the two sides of an account are compared, an account will have a debit balance if the total of the debit amounts exceeds the credits. An account will have a credit balance if the credit amounts exceed the debits.