Definition of ‘Debit in Accounting’ An accounting entry that results in either an increase in assets or a decrease in liabilities on a company’s balance sheet or in your bank account.
Definition of ‘Credit in Accounting’ An accounting entry that either decreases assets or increases liabilities and equity on the company’s balance sheet. On the company’s income statement, a debit will reduce net income, while a credit will increase net income.
In a non-accounting sense, “debit” is a sum of money taken from a bank account.
In a non-accounting sense, “credit” is:
– a sum of money placed into a bank account.
– money available to spend.
– money available to borrow.
The reason why individuals see debits and credits in the above manner, is that the bank statement presented by the bank to the customer is the bank’s view of the account. The bank views money in a chequing account as money the bank owes to the customer, i.e. a liability, and in the rules of accounting, an increase to a liability account is a credit.
i.e. The credit in non-accounting sense means that now bank owes more
money to customer that is the increase in liability.
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solved In accounting we know debit what comes in and credit what goes out [closed]