Debits are all entries that increase assets in a company. In the arena of accounting, there are two main primary terms which are used for journal entries, and these are debit and credit. Both of these terms are a result of the double entry system that companies use on a daily basis for their accounts.
Definition:
According to the Oxford Dictionary, the term "debit” originates from the Latin word "debitum” meaning "which is owing.”
Effects:
In the accounting entries, all debit amounts increase the company’s assets, whilst on the other hand decreasing its liabilities. In easier terms "debit” means that which is received by the company and this may be in the form of sales, or people paying up their debts. It is basically all goods and cash received by the company.
Features:
In the ledger accounts, debit entries are placed on the left hand side. They are listed initially in their journal entries before being posted to the offsetting credit accounts.
Misconceptions:
A number of professionals in the accounting field often make inappropriate abbreviations when dealing with the debit entry. The abbreviation for debit is "Dr” standing for debtor and not "Db”.
Expert Insight:
Generally Accepted Accounting Principles (GAAP) is the main body that provides the guidelines as to the proper usage of debits in accounting. This body is the sole authorizer in the U.S for all accounting and other related principles.
Knowledge of debit is necessary to all those seeking knowledge in the vast arena of accounting, as well as business management.
Definition:
According to the Oxford Dictionary, the term "debit” originates from the Latin word "debitum” meaning "which is owing.”
Effects:
In the accounting entries, all debit amounts increase the company’s assets, whilst on the other hand decreasing its liabilities. In easier terms "debit” means that which is received by the company and this may be in the form of sales, or people paying up their debts. It is basically all goods and cash received by the company.
Features:
In the ledger accounts, debit entries are placed on the left hand side. They are listed initially in their journal entries before being posted to the offsetting credit accounts.
Misconceptions:
A number of professionals in the accounting field often make inappropriate abbreviations when dealing with the debit entry. The abbreviation for debit is "Dr” standing for debtor and not "Db”.
Expert Insight:
Generally Accepted Accounting Principles (GAAP) is the main body that provides the guidelines as to the proper usage of debits in accounting. This body is the sole authorizer in the U.S for all accounting and other related principles.
Knowledge of debit is necessary to all those seeking knowledge in the vast arena of accounting, as well as business management.
