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Bookkeeping Glossary

What are Debits and Credits?

The two sides of every bookkeeping entry — left and right, not good and bad.

The plain-English definition

Debits and credits are the two sides of every bookkeeping entry — historically just 'left' and 'right.' They are not good and bad, or in and out. What a debit or credit does depends entirely on the type of account it touches.

The pattern to memorize: debits increase assets and expenses; credits increase liabilities, equity, and income. (Each also decreases the opposite group.) Every transaction posts equal debits and credits — that's double-entry bookkeeping, and it's why the books can be checked for balance at any moment.

A concrete example

You pay $800 rent: debit Rent Expense $800 (expense up), credit Cash $800 (asset down). You invoice a client $500: debit Accounts Receivable $500 (asset up), credit Revenue $500 (income up). Two entries, both balanced.

Related terms

Double-Entry Bookkeeping · Journal Entry · Chart of Accounts — or browse the full plain-English glossary.

Make it stick

Reading a definition is the easy part — the Daily Challenge (ten questions a day, free, no signup) is how terms like this become reflexes. Going for certification? Start with the free ProAdvisor readiness check.

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