Debit vs. Credit: Know the Difference
By Shumaila Saeed || Updated on December 25, 2023
Debit refers to an entry recording an amount owed, typically on the left side of an account, while credit records an amount that has been received, typically on the right side.
Key Differences
Debit is an accounting entry that either increases an asset or expense account or decreases a liability or equity account. Credit is an entry that does the opposite, increasing liability, equity, or revenue accounts, or decreasing an asset or expense account. This paragraph outlines the fundamental accounting principles governing debits and credits.
Shumaila Saeed
Nov 17, 2023
In banking, a debit transaction withdraws funds from an account, such as when making a purchase with a debit card. A credit transaction involves depositing funds or increasing the account balance, such as receiving a payment. This highlights the practical application in everyday banking.
Shumaila Saeed
Nov 17, 2023
When recording financial transactions, debit entries are made on the left side of an accounting ledger. Credit entries are recorded on the right side, maintaining the balance of the accounting equation. This emphasizes the visual representation of debits and credits in bookkeeping.
Shumaila Saeed
Nov 17, 2023
In personal finance, a debit is often seen as a subtraction from one’s bank account, for example, paying a bill. A Credit is viewed as an addition, such as a salary deposit. This paragraph reflects the common perception of debits and credits in personal banking.
Shumaila Saeed
Nov 17, 2023
Debit cards allow bank customers to spend money by drawing on funds they already have. Credit cards offer a line of credit that the cardholder can borrow against, subject to repayment with interest. This shows the difference in how debit and credit cards function in consumer finance.
Shumaila Saeed
Nov 17, 2023
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Comparison Chart
Accounting Impact
Increases assets/expenses, decreases liabilities/equity
Increases liabilities/equity/revenue, decreases assets/expenses
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Nov 17, 2023
Banking Transaction
Withdraws funds from an account
Deposits funds or increases account balance
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Nov 17, 2023
Personal Finance Perception
Seen as a subtraction from an account
Viewed as an addition to an account
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Nov 17, 2023
Card Type
Uses funds available in one's account
Offers a line of credit to borrow against
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Nov 17, 2023
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Debit and Credit Definitions
Debit
Debit is an accounting entry that increases an asset or expense account.
Debiting the cash account reflects an increase in cash holdings.
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Nov 16, 2023
Credit
Credit refers to a bank transaction that increases the balance of an account.
Salary was credited to the employee’s account.
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Nov 16, 2023
Debit
Debit refers to a bank transaction that reduces the balance of an account.
A debit from a checking account was made for rent payment.
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Nov 16, 2023
Credit
Credit is the right side entry in double-entry bookkeeping.
Crediting accounts payable records an obligation to pay a supplier.
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Nov 16, 2023
Debit
Debit in banking is using funds directly from a bank account.
A debit card was used to buy groceries, reducing the account balance.
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Nov 16, 2023
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Credit
An arrangement for deferred payment of a loan or purchase
A store that offers credit.
Bought my stereo on credit.
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Oct 19, 2023
Debit
Debit is the left side entry in double-entry bookkeeping.
Debiting equipment expense records the purchase of new machinery.
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Nov 16, 2023
Credit
The time allowed for deferred payment
An automatic 30-day credit on all orders.
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Oct 19, 2023
Debit
The left-hand side of an account or accounting ledger where bookkeeping entries are made.
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Oct 19, 2023
Debit
To enter (a sum) on the left-hand side of an account or accounting ledger.
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Oct 19, 2023
Credit
Reputation for solvency and integrity entitling a person to be trusted in buying or borrowing
You should have no trouble getting the loan if your credit is good.
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Oct 19, 2023
Debit
To charge with a debit
If you use an ATM, the bank will debit your account immediately.
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Oct 19, 2023
Credit
Official certification or recognition that a student has successfully completed a course of study
He received full credit for his studies at a previous school.
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Oct 19, 2023
Debit
In bookkeeping, an entry in the left hand column of an account.
A cash sale is recorded as debit on the cash account and as credit on the sales account.
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Oct 19, 2023
Debit
A sum of money taken out of a bank account. Thus called, because in bank's bookkeeping a cash withdrawal diminishes the amount of money held on the account, i.e. bank's debt to the customer.
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Oct 19, 2023
Credit
Often credits An acknowledgment of work done, as in the production of a motion picture or publication
At the end of the film we stayed to watch the credits.
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Oct 19, 2023
Credit
Influence based on the good opinion or confidence of others
Used his credit with the police to get them to devote more time to the case.
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Oct 19, 2023
Debit
To record a receivable in the bookkeeping.
We shall debit your account for the amount of the purchase.
We shall debit the amount of your purchase to your account.
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Oct 19, 2023
Credit
Recognition or approval for an act, ability, or quality
Gave them credit for a job well done.
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Oct 19, 2023
Credit
A source of honor or distinction
This exceptional athlete is a credit to our team.
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Oct 19, 2023
Debit
Of or relating to the debit card function of a debit card rather than its often available credit card function en
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Oct 19, 2023
Credit
A reputation for sound character or quality; standing
It is to their credit that they worked so hard without complaining.
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Oct 19, 2023
Debit
A debt; an entry on the debtor (Dr.) side of an account; - mostly used adjectively; as, the debit side of an account.
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Oct 19, 2023
Credit
Belief or confidence in the truth of something
"They give no credit to [his] scurrilous assertions" (John Edgar Wideman).
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Oct 19, 2023
Debit
To charge with debt; - the opposite of, and correlative to, credit; as, to debit a purchaser for the goods sold.
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Oct 19, 2023
Debit
To enter on the debtor (Dr.) side of an account; as, to debit the amount of goods sold.
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Oct 19, 2023
Credit
To regard as having performed an action or being endowed with a quality
Had to credit them with good intentions.
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Oct 19, 2023
Debit
Debit is an entry that signifies a decrease in liabilities or equity.
Debiting a loan account represents a repayment of the borrowed amount.
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Nov 16, 2023
Credit
To ascribe or attribute
Credit the invention to him.
Credited her recovery to an innovative treatment.
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Oct 19, 2023
Credit
(transitive) To believe; to put credence in. British usage?
Someone said there were over 100,000 people there, but I can't credit that.
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Oct 19, 2023
Credit
To add to an account.
Credit accounts receivable with the amount of the invoice.
For the payroll period credit employees' tips to their wages paid account and debit their minimum wage payable account.
The full amount of the purchase has been credited to your account.
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Oct 19, 2023
Credit
(transitive) To acknowledge the contribution of.
I credit the town council with restoring the shopping district.
Credit the point guard with another assist.
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Oct 19, 2023
Credit
(transitive) To bring honour or repute upon; to do credit to; to raise the estimation of.
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Oct 19, 2023
Credit
(uncountable) Recognition, respect and admiration.
I give you credit for owning up to your mistake.
He arrived five minutes late, but to his credit he did work an extra ten minutes at the end of his shift.
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Oct 19, 2023
Credit
(countable) Acknowledgement of a contribution, especially in the performing arts.
She received a singing credit in last year's operetta.
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Oct 19, 2023
Credit
Written titles and other information about the TV program or movie shown at the beginning and/or end of the TV program or movie.
They kissed, and then the credits rolled.
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Oct 19, 2023
Credit
A privilege of delayed payment extended to a buyer or borrower on the seller's or lender's belief that what is given will be repaid.
In view of your payment record, we are happy to extend further credit to you.
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Oct 19, 2023
Credit
The time given for payment for something sold on trust.
A long credit or a short credit
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Oct 19, 2023
Credit
A person's credit rating or creditworthiness, as represented by their history of borrowing and repayment (or non payment).
What do you mean my credit is no good?
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Oct 19, 2023
Credit
(accounting) An addition to certain accounts; the side of an account on which payments received are entered.
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Oct 19, 2023
Credit
(tax accounting) A reduction in taxes owed, or a refund for excess taxes paid.
Didn't you know that the IRS will refund any excess payroll taxes that you paid if you use the 45(B) general business credit?
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Oct 19, 2023
Credit
A source of value, distinction or honour.
That engineer is a credit to the team.
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Oct 19, 2023
Credit
(science fiction) A unit of currency used in a fictional universe or timeframe.
To repair your star cruiser will cost 100,000 credits.
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Oct 19, 2023
Credit
A nominal unit of value assigned outside of a currency system.
Would you like to play? I put in a dollar and I've got two credits left.
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Oct 19, 2023
Credit
(uncountable) Recognition for having taken a course (class).
If you do not come to class, you will not get credit for the class, regardless of how well you do on the final.
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Oct 19, 2023
Credit
(countable) A course credit, a credit hour – used as measure if enough courses have been taken for graduation.
Dude, I just need 3 more credits to graduate – I can take socio-linguistics of Swahili if I want.
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Oct 19, 2023
Credit
Reliance on the truth of something said or done; belief; faith; trust; confidence.
When Jonathan and the people heard these words they gave no credit unto them, nor received them.
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Oct 19, 2023
Credit
Reputation derived from the confidence of others; esteem; honor; good name; estimation.
John Gilpin was a citizenOf credit and renown.
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Oct 19, 2023
Credit
A ground of, or title to, belief or confidence; authority derived from character or reputation.
The things which we properly believe, be only such as are received on the credit of divine testimony.
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Oct 19, 2023
Credit
That which tends to procure, or add to, reputation or esteem; an honor.
I published, because I was told I might please such as it was a credit to please.
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Oct 19, 2023
Credit
Influence derived from the good opinion, confidence, or favor of others; interest.
Having credit enough with his master to provide for his own interest.
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Oct 19, 2023
Credit
Trust given or received; expectation of future playment for property transferred, or of fulfillment or promises given; mercantile reputation entitling one to be trusted; - applied to individuals, corporations, communities, or nations; as, to buy goods on credit.
Credit is nothing but the expectation of money, within some limited time.
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Oct 19, 2023
Credit
The time given for payment for lands or goods sold on trust; as, a long credit or a short credit.
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Oct 19, 2023
Credit
The side of an account on which are entered all items reckoned as values received from the party or the category named at the head of the account; also, any one, or the sum, of these items; - the opposite of debit; as, this sum is carried to one's credit, and that to his debit; A has several credits on the books of B.
He touched the dead corpse of Public Credit, and it sprung upon its feet.
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Oct 19, 2023
Credit
To confide in the truth of; to give credence to; to put trust in; to believe.
How shall they creditA poor unlearned virgin?
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Oct 19, 2023
Credit
To bring honor or repute upon; to do credit to; to raise the estimation of.
You credit the church as much by your government as you did the school formerly by your wit.
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Oct 19, 2023
Credit
To enter upon the credit side of an account; to give credit for; as, to credit the amount paid; to set to the credit of; as, to credit a man with the interest paid on a bond.
Crove, Helmholtz, and Meyer, are more than any others to be credited with the clear enunciation of this doctrine.
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Oct 19, 2023
Credit
Approval;
Give her recognition for trying
He was given credit for his work
Give her credit for trying
The credits were given at the end of the film
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Oct 19, 2023
Credit
Used in the phrase `to your credit' in order to indicate an achievement deserving praise;
She already had several performances to her credit
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Oct 19, 2023
Credit
Recognition by a college or university that a course of studies has been successfully completed; typically measured in semester hours
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Oct 19, 2023
Credit
A short note recognizing a source of information or of a quoted passage;
The student's essay failed to list several important citations
The acknowledgments are usually printed at the front of a book
The article includes mention of similar clinical cases
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Oct 19, 2023
Credit
An entry on a list of persons who contributed to a film or written work
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Oct 19, 2023
Credit
Give someone credit for something;
We credited her for saving our jobs
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Oct 19, 2023
Credit
Credit is an accounting entry that increases a liability, equity, or revenue account.
Crediting sales revenue reflects income from sales transactions.
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Nov 16, 2023
Credit
Credit in banking is receiving funds or having a balance increase.
Interest earned was credited to the savings account.
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Nov 16, 2023
Credit
Credit is an entry that signifies an increase in assets or decrease in expenses.
Crediting an asset account indicates the return of a deposit.
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Nov 16, 2023
Repeatedly Asked Queries
How do debits and credits affect a bank account?
Debits decrease the balance of a bank account, while credits increase it.
Shumaila Saeed
Nov 17, 2023
Are debits always positive?
In accounting, debits are not inherently positive or negative; their effect depends on the type of account.
Shumaila Saeed
Nov 17, 2023
What is a debit in accounting?
A debit is an entry that increases an asset or expense account or decreases a liability or equity account.
Shumaila Saeed
Nov 17, 2023
What is a credit in accounting?
A credit is an entry that increases a liability, equity, or revenue account or decreases an asset or expense account.
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Nov 17, 2023
What is the role of debits and credits in double-entry bookkeeping?
They ensure every transaction is recorded in two accounts, maintaining the accounting equation's balance.
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Nov 17, 2023
Do debits and credits always equal each other?
In a correctly balanced ledger, the total debits and credits must equal.
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Nov 17, 2023
How do debit cards work?
Debit cards allow spending by drawing directly from a linked bank account.
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Nov 17, 2023
How do credit cards work?
Credit cards provide access to a line of credit, which users can borrow against.
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Nov 17, 2023
Can a single transaction involve both a debit and a credit?
Yes, in double-entry accounting, every transaction involves both a debit and a credit.
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Nov 17, 2023
What happens when you credit an expense account?
Crediting an expense account decreases its balance, indicating less expense.
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Nov 17, 2023
Are credits always negative?
Credits are not always negative; their impact varies based on the account type.
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Nov 17, 2023
Why are debits recorded on the left?
This is a convention in double-entry bookkeeping for organizational clarity.
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Nov 17, 2023
Why are credits recorded on the right?
It's a standard bookkeeping practice to distinguish from debits.
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Nov 17, 2023
How does a credit memo affect an account?
A credit memo decreases the balance of the account it is applied to.
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Nov 17, 2023
What is a debit balance?
A debit balance is the excess of debits over credits in an account.
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Nov 17, 2023
What is a credit balance?
A credit balance is the excess of credits over debits in an account.
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Nov 17, 2023
Can a credit indicate a good financial situation?
It might, particularly in revenue accounts, but context is key.
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Nov 17, 2023
What happens when you debit a revenue account?
Debiting a revenue account decreases its balance, reflecting a reduction in income.
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Nov 17, 2023
How does a debit memo affect an account?
A debit memo increases the balance of the account it is applied to.
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Nov 17, 2023
Can a debit indicate a bad financial situation?
Not necessarily; it depends on the context and the account type.
Shumaila Saeed
Nov 17, 2023
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About Author
Written by
Shumaila SaeedShumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.
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