Debt and Credit

Debit and credit are formal accounting and bookkeeping terms. They are the most basic concepts in accounting, showing the two sides of each person business or transaction recorded in any accounting system. A debit transaction shows an expense or an asset transaction, whereas a credit shows a transaction which will cause a gain or a liability. A debit transaction could also be used to increase a debit balance or lessen a credit balance. A credit transaction could be used to increase a credit balance or decrease a debit balance.

Debits and credits are a method of notation used in the accounting in order to both keep track of the transactions (flow of money) into and out of an account, and to specify the kind of account. Usually, an account’s informations are written or recorded in two columns of numbers: credits in the right hand column and debits in the left hand column. Keeping the credits and debits in separate columns lets each to be summed and recorded independently.