Glossary · Bookkeeping basics
Debits and credits (Dr / Cr)
Debits and credits are the two sides of every accounting entry. A debit is recorded on the left and a credit on the right. Debits increase assets and expenses and decrease liabilities, equity and income; credits do the opposite. In every transaction the total debits equal the total credits.
Glossary / Debits and credits · Also called debit, credit
How it works
The words do not mean good or bad. A credit on your bank statement means money in, because to the bank your deposit is money it owes you, a liability. In your own books, the same deposit is a debit to your bank account, an asset. That reversal confuses many people at first.
A simple way to remember it: assets and expenses have normal debit balances; liabilities, equity and income have normal credit balances. To increase an account, post to its normal side. To decrease it, post to the other side.
Worked example: Which side does it go on?
A business pays $1,800 rent from its bank account. Rent expense increases, so it is debited $1,800. The bank, an asset, decreases, so it is credited $1,800.
Later it invoices a customer $3,200. Accounts receivable, an asset, increases: debit $3,200. Sales income increases: credit $3,200. In both entries the two sides are equal.
| Account type | Increase with | Decrease with |
|---|---|---|
| Asset | Debit | Credit |
| Expense | Debit | Credit |
| Liability | Credit | Debit |
| Equity | Credit | Debit |
| Income | Credit | Debit |
In AcboBooks
You rarely type debits and credits in AcboBooks: invoices, bills and cheques choose the sides for you. The General Journal Entry form has a debit and a credit column for the entries you do make yourself, and reports such as the Trial Balance show each account's debit or credit balance.
Related terms
- Double-entry bookkeeping
- Journal entry (JE)
- Trial balance (TB)
- Chart of accounts (COA)
- General ledger (GL)
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Updated October 25, 2026. General information, not tax, legal or accounting advice. Rules and rates change; check with the IRS, the CRA, your state or province, or your accountant.
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