Debit and Credit terms in Accounting
Debit & credit words are formal bookkeeping & accounting terms. They are the most fundamental concepts in accounting software and bookkeeping applications that representing the two sides of each individual transaction recorded in any accounting system and accounting application.
A debit transaction indicates an asset or an expense transaction, a credit indicates a transaction that will cause a liability or a gain. A debit transaction can also be used to reduce a credit balance or increase a debit balance.
Example of Debit & Credit in journal entry
Please look at a sample journal entry in Iticale accounting software as below:
in this journal entry, Jack should pay 1200 $ for rent, then we put this money in column debit for his account and in credit column for income account (Property rents).
Note: here Jack didn’t pay the rent yet.
A credit transaction can be used to decrease a debit balance or increase a credit balance.