Debit and Credit- Meaning, Differences

Difference between Debit and Credit

Debit and Credit: –

The Debit and Credit are two aspects of the double entry system, which is invented by “Luca Pacioli” the father of bookkeeping. According to the double entry system, Every business transaction has impacted at least two accounts and which is recorded as the Debit one account and credit second account. Debit is shown on the left side of the accounts and Credit is shown on the right side of the account.

Debit Impact:-

In simple words, the Debit means adding some value into the something account. It means when we Debited the account of assets it means we adding some value into it.

Example: –

we have the debit balance of Furniture account of 10,000/-  When we have debited the account of assets or expenses, it shows the increase in these accounts and when we have debited the accounts of liabilities or capital, it shows the decrease in these accounts.

Credit Impact:-

When we have credited the account of assets or expenses, it shows the decrease in these accounts and when we have debited the accounts of liabilities or capital, it shows the Increase in these accounts.

Table presentation of the impact of Debit and Credit: –

 

Impact on accounts Debit  Credit 
Assets or Expenses Increase Decrease
Liabilities or Capital Decrease Increase

 

Meaning of Debit:-

In simple words, the Debit means adding(+) some value into the something account. It means when we Debited the account of assets it means we adding some value into it.

Example: –

we have the debit balance(+) of Furniture account of 10,000/- and we purchase new furniture worth 5,000/- according to rules of accounting(Tradition and Modern), we will debit(+) the account of furniture. Now the total of the furniture account become 15,000/-(10,000 + 5000)) {(Because Debit + Debit ( “+” + “+”)}.

Meaning of Credit:-

In simple words, the Credit means subtracting(-) some value into the something account. It means when we Credited the account of assets it means we subtracting(-) some value from it.

Example: –

we have the debit balance of Furniture account of 15,000/- and we Sold old furniture worth 5,000/- according to rules of accounting(Tradition and Modern), we will Credit the account of furniture. Now the total of the furniture account become 5,000/-(10,000+ (-5000)) {Because Debit + Credit ( “+” + “-“)}.

Presentation of Debit and Credit in journal and ledger: –

Now, We will show the presence of these aspects in the journal and ledger by shows format images of journal and ledger as follows: –

The format of Journal: –

The Format of Journal  - Debit and Credit- Meaning, Differences
The Format of Journal

The format of Ledger: –

The Format of Ledger  - Debit and Credit- Meaning, Differences
The Format of Ledger

Chart of Difference between Debit and Credit: –

Basis of Difference

Debit

Credit

Meaning
The Debit means adding(+) some value into the something account The Credit means subtracting(-) some value into the something account.
Side
The left side of the ledger account The right side of the ledger account.
Impact on Assets Increase Decrease
Impact on Liabilities  Decrease Increase
Impact on Expenses or losses Increase Decrease
Impact on Income or Gains Decrease Increase
Impact on capital Decrease Increase

If you want to Download the chart please download the following image and PDF file: –

Chart of Difference between Debit and Credit 300x204 - Debit and Credit- Meaning, Differences

application pdf - Debit and Credit- Meaning, Differences
Chart of Difference between Debit and Credit

 

 

 

Conclusion: –

The debit and credit both are the very important aspect of accounting. Both have an impact on each and every business transaction. Without the Debit and credit, we can not record the books of account.

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