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Meaning of Debit is adding an amount of cash or fund into the expenses or assets accounts and subtracting from the owner’s equity, liabilities or income accounts. ‘Debit’ word comes from the Latin word debate which means to owe. The word Debit is also abbreviated as “Dr.” It is always operated opposite to the Credit. It is always shown on the left side of the ledger accounts.
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Debit balance is also known as a positive balance and credit balance as a negative balance.
Affect of Debit on accounts: –
The Debit, affect the accounts as per their type or nature. These are two types shown below: –
- The Increase in Balance
- The Decrease in Balance
1. The increase in Balance: –
The balance of all type of assets and expenses account will be increased by the debit amount. Like if Cash a/c has a balance of 5,000/-, Suppose if company/firm received cash of 1,000, then it will be debit the cash account, So the balance of cash account will be 6,000/-.
| The Debit balance of Cash Account | 5,000 |
| Add: – Amount of Debit | 1,000 |
| Total Balance (Plus: Plus = Plus) | 6,000 |
“Note: – All accounts which have a debit balance, treated as asset or expenses account in the accounting system.”
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2. The decrease in Balance: –
The balance of all type of liabilities(owner’s equity) and income account will be decreased by the debit amount. Like if Bank Loan a/c has a balance of 5,000/-, Suppose if company/firm paid EMI of 1,000, then it will be debit the Bank loan account, So the balance of Bank Loan account will be 4,000/-. It is explained as follows: –
| The Credit balance of Bank Loan Account | – 5,000 |
| Add: – Amount of Debit | 1,000 |
| Total Balance(Minus: Plus = Minus) | 4,000 |
“Note: – All accounts which have a Credit balance, treated as Liabilities(Plus owner’s equity) or income account in the accounting system.”
What is Debit Balance: –
If the debit side of an account exceeds the credit side, the account is said to have a “debit balance” to the extent of such difference which is put on the credit side of the account in order to make the totals of the two sides equal and against this amount, the words “By balance C/d” (C/d means carried down) is written in the particulars column. This balance is brought down on the debit side while opening the account for the next period and the words “To balance B/d” (B/d Means Brought down) is written in the particulars column.
What is Debit Note: –
The Debit Note is the document issued by the buyer to the Seller of goods against the return of goods which he had purchased from him. It is also a document which consists of information of debited amount, reasons for Debit, Invoice number & date and description of goods.