Accounting 101 Debits & Credits

13 06 2013

Debits and credits are two terms that are the backbone of understanding basic accounting concepts. After grasping the concept of these two terms, an individual can then move on to understanding basic accounting concepts. Learn the progression from posting business financial transactions, to reporting profits and owner’s equity.

Accounting 101 – Debits and Credits

Financial business transactions are posted with debits and credits. The total dollar amount of debits must be equal to the total dollar amount of credits. If they do not equal, the transaction will be out of balance. Debits and credit represent an increase or decrease, depending on the financial account category.Understanding debits and credits is essential to grasping the concepts of accounting.

  • Asset – debit increase, credit decrease
  • Liability – debit decrease, credit increase
  • Revenue – debit decrease, credit increase
  • Expense – debit increase, credit decrease
  • Equity – debit decrease, credit increase



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