Debits and Credits

Difficulty level: Beginner

Approx reading time:

Number 1 WorldWide


So far we have talked about the accounting equation and how a change in one account, will cause a change in another account in order to balance the equation.


Now, in this unit, we move to the official terminology for the increases and decreases to the accounting equation.


Debits and credits

Read history of debits and credits (Click here)

Do not confuse debits and credits with the way it is defined in normal English. You have to understand debits and credits specifically the way it is used in accounting.

Debits and credits are terminologies we use to classify the corresponding increases and decreases in accounts in the accounting equation (such as we learned in the previous unit).

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