DEFINITION of 'Bank Debits'

A bookkeeping term for realization of the reduction of deposits held by bank customers. Bank debits can be the result of check payments, honored drafts or a withdrawal of funds from an account. Economists also use bank debit statistics to forecast national economic trends, including the transactions demand for cash.

BREAKING DOWN 'Bank Debits'

On a bank's balance sheet, deposits are liabilities: they represent a source of capital and obligations to the customer. As a liability, deposits has a credit balance. In contrast, the cash deposits supply to the bank are assets, which have debit balances.

When a check is paid, the bank's obligation to the customer becomes smaller, since fewer funds are supplied to the bank. The liability that deposits represent is reduced through a debit for the amount of the check. At the same time, the bank's cash is smaller as well, and so the assets of the bank are reduced through a credit.

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RELATED FAQS
  1. How do you calculate credits and debits in the general ledger?

    Know the key points when balancing a ledger and why it's essential to understand the relationship between credits and debits ... Read Answer >>
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    Understand the process that takes place when your account is debited. A debit to your account happens when you use funds ... Read Answer >>
  3. What are some examples of debit notes in business-to-business transactions?

    Review some examples of debit notes in business-to-business transactions and learn why debit notes would be used instead ... Read Answer >>
  4. Who uses debit notes in business transactions?

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