An accounting entry that results in either an increase in assets or a decrease in liabilities on a company's balance sheet or in your bank account. A debit on an accounting entry will have opposite effects on the balance depending on whether it is done to assets or liabilities, with a debit to assets indicating an increase and vice versa for liabilities.


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In fundamental accounting, debits are balanced by credits, which operate in the exact opposite direction. When a debit is made to one account of a financial statement, a corresponding credit must occur on an opposing account. This is the fundamental law of bookkeeping accounting. For instance, if a firm were to take a loan to purchase equipment, one would debit fixed assets and credit a liabilities account, depending on the nature of the loan.

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  2. Missent Item

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  3. Credit

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  4. Asset

    1. A resource with economic value that an individual, corporation ...
  5. Account Activity

    A banking term that refers to any activity that creates a debit ...
  6. Accounting

    The systematic and comprehensive recording of financial transactions ...
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  1. What happens when my bank account is debited?

    When your bank account is debited, it means money is taken out of the account. The opposite of a debit is a credit, in which ... Read Full Answer >>
  2. What's the difference between a cash account and a margin account?

    The main difference between a cash account and a margin account is that in a cash account all transactions must be made with ... Read Full Answer >>
  3. Does working capital include prepaid expenses?

    The calculation for working capital includes any prepaid expenses that are due within one year, since such prepaid expenses ... Read Full Answer >>
  4. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  5. Does working capital include short-term debt?

    Short-term debt is considered part of a company's current liabilities and is included in the calculation of working capital. ... Read Full Answer >>
  6. Do dividends affect working capital?

    Regardless of whether cash dividends are paid or accrued, a company's working capital is reduced. When cash dividends are ... Read Full Answer >>

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