There are a few theories on the origin of the abbreviations used for debit (DR) and credit (CR) in accounting. In order to better understand these theories, it's important to take a look at how the use of debits and credits, and how the technique of double-entry accounting came to be.
A Franciscan monk by the name of Luca Pacioli developed the technique of double-entry accounting. He's now known as the "Father of Accounting" because the approach he devised became the basis of modern-day accounting. He warned that you should not end a work day until your debits equal your credits.
A Closer Look at Double-Entry Accounting
Let's review the basics of Pacioli's method of bookkeeping or double-entry accounting. On a balance sheet or in a ledger, assets equal liabilities plus shareholders' equity. An increase in the value of assets is a debit to the account, and a decrease is a credit. On the flip side, an increase in liabilities or shareholders' equity is a credit to the account, notated as "CR," and a decrease is a debit, notated as "DR." Using the double-entry method, bookkeepers enter each debit and credit in two places on a company's balance sheet.
For example, Company XYZ issues an invoice to Client A. The company's accountant records the invoice amount as a debit in the accounts receivables section of the balance sheet and records that same amount again as a credit in the revenue section. When Client A pays the invoice to Company XYZ, then the accountant records the amount as a credit in the accounts receivables section and a debit in the revenue section. Using this method is sometimes also known as "balancing the books."
A Closer Look at Debit (DR) and Credit (CR)
Having Latin roots, the term debit comes from the word debitum, meaning "what is due," and credit comes from creditum, defined as "something entrusted to another or a loan."
When you increase assets, the change in the account is a debit, because something must be due for that increase (the price of the asset). Conversely, an increase in liabilities is a credit because it signifies an amount that someone else has loaned to you and which you used to purchase something (the cause of the corresponding debit in the assets account).
The terms debit and credit signify actual accounting functions, both of which cause increases and decreases in accounts, depending on the type of account. That's why simply using "increase" and "decrease" to signify changes to accounts wouldn't work.
When it comes to the DR and CR abbreviations for debit and credit, a few theories exist. One theory asserts that the DR and CR come from the Latin past participles of debitum and creditum, which are debere and credere, respectively. Another theory is that DR stands for "debit record" and CR stands for "credit record." Finally, some believe the DR notation is short for "debtor" and CR is short for "creditor."