What Debit means and the difference with credit

Some of us must be familiar with the terms credit and debit. Credit and debit are terms that we use quite often in real life to carry out transactions. But, some people still don’t understand about debit and credit.

In general, debit is the activity of withdrawing cash from savings for certain needs. While credit is a payment system in debt or installments.

The words debit and credit are also widely used in accounting and can be used to make financial statements. So, what is the meaning of debit and credit in the accounting world? Find the answer by reading the article below to the end.


1 Definition of Debit and Credit
1.1 Pengertian Debit
1.2 Definition of Credit
2 Differences between Debit and Credit
3 Proper Use of Debits and Credits in Accounting
3.1 1. Asset
3.2 2. Load
3.3 3. Liabilities and Equity
3.4 4. Accumulation
4 Cover

Definition of Debit and Credit

Definition of Debit

In the realm of accounting, debit is a decrease or increase in money contained in a savings account. Often debit is abbreviated as DR which is one of the terms in Latin, namely debate , which means the opposite of credit.

A debit is an account or code and asset whose value can increase when debited. While equity, liabilities, and income will be reduced when debited. Debit also has the meaning of a record in the bookkeeping in the reduction of deposits found in bank accounts.

For example, the bank debits your savings account by reducing a certain amount of funds to make certain transactions. Or, the insurance company debits the account from savings in order to pay for the insurance policy.

Based on the explanation above, the debit card is able to give authority to the bank to be able to take a certain amount of money from the customer’s account electronically for payment needs or certain transactions.

Another example of debit, let’s say there is a bag store that sells bags for 20 million rupees, then they want to debit the account from the store’s cash as much as 20 million rupees and credit the bag supplies or inventory as much as 20 million rupees.

That means, the company currently has 20 million rupees more in cash or cash, and has 20 million rupees less in the form of stock bags.

The use of debit also has certain advantages, such as:

1. Debit cards are perfect for customers who have sufficient funds and need a loan in the short term.
2. It’s easier to use when you need cash at any time.

Credit Definition

In general, credit is a person’s ability to carry out borrowing or purchasing activities through certain agreements, where payments can be made at a predetermined time.

Many people think that credit cards are safer than debit cards. But if you use it too much, credit cards can also increase your chances of getting into big debt.

In addition, credit also has the meaning of trust, which means that if a person or business entity has obtained a credit facility, it means that he or she has gained full trust from the creditor.

In the realm of accounting, it is also known as a debit note, which is a document containing detailed information regarding the increase in the company’s receivables. In addition, debit notes can also be used to reduce the amount of debt in a company to suppliers.

There is also the term credit note, which means a document related to information about debt to customers that continues to increase for some reason. Unlike debit notes, credit notes can be used to reduce the amount of debt the company has to suppliers or vendors.

Difference between Debit and Credit

In every transaction in accounting, at least these two accounts will have an effect or will be affected. The two accounts are debit and credit accounts.

Both transactions will be recorded in one debit account and one credit account. In it there is no limit on the number of accounts recorded in each transaction, but there will be no less than two accounts.

The total transactions that can be recorded in credit and debit accounts for each transaction activity must also be the same and in accordance with one another, so that the transaction value can be assessed as balanced. If there are transactions that are not balanced, it will have an impact on the financial statements that will later be made.

Therefore, the use of credits and debits is important in the two-column transaction recording format. Well, the difference between debit and credit that you must understand is as follows:

1. Debit is the column on the left side of the general ledger account, while credit is on the right side of the general ledger account. in the beneficiary’s account will be recorded in the debit account, while the giver will be in the credit account.
2. All incoming financial transactions will be entered in a debit account on the balance sheet. Meanwhile, any outgoing transactions will be recorded in the credit account.
3. In the profit and loss statement, all expenses, as well as losses, will be recorded in credit, while income will be written in credit.
4. The increase in debits is due to an increase in cash, machinery, inventory, land, equipment, buildings, insurance, and so on, while an increase in credit can be caused by an increase in shareholder funds, retained earnings, costs, bank loans, debt, and so on.

Based on the explanation above, we can conclude together that the difference between credit and debit is as follows:

1. Generally, credit is used to record an increase in an amount of money, while a debit is used to record a decrease in funds.
2. We can interpret that debit is saving in the bank, while credit is issuing or borrowing some money from the bank.
3. Debit is a bookkeeping record relating to a reduction in a number of deposits.

Proper Use of Debits and Credits in Accounting

In order to better understand the difference between debit and credit, below will explain the use of both in accounting, complete with account names for using credit and debit in accounting.

1. Asset

The first account to use credit and debit is an asset. Assets or commonly known as assets are grouped into two, namely fixed assets and current assets.

Current assets are assets or assets that are easiest to liquidate or have liquid form. Some of the liquid accounts in current assets include machinery, cash, vehicles and office equipment, and trade receivables.

So when an asset increases, its position will be on a debit, while if it decreases it will be on a credit.

2. Load

Expenses are expenses that must be made so that the business can continue to move. Expenses will also increase when debited and decrease when credited.

3. Liabilities and Equity

We can also see the difference between debits and credits in accounts payable and equity. For example, a company borrows a number of funds from the bank as much as Rs. 100,000,000, – for the initial capital needs of its business. So in the journal, we can know that cash will increase by Rs. 100,000,000, – generated from bank loans.

4. Accumulation

The last account related to the difference between credits and debits is part of non-current assets, money can increase in value when credited, namely accumulation. The accumulation in the balance sheet will reduce the value of fixed assets, such as computers, laptops, and vehicles.

By recording the accumulation of vehicles and various tools, it will help in assessing the asset if it experiences a loss or profit when later you want to resell it.

In credit or debit transaction activities, the two cannot be separated because they will always be related. Although the differences in them are very prominent, the two will always be related in every transaction activity that will be carried out, financial management of a business is not only managing finances.

The related knowledge, as well as the differences between debit and credit accounts, is very important for the continuity of your business.


This is our explanation of the meaning of credit and debit, and the differences between them in the world of accounting and in the banking world. Managing these two accounts so that they can be balanced is very important to produce precise and accurate financial reports.

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