Understanding Debit and Credit in Accounting: Key Differences

A debit is an entry on the left side of an account, and a credit is an entry on the right side. Neither one means good or bad, and neither one means increase or decrease on its own: whether a debit raises or lowers an account depends on the account type. Assets and expenses go up with debits; liabilities, equity and revenue go up with credits. The side that increases an account is its normal balance.

Billed publishes this page. Definitions and rules are quoted from the open textbook Principles of Accounting, Volume 1 (OpenStax), sections 3.2 and 3.5 and the chapter 3 key terms, opened on October 30, 2026. For how a full entry is written, see what is a journal entry, and for how the system keeps the equation in balance, double-entry bookkeeping.

The two sides

OpenStax defines a debit as an entry that "records financial information on the left side of each account" and a credit as one that "records financial information on the right side of an account".

The side that increases an account is its normal balance: OpenStax defines a normal balance as the "expected balance each account type maintains, which is the side that increases".

Which side increases each account type

Each line below is OpenStax's own example sentence from section 3.5:

• Assets (normal balance: debit). "Assets increase on the debit side". Going down: "Cash is an asset that decreases on the credit side."
• Liabilities (normal balance: credit). "Liabilities increase on the credit side". Going down: "Liabilities decrease on the debit side".
• Equity (normal balance: credit). For stock issued to owners: "Common Stock increases on the credit side."
• Revenue (normal balance: credit). "Service Revenue increases equity; therefore, Service Revenue increases on the credit side."
• Expenses (normal balance: debit). "Expenses increase on the debit side".

A short way to hold it: assets and expenses are debit accounts; liabilities, equity and revenue are credit accounts. Revenue and expenses sit inside equity, which is why revenue behaves like equity and expenses work the other way.

Contra and abnormal balances

A contra account runs against its category. OpenStax defines a contra account as an "account that has a normal balance opposite of normal balance for the broad category to which the account belongs". Its example is dividends: "The normal balance for the equity category is a credit balance whereas the normal balance for dividends is a debit balance resulting in dividends reducing total equity."

An abnormal balance is different: OpenStax defines it as an "account balance that is contrary to the expected normal balance of that account". A cash account with a credit balance, for example, is worth checking.

Sample: two entries and the balances they leave

The business and figures here are a sample, invented for this example.

A designer buys $450.00 of supplies on credit, then pays $200.00 of the bill.

Entry 1: buying supplies on credit

• Debit Supplies (asset, increases on the debit side): $450.00
• Credit Accounts Payable (liability, increases on the credit side): $450.00

Entry 2: paying part of the bill

• Debit Accounts Payable (liability, decreases on the debit side): $200.00
• Credit Cash (asset, decreases on the credit side): $200.00

Totals: debits $450.00 + $200.00 = $650.00; credits $450.00 + $200.00 = $650.00. They're equal.

Balances left:

• Supplies: $450.00 debit, its normal side.
• Accounts Payable: $450.00 credit − $200.00 debit = $250.00 credit, its normal side, the amount still owed.
• Cash: down $200.00, from a $200.00 credit entry.

Where Billed fits

Billed's financial reporting page says: "All reports in Billed can be exported for use with your accountant, bookkeeper, or tax software." For organizing accounts before you post entries, see what is a chart of accounts and what is a general ledger. For the wider field, see the different types of accounting.

Related Articles

• What Is a Journal Entry?
• What Is Double-Entry Bookkeeping?
• What Is a Chart of Accounts?
• What Is a General Ledger?

Frequently Asked Questions

What is the difference between a debit and a credit?

A debit is recorded on the left side of an account and a credit on the right. Whether each one increases or decreases the account depends on the account type.

Does a debit mean an increase?

No. Debits increase asset and expense accounts and decrease liability, equity and revenue accounts. Credits do the opposite.

What is a normal balance?

OpenStax defines it as the "expected balance each account type maintains, which is the side that increases". Assets and expenses have debit normal balances; liabilities, equity and revenue have credit normal balances.

What is a contra account?

An account with a normal balance opposite to its category's. OpenStax's example is dividends, which have a debit normal balance and reduce total equity, whose normal balance is a credit.