DEBIT

An entry that results an increase or a decrease of assets or liabilities. 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 debt to assets indicating an increase and vice versa for liabilities. 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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