Placement

• In an accounting journal or ledger, debits are placed in the left column. Credits are placed in the right column.
  
  

Purpose

• Each transaction requires a debit to one account and a credit to another. This keeps the accounting equation (Assets = Liabilities + Equity) in balance.
  
  

Misconceptions

• Debits do not always increase an account. Credits do not always decrease an account. If depends on the function of the account and what type of entry is necessary to keep the accounting equation in balance.
  
  

Debits

• The following accounts are increased by a debit and decreased by a credit: assets, owner's withdrawal and expenses.
  
  

Credits

• The following accounts are increased by a credit and decreased by a debit: liability, owner's capital and revenue.