Debit - Definition & Advantages of Debit | What is Debit?

Debit refers to a financial entry that increases assets and decreases liabilities or equity in accounting. It's sometimes called "dr," standing for "debtor." 

Overview

1. A debit entry reduces obligations or increases assets.

2. Debits are recorded on the left side of the ledger and must be balanced by credits on the right.

3. Positive values of assets and expenses are on the debit side, and negative values are on the credit side.

4. The left side of an account shows the debit.

5. In a standard journal entry, credits appear below debits.

6. Debits increase assets and decrease liabilities.

7. In a double-entry system, all debits are balanced by credits.

8. For example, if a business lends equipment, it debits the fixed asset and credits the liability account.

Debit vs Credit

Debits represent money leaving an account, while credits represent money entering it. Debits are on the left and credits on the right in T-accounts. They must balance in the trial balance and adjusted trial balance. 

A dangling debit is a debt that can't be written off due to a lack of credit balance. It indicates balance sheet disparities. 

Debit Principles

1. For personal accounts, debit the receiver and credit the giver.

2. In real accounts, debit what comes in and credit what goes out.

3. For nominal accounts, debit losses and expenses and credit profits and income.

Every debit entry must equal every credit entry to ensure trial balance. The total debit side must match the total credit side. 

Debit notes show that a business made a valid debit entry in a B2B transaction. 

Market Margin refers to investors borrowing money from their brokerage to buy more shares than they could with their own money alone.