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Meaning of Debit and Credit in accounts

Sanat Kumar (Manager Research) (38 Points)

27 April 2011

What is the meaning of Debit and Credit when we prepare accounts. Is there are special meaning attached to it and if yes what it is? Further how do we differentaite between liability and expense.

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Debit comes from the latin word debitum meaning "that which is owing" and credit comes from the latin word Credere meaning "to trust or belive".

In Accounting:

Debits represent increases in value of assets and expenses and decreases in income, liabilities and equity
Credits represent increases in liabilities, equity and income and decreases in assets and expenses

A liability is an obligation, or debt, reported on the balance sheet of the company. It may occur because the company bought a product or service that it has not yet paid, or because it borrowed money that it will repay later.

An expense is a cost of operating the company at some level. It could be material, labor and expenses. It could be taxes.

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Suresh Prasad (www.aubsp.com) (15630 Points)
Replied 27 April 2011

Originally posted by : vinnzz
	Debit comes from the latin word debitum meaning "that which is owing" and credit comes from the latin word Credere meaning "to trust or belive". In Accounting: Debits represent increases in value of assets and expenses and decreases in income, liabilities and equity Credits represent increases in liabilities, equity and income and decreases in assets and expenses A liability is an obligation, or debt, reported on the balance sheet of the company. It may occur because the company bought a product or service that it has not yet paid, or because it borrowed money that it will repay later. An expense is a cost of operating the company at some level. It could be material, labor and expenses. It could be taxes.