The left hand side of any account is called the debit side and the right side is called credit side. Amounts on the left hand side of an account, regardless of the title of the account are called debits and the amount enters on the right side of an account are called credits. To debit (Dr) an account means to make an entry on the left hand side of an account and to credit (Cr) an accounbt means to make an entry on the right hand side. The words debit and credit have no other meaning in accounting, though in common balance: Debit has negative connoation, while credit has positive connoation.
Double entry system of recording business transaction in universally followed. In this system for each transaction the debit amount ,ust equal the credit amount. If not, the recording of transaction is incorrect. The equality of debits and credits is maintained in accounting simply by specifying that the left side to be used for recording decreases. The right side of liability and capital account is to be used to recording decreases. The account balances when thet are totaled, will thern confirm to the equations :
- Assets = Liabilities + Owners's Equity
- Debit = Credits.
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