What Are Debit and Credit?
Every rupee that moves through a business leaves one place and lands in another, and bookkeeping records both ends.
Debit and credit are the names for the two ends of every transaction. A debit (Dr) is an amount entered on the left side of an account, and a credit (Cr) is an amount entered on the right side. Under the double-entry system, as explained in NCERT’s Class 11 accountancy textbook, every transaction carries at least one debit and one credit, and the two sides always total the same.
The Rules of Debit and Credit
Neither word means good or bad. What a debit does depends on the type of account it lands in, which is why NCERT’s Class 11 accountancy textbook sorts every account into five types first.
| Account | Debit when it | Credit when it |
|---|---|---|
| Asset | Rises | Falls |
| Expense | Rises | Falls |
| Liability | Falls | Rises |
| Capital | Falls | Rises |
| Income | Falls | Rises |
Many teachers and older accountants still use the golden rules instead, which group accounts three ways and reach the same answer:
- Personal accounts (people, firms, banks): debit the receiver, credit the giver.
- Real accounts (cash, stock, furniture): debit what comes in, credit what goes out.
- Nominal accounts (rent, wages, sales, interest): debit expenses and losses, credit incomes and gains.
Our page on the journal entry shows how both sides are written out, and the ledger page shows where they are filed afterwards.
Debit and Credit in Your Books vs Your Bank Statement
This is where most people get stuck. Your bank SMS says “A/c credited with Rs.3,875” when money arrives, yet in your own books that same deposit is a debit to Bank A/c.
Both are right, because the bank is writing from its own books, not yours. To the bank, the money in a savings or current account is something it owes you, a liability, and liabilities grow on the credit side. On an overdraft or cash credit account the roles flip, since you owe the bank, though a deposit still shows as credited.
| Aspect | Your books | Bank’s books |
|---|---|---|
| Deposit | Bank A/c debited | Your account credited |
| Payment | Bank A/c credited | Your account debited |
| Balance | An asset you hold, if positive | A liability it owes, if positive |
So a bank statement is a mirror image of your Bank A/c, apart from items one side has not recorded yet (bank charges, a cheque still clearing) and any mistakes made by you or the bank, which is what a bank reconciliation sorts out.
Debit and Credit Example
A stationery shop in Cuttack’s Buxi Bazaar opens on 6 October 2026, and on that first day the owner records five transactions: Rs.40,000 of their own money paid into the shop’s bank account, Rs.18,650 of stock bought on credit from a wholesaler, Rs.6,240 of cash sales, Rs.9,500 of rent paid by UPI and Rs.10,000 paid to the wholesaler by bank transfer.
| Entry | Account | Debit (Rs.) | Credit (Rs.) |
|---|---|---|---|
| 1 | Bank A/c | 40,000 | |
| 1 | To Capital A/c | 40,000 | |
| 2 | Purchases A/c | 18,650 | |
| 2 | To Wholesaler A/c | 18,650 | |
| 3 | Cash A/c | 6,240 | |
| 3 | To Sales A/c | 6,240 | |
| 4 | Rent A/c | 9,500 | |
| 4 | To Bank A/c | 9,500 | |
| 5 | Wholesaler A/c | 10,000 | |
| 5 | To Bank A/c | 10,000 | |
| Total | All five | 84,390 | 84,390 |
Note: this is an invented example for illustration only. The shop and its figures are not real, and GST is left out to keep the two sides plain.
Both columns total Rs.84,390. That equality is what a trial balance later tests, account by account. The cash sale itself would go on a bill such as a cash memo.
Where Debits and Credits Go Wrong
Balanced totals do not prove the books are right. Post the Rs.9,500 rent to Furniture A/c instead of Rent A/c and the trial balance still agrees, but profit now looks Rs.9,500 higher, because an expense has been recorded as something the shop owns.
And a reversed entry is the other classic slip. Debit Sales and credit Cash for that Rs.6,240 sale and the columns still match, yet cash and sales both end up Rs.12,480 too low, and on a first day Cash A/c would even show a credit balance, which a cash account can never really have.
The mix-up we hear about most from new owners, though, is reading the bank SMS as their own books. Our guide to journal entries with accounting examples works through more cases.
Check Debits and Credits in Journal Reports
Getting every debit and credit right is easier when the accounts sit in the same place as your bills.
For retail businesses, Petpooja Invoice lists a Balance Sheet, Chart of Accounts, Journal Entry Reports and Profit and Loss Reports among its features, alongside GST invoicing with automatic GST calculation on every bill.
For restaurants, Petpooja POSS offers 100+ downloadable reports on sales and payments, the figures your sales and cash entries start from.
Pick five entries from last month and check that rent, stock and supplier payments sit in the right accounts.
Frequently Asked Questions
No. A debit to Cash A/c means cash came in, and a debit to Bank A/c means money was deposited. What a debit means depends on the account it lands in.
Because the statement shows the bank’s books. Your balance is money the bank owes you, so it records your deposit as a credit, while your own books record it as a debit to Bank A/c.
Not at all. A debit note is a document sent to a supplier or buyer to adjust a bill, while a debit is simply the left side of an entry.
Yes, in total for every entry. One entry can have several debits and a single credit, as a GST purchase usually does when the buyer can claim input tax credit (Purchases plus input CGST and SGST, or IGST on a purchase from another state), but the two sides must still add up to the same amount.
