Business transactions are events that have a monetary impact on the
financial statements of an organization. When accounting for these
transactions, we record numbers in two accounts, where the debit column
is on the left and the credit column is on the right.
In financial accounting debit and credit are simply the left and
right side of a T-Account respectively. They are used to indicate the
increase or decrease in certain accounts. When there is a change in an
account, that change is indicated by either debiting or crediting that
account according to following rules:
Assets and Expenses An increase is recorded as debit (left side)
A decrease is recorded as credit (right side)
Liabilities, Equities and Revenues A decrease is recorded as debit (left side)
An increase is recorded as credit (right side)
Contra-accounts Contra-accounts behave exactly in opposite way to the respective normal accounts.