What is Debit and Credit? Please answer this question with examples.a detailed answer please
In accounting debit (Dr.) and credit (Cr.) are the two different types of impact any accounting transaction has in book of account. This is sometimes referred as dual concept of accounting system. As per the double entry accounting system, any transaction is reflected in the accounts in two entries that are equal and opposite and affect two different accounts. Thus any transaction will result in crediting one account by the amount involved in the transaction. At the same time another account will be debited by an equal amount.
Debit in accounting system refers to reduction in the amount that is owed by others to an account, or an increase in the amount owed by the account to others. Credit, which is the opposite of debit, refers to increase in the amount owed by others to an account, or an decrease in the amount owed by the account to others.
Let us take the example of a personal bank amount. When some money is deposited in your bank account, the amount of money that is owes to you increases. Therefore your bank account gets credited. At the same time the total amount of money the bank owes to other also increases. Therefore the bank's account will get debited.
This additional amount owed by bank is represented within the bank by increase in the cash. Thus among the various sub classification of bank accounts, it is the bank's cash account that will get credited. It is important to note that, a physical increase in cash available in the bank is recorded accounts by a crediting the cash account.
Also, please not that when you buy things using your credit card, you are actually being debited by the amount of purchases made on credit. This debit is reflected in your credit card account, which is different from your bank account. The corresponding credit goes to the seller's account. When you make payment by cheque for the amount of credit availed by you against the credit card, your credit card account gets credited and the bank account gets debited.
In contrast, when you make purchases using your debit card, your bank accounts gets debited immediately, and simultaneously the seller's account gets credited.
Debit is a term used to describe the subtraction of a value, usually money. Credit is the term used to describe the addition of a value.
For example, when you take money out of you checking account, it is a debit. Most banks issue "debit" cards for this purpose. Many companies pay their employees by having automatic "credits" made directly to their bank accounts. Any money added to your account is considered a "credit."