Debit and credit are concepts used in accounting. Debit is the left side of the account, derived from the Latin word for "must". The right side of the account is called a loan and comes from the Latin - "to believe".
This designation of the parties to the account has developed historically. They appeared at a stage of development when the essence of accounting was to reflect the relationship between the supplier and the debtor, the borrower and the banker.
Currently, these terms have lost their literal meaning. The debit of the account denotes the property or property rights of the enterprise, depending on the facts recorded on the account.
The term "debit" is associated with the concept of "debit turnover", which includes business transactions carried out over a certain period of time, leading to an increase in the property of the organization or a decrease in the source of their formation. The state of property recorded on a certain account at a certain point in time is called the debit balance.
Credit - the opposite side of the account, necessary to reflect the liabilities (sources of property formation) of the enterprise. Consequently, credit turnover is business transactions that lead to an increase in its liabilities (liabilities) or a decrease in assets.
Thus, the business transactions recorded on the account cause an increase or decrease in the group of funds for which it is open. And each side of the account is designed to separately reflect the decrease or increase in amounts. When reflecting business transactions on active accounts (property accounts), debit turnover indicates an increase in the amounts indicated on it. Debit turnover on passive accounts (accounts of the organization's liabilities), on the contrary, indicates a decrease. Credit turnover for active accounts means a decrease in the amounts recorded on it, and for passive accounts - their increase.
The presence of two parties to the account is due to the need for separate accounting of transactions on it (increase and decrease), as well as the convenience of records on the account.
