DEBITS Meaning and
Definition
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Debits, in accounting and finance, refer to the deductions or reductions made to an individual's or company's financial accounts. It is one of the fundamental concepts in double-entry bookkeeping, which records transactions by debiting one account and crediting another.
In this context, debits represent amounts that are subtracted from an account. They are recorded on the left side of a general ledger or T-account, while credits are entered on the right side. Debits increase asset accounts, decrease liability and equity accounts, as well as signal an expense.
Debits can affect various financial accounts, such as cash, accounts receivable, inventory, prepaid expenses, and many more. For instance, when a customer pays for a product or service, it is recorded as a debit to the cash account and a credit to the accounts receivable account. Similarly, when a company purchases inventory on credit, it records a debit to the inventory account and a credit to the accounts payable account.
Debits are essential for maintaining the balance in accounting equations and ensuring accurate record-keeping. The principle of double-entry bookkeeping requires every debit transaction to have an equal and opposite credit transaction. If debits do not match credits, it indicates an error in recording or a potential discrepancy in financial statements.
Overall, debits are fundamental elements of accounting that signify reductions in accounts and aid in the accurate and systematic recording of financial transactions.
Top Common Misspellings for DEBITS *
* The statistics data for these misspellings percentages are collected from over 15,411,110 spell check sessions on www.spellchecker.net from Jan 2010 - Jun 2012.
Other Common Misspellings for DEBITS
Etymology of DEBITS
The word debits has a Latin origin. It comes from the Latin word debere, which means to owe or to be indebted. Over time, this Latin word evolved into the Old French word debit, which meant debt or worth. Eventually, the term debite was adopted into Middle English, and later simplified to debits in modern English. The word debit is also related to debt and due.
Similar spelling words for DEBITS
Conjugate verb Debits
CONDITIONAL
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FUTURE
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FUTURE PERFECT
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will have debitted
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PAST
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debitted
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PAST PERFECT
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PRESENT
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debit
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have debitted
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would have debitted
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