Debit or Credit?

In double-entry accounting (used in VisionVPM) two columns are used for each account. Whether the entry increases or decreases the account is determined by the column it is entered in. (Left = Debit, Right = Credit).

There are always two accounts affected by any transaction and one entry must be a debit and the other a credit of an equal amount. There can be more than two accounts involved, provided the total debits equal the total credits for the transaction.

The double entry accounting system provides a system of checks and balances enabling detection and correction of many common types of bookkeeping errors.

Whether a debit or credit increases or decreases an account balance depends on the type of account. Asset and expense accounts are increased on the debit side. Liability, equity and revenue accounts are increased on the credit side.

The following chart may assist you in deciding which account should be debited and which should be credited: