Debit refers to an amount or expenses paid into an account from another, and it results in a decrease in liabilities and an increase in assets or equity on the balance sheet. Debit originates from the Latin word "debere," which simply means "to owe." A debit is usually placed on the negative side of a result item, and on the positive side of a balance sheet. When it comes to bookkeeping, the debit is usually entered on the left side part of the double-entry system.
On the other side of the coin, credits are outstanding payments made from the debtor to the creditor. It is usually entered on the right side of balance sheets within the accounting ledger. An account that is on a negative amount receives credit alerts.
Credit normally leads to an increase in liabilities. A creditor, however, is someone that gives out credit. When a creditor pays out, he is to receive a product or service instead of from the debtor.
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