What is debiting

Debiting involves noting a financial transaction as a debit in a business’s accounts, showing which account has either received or sent out money.

Debiting an account can mean one of three things:

• An increase in assets
• An increase in expenses
• A decrease in liabilities

Double-entry bookkeeping, which requires each transaction to be recorded in two accounts—one for credit and one for debit—is the practice of debiting.
These dual entries must balance, reflecting the fundamental principle that all assets are either financed by borrowing money (liabilities) or by paying money (equity).

Example of debiting

Consider a scenario where your business makes a purchase. This transaction should be recorded as a debit to an account reflecting the nature of the expense, due to the increase in the business’s costs. Concurrently, the payment is credited to the appropriate bank or cash account, representing the outflow of funds from the business.

Read more about debit and credit.