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Unit 2 Assets - Georgia CTAE | Home
Unit 2 Assets - Georgia CTAE | Home

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Debits and credits

In double entry bookkeeping, debits and credits (abbreviated Dr and Cr, respectively) are entries made in account ledgers to record changes in value resulting from business transactions. Generally speaking, the source account for the transaction is credited (that is, an entry is made on the right side of the account's ledger) and the destination account is debited (that is, an entry is made on the left side). Total debits must equal total credits for each transaction; individual transactions may require multiple debit and credit entries to record.The difference between the total debits and total credits in a single account is the account's balance. If debits exceed credits, the account has a debit balance; if credits exceed debits, the account has a credit balance. For the company as a whole, the totals of debit balances and credit balances must be equal as shown in the trial balance report, otherwise an error has occurred.Accountants use the trial balance to prepare financial statements (such as the balance sheet and income statement) which communicate information about the company's financial activities in a generally accepted standard format.
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