Debits are one side of the dual entry found in accounting. Customarily located in one of the journals from a source document; debits are transferred to the appropriate ledger (account) into the debit column and update the running balance for that particular account. Certain types of accounts customarily have debit balances and include, assets, cost of sales and expenses.

Bookkeeping – Debits and Credits in Equity Accounts (Lesson 10)

Equity Accounts

The equity section of the balance sheet identifies the approximate dollar value of net worth accrued to the owners/investors. Equity type accounts can have both credit and debit balances. By far the most preferred is a credit value. Debit values does not mean that something is wrong, actually it can be a great sign of a good operation.