When it comes to accounting, the terms “credit” and “debit” have a specific meaning. In essence, whenever you enter a transaction into your books, the credit side of the entry will be used to record the source of funds or assets, while the debit side is used to record payments for expenses or losses. To put it simply, when you receive money, it’s recorded as a credit; when you pay out money, it’s recorded as a debit. That’s why credits increase your bank balance, while debits decrease it. By understanding this basic principle, you can keep your accounts in perfect balance.