Debit and Credit Journal Entries are the foundation of all financial record keeping. A debit entry is an accounting transaction where an asset or expense account is debited and a corresponding liability, equity, or revenue account is credited. At the same time, a credit entry increases the balance of one account and decreases the balance of another. Simply put, when recording a business transaction, if you spend money (incurring an expense) then it’s likely that you’ll need to record a debit entry in your company books. Conversely, if you earn money (generating sales or income), then you’ll want to record a credit entry in your books. By understanding how these entries work, business owners will be able to accurately reflect their financial activities in a systematic way.